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Circassia 2021 update - Ahead of expectations



Circassia Group (CIR, AIM All-Share, Market Cap £182m, 46p, 5.2% of JIC Portfolio, Medium Risk/High Reward 5.0% target position) www.circassia.com


Circassia Group Plc is a United Kingdom-based medical device company, which is focused on point of care asthma diagnosis and management. NIOX segment is a portfolio of products used to improve asthma diagnosis and management ...


Trading update for the year ended 31st December 2021


Conclusion: Revenue recovering along with a lower cost base has led to an improved operating performance. So much so that it beat expectations and returned a Group EBITDA profit. The operational gearing is clear. Management seems on top of everything and confident of further top line growth this year despite COVID still having an impact. Hopefully, as the year progresses, that cloud will lift. Yesterday, I should have mentioned that management’s zero cost share options exercise at 62.4p. That at the very least will be the target for Ian Johnson and his team. There is no guarantee that they will achieve the target but if any management team will, it’s this one. I have it as Medium Risk/High Reward with a 5.0% target. The chart looks good. Very Happy Holder!



The highlights:


· Revenue growth of 17% (20% on a constant currency basis) to £27.9m, with recurring revenue of 84%

· Group adjusted EBITDA1 positive for the first time at c. £0.6m, ahead of market expectations

· Net cash £12.6m

· New distribution arrangements in the United States and China to drive further revenue growth


The continuing Niox business recorded a 17% increase in sales to £27.9m with underlying revenues recovering to 85% of 2019 levels. Constant currency growth was 20%.


Gross margins were steady at 68% and recurring revenues stood at 84%, consistent with previous years.


Management continued to implement the new sales and marketing strategy, focusing particularly on partnered distribution in China and the USA. This resulted in a significant reduction in operating costs with total expenditure reducing from £27.4m in 2020 to £18.4m in 2021.


EBITDA for the Niox business increased to £2.3m v a loss in 2020 of £6.8m. Group adjusted EBITDA was £0.6m v a 2020 loss of £9.1m.


Ian Johnson, Circassia's Executive Chairman, said: "2021 has been a significant year for Circassia with both the NIOX business and the Group achieving positive EBITDA for the first time. The Group is now cash generative and debt free.

With the global pandemic set to continue into 2022, the much-reduced cost base, high levels of recurring revenues and high gross margins provide a considerable degree of resilience. The Board believes that these attributes, together with the measures taken to drive top line growth, will deliver further shareholder value over the medium term."



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