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25 August 2009

Corin Group PLC 

Half Year Results

Corin Group PLC (LSE: CRG, 'Corin' or 'the Group'), a leading manufacturer and supplier of orthopaedic devices, announces its half year results for the six months ended 30 June 2009.

Highlights

• Group sales £20.1m (H1 2008: £22.9m) 

• Excluding US, sales up 28% to £19.3m (10% on constant currency basis*)

• Sales of hip products, outside US, up 26% (8% on a constant currency basis) 

• Operating profit £0.2m (H1 2008: £2.0m) reflecting lower sales to Stryker

• Operating profit, before exceptional items, £0.8m (H1 2008: £3.9m)

• Loss per share of 0.16p (H1 2008: earnings 2.13p)  Earnings per share, before exceptional items, were 0.96 pence (H1 2008: 5.76 pence)

• Maintained interim dividend of 0.48p per share

• Strategy on course to achieve medium term targets of double digit growth and margin enhancement

• MiniHip hip stem successfully launched in Germany in Q1 and the rest of Europe in Q2

* Constant currency is calculated by translating 2009 results at the average exchange rates used for the six month period ended 30 June 2008 (see note 12)

Peter Huntley, Corin Chief Executive, said:

'We have made steady progress this year. Although we remain committed to exploiting the opportunities with Cormet in the US, we are particularly pleased to report that we achieved notable non-US revenue growth whilst continuing to implement the Group's strategy.  

'In relatively resilient markets, our strategic focus remains to widen our product portfolio and continue to develop innovative implant solutions, such as the recently launched MiniHip.'

Enquiries:

Corin Group PLC
Peter Huntley, Chief Executive  Michael Roller, Finance Director		01285 659 866
College Hill
Adrian Duffield/Rozi Morris		020 7457 2020

Overview

Corin has made steady progress during the first half of 2009. Although reported sales fell by 12%, underlying constant currency* sales growth, adjusting for the large stocking order to Stryker in the first half of the comparative period, was a pleasing 10% (see note 12). This was the result of increased focus on sales across a broader number of key countries and the early stages of the product portfolio expansion.

Implementation of the revised strategy continued in line with plan, highlighted by the launch of the Group's innovative MiniHip hip stem in the first half.

Financial Results

Group sales in the first half of 2009 were £20.1m (H1 2008: £22.9m), and were down 25% on a constant currency basis. Excluding sales to the US, Group sales were £19.3m (H1 2008: £15.1m), up 28% and 10% on a constant currency basis. Sales to the US were £0.8m (H1 2008: £7.8m), reflecting the substantial stocking order by Stryker in H1 2008 which was not repeated.  

Operating profit (before exceptional items of £0.6m (H1 2008: £1.9m)) was £0.8m (H1 2008: £3.9m), also reflecting the significantly lower sales to the US. 

Exceptional items totalled £0.6m (H1 2008: £1.9m), of which £0.2m is non-cash, and relate to the departure of the former Finance Director in February 2009. After these exceptional charges, the reported profit before tax was £0.1m (H1 2008: £1.8m).

The reported loss per share was 0.16 pence (H1 2008: earnings of 2.13 pence), reflecting the above results. Earnings per share before exceptional items were 0.96 pence (H1 2008: 5.76 pence) (see note 5).

The Board is maintaining the interim dividend of 0.48 pence per share.

The Group generated cash from operations of £2.0m (H1 2008: £8.7m) prior to capital expenditure of £1.7m (H1 2008: £3.0m). Net borrowings at 30 June 2009 were £5.9m (30 June 2008: £2.1m), representing an increase of £0.4m since 31 December 2008.  

Operating Review

The international orthopaedic market remained relatively resilient, but growth slowed further during the first half of 2009 to approximately 3%, compared to 7% in 2008. Within this, the market in Europe was flat with small volume gains offset by continued pressure on price.

Products

Sales of Corin's hip products fell by 35% to £9.7m, a decline of 45% on a constant currency basis. However, excluding sales to the US, which included a significant stocking order to Stryker in early 2008, sales of hip products increased by 26%, an increase of 8% on a constant currency basis.  

The sales growth was driven by the expanding hip portfolio which has benefitted from the early phases of Corin's product development strategy. The Metafix cementless hip stem was launched in 2008 and the MiniHip hip stem launched in Germany in the first quarter of 2009 and the rest of Europe in the second quarter. The distributed hip stems launched in the UK and Australia in 2008 also continued to contribute to growth.

