Final Results 31st March 2014

Sutherland Health Group announces final results for the year ended 31st March 2014.

                                                                                                                                                 26 August 2014
SUTHERLAND HEALTH GROUP PLC
(“Sutherland Health Group” or “the Company”)
ISDX Symbol: SHGP
FINAL RESULTS
 
The Board of Sutherland Health Group, a national supplier of personal care, 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 2014.
 
Chairman John French commented “It was pleasing to see the growth in turnover that the second half of the financial year brought to the year ending 31st March 2014 due to the continued growth we have been experiencing with our wholesaler business. At the interim stage we were actually 45% down in turnover because we were up against sales in the previous year that included some additional unexpected business from the NHS. That the company’s position was able to improve considerably from that reported at the interims demonstrates that we are making the right decisions by continuing to develop and strengthen our business with other sectors outside of the NHS whilst continuing to gain contracts within the important NHS sector”
 
SUTHERLAND HEALTH GROUP PLC
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2014

BUSINESS REVIEW

Highlights
 
• Sales decreased by 28% to £755,955
• Gross profit decreased by 17.6% to £379,874
• Operating profit decreased by 180.0% to a loss of £55,475 (2013: profit £69,521)
• Net profit decreased by 316.0% to a loss of £78,994 (2013: profit £36,580)
• Gross margin increased to 50.0% from 44.0%
• Overheads increased by 11.1% to £446,757
• Reduced dependency on NHS Contracts
• Biston products acquired in September 2013
• Amazon increase products stocked from 39 to 40
• Now exporting to Serbia and Slovenia
 
Following a year where sales grew to over £1 million and we were able to deliver a profit, it is naturally disappointing to report to Shareholders that we have this year seen a 28% decrease in sales and a net loss rather than a profit. This has been in the main due to the loss of some short term opportunity business that we gained in the first half of 2013 that we obtained from the NHS.
 
This has confirmed to us the importance of reducing the dependence on NHS business and our current strategy of building business outside the NHS with Wholesalers and Export markets is the right course to take. The NHS remains an important market to us but with the pressures they are under to reduce costs it does mean at times it has been a challenging market for us.
 
 
GROUP STRATEGIC REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2014
 
The extension of distribution of sales outside the NHS coupled with an increase in the products now supplied means that we are seeing an improvement in gross margin having increased from 44% to 50%.
 
It has been very much an on-going key strategy to improve the distribution of our products outside of the NHS whilst maintaining a strong on-going relationship and this has been working well. The group has strengthened its business with key wholesalers who supply GPs, Hospitals, Pharmacies and Care Homes enabling our products to be distributed more widely in new sectors other than the hospitals which has been the traditional trade sector that the group supplies.
 
Our relationship with the major internet retailer Amazon.co.uk is growing with 40 of our own products now listed and stocked with a further 11 products that we supply on behalf of other companies. Sales growth via this important retailer continues to be encouraging.
 
We acquired the IP, products and business of Biston LLP in the second half of the period under review. The Biston Point of Care Bag designed by chartered physiotherapists has now been added to an NHS England Framework Agreement and is stocked by Amazon. The Biston Wheelchair Travel Bag is also stocked by Amazon and to support this and other customers that we now have such as mobility retailers we have commenced an advertising campaign in disability magazines.
 
The Company has commenced exporting to Serbia working closely with local wholesalers in the market we have registered two products with the Health Agency in Serbia and are in the process of registering four more products for sale to Hospitals; GPs and retail pharmacies. It is our strategy to identify other European markets where our own brand products will have an opportunity to be sold based on the requirement by customers in those markets for quality British manufactured health and personal care products.
 
PRINCIPAL OPERATING RISKS AND MITIGATIONS
The Directors maintain risk as a main Board agenda item, identifying, managing and mitigating business risk, by ongoing assessment. The principal areas covered by this assessment are summarised as follows.
 
     Risk                                                                                 Potential Impact                                                            Mitigation
Customer issues                                                  Non-payment                                         Robust credit control
 
Loss of orders                                                                                                                 Focus on quality service
 
Products                                                             Quality issues                                        Registrations, Audits
 
Cash flow                                                            Funding gap                                          Strong reporting, robust
                                                                                                                                     credit control, adequate
                                                                                                                                     funding sources
 
Intellectual Property                                             Loss of business to
                                                                         competing Trademarks                            market product
                                                                                                                                     awareness
 
Market cycles                                                      Unplanned shifts in demand                     Strong reporting,
                                                                                                                                     market surveillance
 
Loss of reputation                                                Loss of major business                           Absolute focus on quality
 

SUTHERLAND HEALTH GROUP PLC
GROUP STRATEGIC REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2014

FINANCIAL KEY PERFORMANCE INDICATORS
During the period to 31st March 2014 the Group achieved a turnover of £755,955 (2013: £1,044,413) representing a decrease in sales of 28% over the previous year, producing a gross profit of £379,874 (2013: £460,752). Administrative and distribution expenses were £446,757 (2013: £401,947) after charging £25,124 (2013: £25,578) for amortisation and depreciation. The pre-tax loss was £80,169 (2013: £43,074) and the loss per ordinary share was 0.10p (2013: profit 0.05p). Cash at the bank on the balance sheet as at the 31st March 2014 was £192,619 (2013: £137,494)
 
OTHER KEY PERFORMANCE INDICATORS
The company seeks to ensure that responsible business practice is fully integrated into the management of all its operations and into the culture of all parts of its business. It believes that the consistent adoption of responsible business practice is essential for operational excellence, which in turn is expected to ensure the delivery of its core objectives of sustained real growth in future profitability. In a company this size the directors consider there are collectively numerous non-financial performance indicators but none individually are key.
 
