REG - Belluscura PLC - Trading Update

BelluscuraAnnouncement

02/04/2024 07:00

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RNS Number : 9034I  Belluscura PLC  02 April 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

Belluscura plc

("Belluscura" or the "Company")

 

Trading Update

 

 

LONDON, U.K. and PLANO, TX, U.S. (2 April 2024). Belluscura plc (AIM:BELL),
a leading medical device developer focused on lightweight and portable oxygen
enrichment technology, provides a trading update.

 

Impact of delay in completion of acquisition of TMT Acquisition plc ("TMT")

 

Although it is early in our financial year, it has become apparent that
primarily due to the untimely delay in completing the acquisition and closing
of TMT, sales and manufacturing progress on both the X-PLOR(®) and
DISCOV-R™ products has been pushed back by at least four months compared to
our previous expectations.

 

At the time of our trading update as notified on 20 December 2023, we had
expected that, given the proceeds from the funds raised in November 2023,
together with the anticipated resources from completion of the TMT offer, the
Company would have sufficient working capital to meet its growth plans through
to becoming cashflow positive. As stated in the Offer Document of 19 January
2024, due to the delay to the Chinese NMPA approval and completion of the TMT
offer, the Company revised its commercial activity in order to preserve cash
resources. This has resulted in a delay in selling into the profitable Direct
to Consumer ("DTC") market and delaying the launch of the DISCOV-R product and
the acquisition of components.  As a result, the current sales mix
projection, and the timing of receipts of China royalty revenue, we now expect
operating cashflow to be positive in Q1 2025 and thereafter.

 

As at 31 March 2024, the Company's (unaudited) cash balances amount to c$3
million.

 

As a result of the operational changes set out above, the Company expects to
achieve positive Adjusted EBITDA from Q3 of 2024 onwards. Consequently,
Revenue and Adjusted EBITDA for 2024 are expected to be lower than market
expectations* at $16 to $19 million and $(0.75) to $(1.5) million,
respectively.

 

During the recent period the Company has worked closely with its partner
InnoMax Medical Technology Ltd ("InnoMax") to expedite the launch of X-PLOR in
China and the manufacture of the DISCOV-R. Due to the restructuring of
manufacturing in China and the delay in profitability we are in discussions
with certain parties to provide a line of credit to meet the funding
requirement for non-recurring engineering, quality control and regulatory
expenses for both the US and China, and initial DISCOV-R inventory details of
which are expected to be announced in due course.

 

The initial launch of the DISCOV-R is now expected to be the end of June this
year, compared to a previous estimate of the end of March, with a full
commercial launch expected during September 2024. InnoMax will manufacture the
great majority of these products and the expectation is for a 40% reduction in
the unit cost of goods compared to that incurred in the US.

 

Accounts for year to 31 December 2023: Additional provisions

 

The audit of the accounts for the year to 31 December 2023 is progressing
satisfactorily.

 

In considering the fair value of certain assets and liabilities as at 31
December 2023, the Board has determined that, as compared with its
expectations for the year to December 2023 at the time of issuing its the
Trading Update on 20 December 2023 and confirmed at the time of making the
offer on 19 January 2024, it now expects to make one-time fair value
adjustments (subject to audit) for Inventory (both finished products and raw
materials), future supply arrangements for raw materials with certain
suppliers and warranty provisions for product supplied in 2023 and earlier
years.

 

The Board expects to publish the audited accounts in June 2024.

 

Manufacturing in China

 

Following an operational review against future strategic objectives, the Board
has decided to move the majority of its manufacturing operations to our
Chinese partner InnoMax by the end of Q2 / beginning of Q3, which should
result in a significant, immediate and long-term reduction in the cost of
goods, as well as increased manufacturing capacity.

 

 

Robert Rauker commented:

 

"It is disappointing that cashflow breakeven has been delayed to Q1 2025.
However, the actions we have taken to manufacture the great majority of our
products through InnoMax in China will result in significant savings in the
cost of goods, resulting in a material improvement to gross profit.

 

"We have substantial interest in the DISCOV-R, as demonstrated by the demand
and orders we have already taken from leading oxygen providers.  We are
focused on bringing this new product to initial launch as quickly and
efficiently as possible within the next three months."

 

 

For further information please contact:

 

 Belluscura plc                             Tel: +44 (0)20 3128 8100

 Adam Reynolds, Chairman

Robert Rauker, Chief Executive Officer

Simon Neicheril, Chief Financial Officer

 SPARK Advisory Partners Limited            Tel: +44 (0)20 3368 3550

 Nominated Adviser
 Neil Baldwin / Jade Bayat

 Dowgate Capital Limited                    Tel: +44 (0)20 3903 7715

 Broker
 Russell Cook/Nick Chambers

 MHP                                        Tel: +44 (0)20 3128 8100

 Financial PR & Investor Relations          email: Belluscura@mhpgroup.com
 Katie Hunt/Matthew Taylor

 

About Belluscura plc (www.belluscura.com)

Belluscura is a UK medical device company focused on developing oxygen
enrichment technology spanning broad industries and therapies. Our innovative
oxygen technologies are designed with a global purpose: to create improved
health and economic outcomes for the patients, healthcare providers and
insurance organisations.

 

* Market expectations for the full year stand at total revenue of $22.5
million and Adjusted EBITDA of $1.5m as per Dowgate Capital's research note
dated 13 September 2023

 

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