This growth was achieved despite lower sales in the Group's Cormet and Optimom metal-on-metal hip systems. This reflects a decline in the European resurfacing market, as some surgeons narrowed the patient indication range for metal-on-metal implants. Deliveries of Cormet to Stryker in the US recommenced in the first half of the year at much lower levels, as Stryker's stocks of the more common sizes were depleted.

Sales of the Group's knee products grew by 10% to £5.2m, a 7% decline on a constant currency basis. Sales of the Rotaglide and AMC mobile bearing knees declined, reflecting pricing pressure in the German market and the lack of recent enhancements to these products. The Uniglide unicondylar knee also declined in the first half, as a result of competitive pressures slowing the strong growth seen in 2008.

Other products, which include the Zenith ankle, LARS ligament augmentation and surgical disposable products, grew reported sales by 57% to £5.2m, a growth of 37% on a constant currency basis.

LARS, which Corin distributes on behalf of a French manufacturer, led this growth as its acceptance in reconstructive surgery and sports medicine continued to build, particularly in Australia and the UK. The Zenith ankle, launched in 2008, more than doubled its sales as the rollout phase for this product continued.

The sale of surgical disposable products in the UK grew during the half year, but, as anticipated, at more normal rates compared to the exceptional growth in the second half of 2008 when competitors experienced supply problems. As all the competitors are back in the market, sales of surgical disposable products are expected to decline in the second half of 2009 against a very strong comparator from 2008.

Geographic Results

In Europe, sales increased by 8% to £10.5m, a decrease of 3% on a constant currency basis.

The UK experienced difficult trading conditions, with a decline in the overall reconstruction market compounded by the decline in the resurfacing market affecting the Group's leading metal-on-metal product, Cormet. Overall, sales were £4.6m (H1 2008: £4.7m). Good progress continued with LARS, Metafix and the distributed revision hip system and the MiniHip hip stem was launched in May, although the Group does not expect to see notable results from this product until next year.

Sales in Corin's other key European market, Germany, grew 15% to £3.0m (H12008: £2.6m) but were unchanged on a constant currency basis, reversing the sales declines of the recent past. The strong performance of the recently launched MiniHip stem and Zenith ankle offset declines in the more mature part of the German product portfolio.

Sales in the US were £0.8m (H1 2008: £7.8m). This sharp decline is a result of the large Cormet stocking orders delivered to Stryker in the first half of 2008. There was a small growth in other products in the US, where Corin is continuing with the Uniglide IDE study.

In the Rest of the World, sales grew by 63% to £8.8m (H1 2008: £5.4m), a growth of 33% on a constant currency basis.  Australia, Japan and China all continued their very strong performances from 2008. Australian sales increased by 62% to £3.2m (H1 2008: £2.0m), an increase of 58% on a constant currency basis. This growth was led by LARS and solid growth in the knee and hip portfolio which benefitted from the distributed Score knee and an expansion of the sales and marketing team in this country over the last 12 months.  

In Japan, sales increased by 84% to £3.1m (H1 2008: £1.7m), an increase of 27% on a constant currency basis. Sales of the Group's metal-on-metal and bipolar hip systems continued to support this growth. Growth in China, from a small base, was driven by the continued rollout of Corin's hip and knee systems.

Strategy Implementation

Corin's strategy is to generate growth in the orthopaedic reconstructive market by broadening its hip and knee portfolio, developing innovative implant solutions, building the sales and marketing teams internationally and driving Cormet growth in the US. Good progress was made in the first half year to position the Group to achieve the medium term target of sustainable double digit sales growth and margin enhancement.

The investment in all aspects of product development is driving the new product development pipeline in line with the five year plan. Corin's bone-conserving small-stem hip system, MiniHip, was successfully launched in Germany, the UK and across the rest of Europe in the first half and will be launched in Australia in Q3. Together with the Metafix cementless hip system launched in 2008, and Cormet resurfacing, this is building Corin's presence in the cementless hip stem market. Regulatory clearances are being submitted for these new hip stems in the US, Japan and China.