POST BALANCE SHEET
Since the end of the period we are pleased to report that we have appointed a distributor for the market of Slovenia. The company has already placed several small orders for Sutherland Lubricating Jelly that is being supplied to Hospitals and retail pharmacies in Slovenia. We hope to develop this market further with our distribution partner by adding further products to our agreement.
 
OUTLOOK
The new financial year has started in line with our expectations with non-NHS wholesalers showing continued growth in sales and share of our overall business. Sales in the NHS is showing a mixed picture with sales to NHS Supply Chain less than last year but sales to other Hospital customers showing growth. The group has tendered for a new contract which if successful, would be both sales and profit enhancing. Whilst the group recognises the opportunity this possible contract represents, it continues to develop business outside of the NHS to ensure that the dependence on such contracts continues to reduce.
 
The group continues to look at new opportunities for new product development and is also reviewing products that may be suitable for launch into our existing customer base that are being presented to us by companies wishing to enter the UK market.
 
The group is actively looking at possible acquisitions both in products and companies that would fit the overall strategy of the Company.
 
This report was approved by the board on and signed on its behalf.
 
F J French
Director

 

CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2014
 
 
                                             
                                                                                                                      2014                            2013
                                                                                                                         £                                 £
TURNOVER
                                                                                                                   755,955                       1,044,413
Cost of sales
                                                                                                                  (376,081)                       (583,661)
GROSS PROFIT
                                                                                                                   379,874                          460,752
Distribution costs
                                                                                                                    (44,354)                        (39,670)
Administrative expenses
                                                                                                                  (402,403)                       (362,277)
Other operating income
                                                                                                                     10,233                           10,716
OPERATING (LOSS)/PROFIT
                                                                                                                    (56,650)                          69,521
Interest payable and similar charges
                                                                                                                    (23,519)                       (26,447)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
                                                                                                                    (80,169)                          43,074
Tax on (loss)/profit on ordinary activities
                                                                                                                               -                          (6,494)
 
(LOSS)/PROFIT FOR THE FINANCIAL YEAR
                                                                                                                    (80,169)                          36,580
 
All amounts relate to continuing operations.
There were no recognised gains and losses for 2014 or 2013 other than those included in the Profit and Loss Account.
 

(LOSS)/EARNINGS PER SHARE IN PENCE                                                              (0.10p)                           0.05p
 
DILUTED (LOSS)/EARNINGS PER SHARE IN PENCE                                                (0.10p)                           0.03p
 
 
 
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2014
                                                                               
                                                                                             2014                                       2013
                                                                                   £                          £                  £                         £
FIXED ASSETS
 
Intangible assets                                                                               247,097                                    247,546
 
Tangible assets                                                                                     3,919                                       6,286
 
                                                                                                        251,016                                    253,832
CURRENT ASSETS
 
Stocks                                                                    150,045                                     210,538
 
Debtors                                                                  160,697                                     149,502
 
Cash at bank and in hand                                         192,619                                    137,494
 
                                                                             503,361                                     497,534
 
CREDITORS: amounts falling due
                   within one year                                    (478,700)                                  (272,328)
 
NET CURRENT ASSETS                                                                           24,661                                    225,206
 
TOTAL ASSETS LESS CURRENT LIABILITIES                                                         275,677                                    479,038
 
CREDITORS: amounts falling due
                   after more than one year                                                  (16,298)                                 (244,490)
 
NET ASSETS                                                                                                                    259,379                                    234,548
 
CAPITAL AND RESERVES
 
Called up share capital                                                                       156,274                                    139,505
 
Share premium account                                                                    1,160,792                                 1,072,561
 
Other reserves                                                                                   111,478                                    111,478
 
Profit and loss account                                                                    (1,169,165)                              (1,088,996)
 
SHAREHOLDERS' FUNDS                                                                                            259,379                                    234,548
 
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 21st August 2014
 
G M Sutherland
Director
 
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2014
 
                                                                                                                       2014                         2013
                                                                                                                          £                              £
 
Net cash flow from operating activities                                                                  21,797                     148,366
 
Returns on investments and servicing of finance                                                  (23,519)                    (26,447)
 
Taxation                                                                                                           (5,710)                          (64)
 
Capital expenditure and financial investment                                                       (23,500)                        (310)
                                                                                                                                                                  
 
CASH (OUTFLOW)/INFLOW BEFORE FINANCING                                                                 (30,932)                    121,545
 
Financing                                                                                                          86,057                     (55,875)
                                                                                                                                                                  
 
INCREASE IN CASH IN THE YEAR                                                                          55,125                       65,670
 

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/DEBT
FOR THE YEAR ENDED 31 MARCH 2014
 
 
                                                                                                                       2014                             2013
                                                                                                                          £                                  £
 
Increase in cash in the year                                                                                55,125                       65,670
 
Cash outflow from decrease in debt and lease financing                                         28,193                       31,875
 
 
 
MOVEMENT IN NET DEBT IN THE YEAR                                                                                        83,318                       97,545
 
Net debt at 1 April 2013                                                                                  (106,996)                   (204,541)
 
NET DEBT AT 31 MARCH 2014                                                                                                      (23,678)                   (106,996)
 
 
 
---ENDS---
 
The Directors of the Issuer accept responsibility for this announcement
 

Enquiries:
 
Sutherland Health Group Plc
John French, Chairman
T: 07836 722482
 
Jon Isaacs
Alfred Henry Corporate Finance Ltd
T: 0207 251 3762
 
 
Notes to Editors:
Sutherland Health Group Plc is a national supplier of personal care; 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 manufactures and operates within the United Kingdom.
 
For further information on the Company visit www.sutherlandhealth.com
 
 

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