The key development project of an enhanced hip cup system with multiple bearing options, to complement the Group's existing metal-on-metal advance bearing options, is progressing well in line with the target of commencing evaluation surgeries in the later part of this year. The major project to update and enhance Corin's total knee system is also continuing, with a target of first evaluation surgeries in the later part of 2010. Corin is working with leading international surgeons on these development projects.

Manufacturing costs have been kept under tight control as production capacity has been better balanced to meet current demand. Good progress was made in the first phase of the stock reduction programme, with a cash reduction of £0.4m after the investment in the MiniHip launch to date. The project to reclassify the Group's ongoing orthopaedic implants, to meet the new EU regulations, is virtually completed in line with the September deadline and the destocking of discontinued lines is well progressed.

Current Trading and Outlook

Trading in the second half of the year to date has been broadly in line with the Board's expectations. Product and geographical sales trends have so far tended to mirror those of the first half of the year. As previously reported, Corin continues to expect orders from Stryker to reflect the implant rate more closely as the second half progresses, as its Cormet inventories continue to be depleted.

The Board continues to expect the orthopaedic market to remain resilient, albeit at slower growth rates than the recent past. The implementation of the revised strategy is progressing well, and with the experienced resources added to the Group and the benefits of the new product development programme, Corin remains on course to achieve its medium term targets.

* Constant currency is calculated by translating 2009 results at the average exchange rates used for the six month period ended 30 June 2008

Condensed Consolidated Income Statement

		6 Months to 30 June 2009	6 Months to 30 June 2008	12 Months to 31 Dec 2008
	Note	£’000	£’000	£’000
Revenue	2	20,139	22,896	39,837
Cost of sales		(7,086)	(7,947)	(20,109)
Gross profit		13,053	14,949	19,728
Distribution costs		(449)	(522)	(683)
Administrative expenses		(12,371)	(12,411)	(22,793)
Operating profit before exceptional items		812	3,934	3,382
Exceptional Items	9	(579)	(1,918)	(7,130)
Operating profit/(loss)		233	2,016	(3,748)
Finance costs		(197)	(275)	(557)
Finance income		25	50	97
Profit before tax and exceptional items		640	3,709	2,922
Exceptional Items	9	(579)	(1,918)	(7,130)
Profit/(loss) before tax	2	61	1,791	(4,208)
Taxation	3	(52)	(766)	300
Profit/(loss) for the period		9	1,025	(3,908)
Attributable to:
Equity holders of parent company		(70)	925	(4,112)
Minority interests		79	100	204
		9	1,025	(3,908)
(Loss)/earnings per share
- Basic	5	(0.16)p	2.13p	(9.48)p
- Diluted	5	(0.16)p	2.13p	(9.48)p

Condensed Consolidated Statement of Financial Position

		30 June 2009	30 June 2008	31 December 2008
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	6	9,735	8,619	10,690
Goodwill		1,433	1,376	1,393
Other intangible assets		2,413	2,411	2,326
Investments		125	250	125
Deferred tax		1,741	803	1,625
Total non-current assets		15,447	13,459	16,159
Current assets
Inventories		14,046	17,559	15,183
Trade and other receivables		9,936	9,717	9,579
Cash and cash equivalents		2,055	5,571	1,954
Total current assets		26,037	32,847	26,716
Total assets	2	41,484	46,306	42,875
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital	7	1,061	1,060	1,060
Share premium account		15,559	15,559	15,559
Employee share scheme reserve		3,891	2,918	3,590
Own shares held reserve		(10)	(10)	(10)
Translation reserve		1,690	(760)	3,437
Retained earnings		4,548	10,241	5,000
		26,739	29,008	28,636
Minority interests		272	173	193
Total equity		27,011	29,181	28,829
Non-current liabilities
Long-term borrowings		5,484	6,931	1,269
Deferred tax		91	134	229
Provisions		158	159	159
Total non-current liabilities		5,733	7,224	1,657
Current liabilities
Trade and other payables		6,274   6,274	7,732	6,164
Short-term borrowings		2,466	744	6,142
Current tax payable		-	1,425	83
Total current liabilities		8,740   8,740	9,901  9,901	12,389
Total liabilities		14,473	17,125	14,046
Total equity and liabilities		41,484	46,306	42,875

Condensed Consolidated Statement of Cash Flows

		6 Months  to 30 June 2009	6 Months to 30 June  2008	12 Months to  31 December 2008
		£'000	£'000	£'000
Cash flows from operating activities
Profit/(loss) before tax		61	1,791	(4,208)
Adjustments for:
Depreciation and amortisation		1,948	1,304	3,038
Net interest expense		172	225	460
Share based payments		458	374	606
Loss on disposal of plant, property and equipment		4	184	170
Loss on disposal of intangible fixed assets		-	38	263
Impairment to goodwill Impairment to investment		- -	95 -	95 125
Decrease/(increase) in inventories		381	(509)	4,360
(Increase)/decrease in trade and other receivables		(773)	3,625	4,695
(Decrease)/increase in trade and other payables		(225)	1,537	195
Cash generated from operations		2,026	8,664	9,799
Interest paid		(197)	(275)	(557)
Taxes paid		(574)	(622)	(1,411)
Net cash flows from operating activities		1,255	7,767	7,831
Cash flows from investing activities
Interest received		25	50	97
Acquisitions		-	-	(84)
Proceeds from sale of fixed assets		175	-	-
Capital expenditure		(1,744)	(2,994)	(6,207)
Net cash used in investing activities		(1,544)	(2,944)	(6,194)
Cash flows from financing activities
Proceeds from issue of ordinary share capital (net of issue costs)		-	1,189	1,189
Proceeds from borrowings		6,000	415	1,065
Repayment of loans		(4,906)	-	(1,096)
Payment of finance lease liabilities		(337)	(375)	(748)
Dividends paid		-	-	(585)
Net cash received/(used in) from financing activities		757	1,229	(175)
Net increase in cash and cash equivalents		468	6,052	1,462
Cash and cash equivalents at the beginning of the period		1,293	(586)	(586)
Exchange adjustments		(149)	34	417
Cash and cash equivalents at the end of the period		1,612	5,500	1,293

  

Cash and cash equivalents comprises:	£'000	£'000	£'000
Cash available on demand	2,019	3,064	1,954
Short-term deposits	36	2,507	-
	2,055	5,571	1,954
Overdrafts	(443)	(71)	(661)
	1,612	5,500	1,293

Condensed Consolidated Statement of Comprehensive Income 

	6 Months to 30 June 2009	6 Months to  30 June  2008	12 Months to 31 December 2008
	£'000	£'000	£'000
Profit/(loss) for the period	9	1,025	(3,908)
Other comprehensive (expense)/income:
Exchange differences on translation of foreign currency net investments Tax on items taken directly to equity	(1,747)	(213)	3,984
Tax on items taken directly to equity	(157)	(1,038)	(598)
Total comprehensive expense for the period	(1,895)	(226)	(522)
Attributable to:
Equity holders of the parent company	(1,974)	(326)	(726)
Minority interests	79	100	204
	(1,895)	(226)	(522)

Condensed Consolidated Statement of Changes in Equity

	Share Capital Reserve £'000	Employee Share Scheme £'000	Translation Reserve £'000	Share Premium Account £'000	Own Shares Held Reserve £'000	Retained Earnings £'000	Total £'000	Minority Interests £'000	Total Equity £'000
At 1 January 2009	1,060	3,590	3,437	15,559	(10)	5,000	28,636	193	28,829
Total recognised income and expense for the period	-	(157)	(1,747)	-	-	(70)	(1,974)	79	(1,895)
Share-based payment expense	-	458	-	-	-	-	458	-	458
Issue of share capital	1	-	-	-	-	-	1	-	1
Dividends paid	-	-	-	-	-	(382)	(382)	-	(382)
At 30 June 2009	1,061	3,891	1,690	15,559	(10)	4,548	26,739	272	27,011

	Share Capital Reserve £'000	Employee Share Scheme £'000	Translation Reserve £'000	Share Premium Account £'000	Own Shares Held Reserve £'000	Retained Earnings £'000	Total £'000	Minority Interests £'000	Total Equity £'000
At 1 January 2008	1,036	3,582	(547)	14,394	(10)	9,697	28,152	73	28,225
Total recognised income and expense for the period	-	(1,038)	(213)	-	-	925	(326)	100	(226)
Share-based payment expense	-	374	-	-	-	-	374	-	374
Issue of share capital	24	-	-	1,165	-	-	1,189	-	1,189
Dividends paid	-	-	-	-	-	(381)	(381)	-	(381)
At 30 June 2008	1,060	2,918	(760)	15,559	(10)	10,241	29,008	173	29,181

	Share Capital Reserve £'000	Employee Share Scheme £'000	Translation Reserve £'000	Share Premium Account £'000	Own Shares Held Reserve £'000	Retained Earnings £'000	Total £'000	Minority Interests £'000	Total Equity £'000
At 1 January 2008	1,036	3,582	(547)	14,394	(10)	9,697	28,152	73	28,225
Total recognised income and expense for the period	-	(598)	3,984	-	-	(4,112)	(726)	204	(522)
Purchase of minority interest	-	-	-	-	-	-	-	(84)	(84)
Share-based payment expense	-	606	-	-	-	-	606	-	606
Issue of share capital	24	-	-	1,165	-	-	1,189	-	1,189
Dividends paid	-	-	-	-	-	(585)	(585)	-	(585)
At 31 December 2008	1,060	3,590	3,437	15,559	(10)	5,000	28,636	193	28,829

Notes to the Condensed Consolidated Financial Statements

1.  Basis of preparation

Corin Group PLC (the 'Company') is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2009 comprise the Company and its subsidiaries (together referred to as the 'Group').

Other than as set out below, the condensed consolidated interim financial statements have been prepared using the principal accounting policies set out in the Group's 2008 annual report and financial statements and in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and IAS 34 Interim Financial Reporting as adopted by the European Union.

The IASB has issued the following revised and updated standards that are applicable to the Group and that resulted in changes in presentation for this accounting period; IAS 1 (revised) 'Presentation of financial statements' and IFRS 8 'Operating Segments'.

IAS 1 (revised) updates the presentation of the key statements of performance and position for the Group. The revised standard has no impact upon the reported results of the Group.

IFRS 8 introduces new requirements for segmental reporting to be based on the information provided to the Chief Operating Decision Maker (CODM). It also introduces additional disclosure and reconciliation requirements. The segmental reporting basis used by the Group in previous years is the same as that which is reported to the CODM, hence the changes to the segmental reporting for 2009 are in respect of the additional disclosure only.

In addition, the following IFRIC amendments and IASs have been adopted, although they have no impact on the Group's reporting; IFRIC 9 'Reassessment of embedded derivatives', IFRIC 13 'Customer loyalty programmes', IFRIC 14 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction', IFRIC 16 'Hedges of a net investment in a foreign operation' and the amendments to IAS 23 'Borrowing Costs', IAS 32 'Presentation', IAS 39 'Financial instruments: recognition and measurement' and IFRS 2 'Share-based payment'. IFRIC 15 'Agreements for the construction of real estate' and various amendments to IAS 39 are still to be endorsed but these are not expected to have any impact on the Group.

The condensed interim financial statements for the six months ended 30 June 2009 have not been audited or reviewed in accordance with International Standard on Review Engagements 2410.  

The financial information for the year ended 31 December 2008 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. Statutory financial statements for 2008, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under Section 237(2) or (3) of the Companies Act 1985.

2.  Segmental analysis

For management purposes, the Group is organised into the following segments which are identified in accordance with IFRS 8.

	6 Months to  30 June 2009	6 Months to  30 June  2008	12 Months to 31 December 2008
	£'000	£'000	£'000
Revenue
UK operations	13,442	11,875	23,483
German operations	3,074	2,647	5,094
Australian operations	3,214	1,989	4,530
Japanese operations	3,152	1,706	3,756
US operations	820	7,761	8,483
All other segments	1,019	581	1,242
	24,721	26,559	46,588
Less sales by UK to overseas operations
Germany	(1,345)	(1,721)	(2,228)
Japan	(1,239)	(636)	(1,159)
Australia	(1,181)	(733)	(1,580)
All other segments	(817)	(573)	(1,784)
	20,139	22,896	39,837

Profit before taxation
UK operations	(1,116)	(3,752)	(10,426)
German operations	(304)	(278)	(583)
Japanese operations	623	393	554
Australian operations	799	519	1,254
US Operations	178	4,962	5,327
All other segments	(119)	(53)	(334)
	61	1,791	(4,208)
Assets
UK operations	24,851	28,404	24,606
German operations	5,905	6,170	6,824
Japanese operations	4,698	3,432	5,214
Australian operations	4,563	3,051	3,918
US Operations	505	4,714	1,544
All other segments	962	535	769
	41,484	46,306	42,875

3.  Taxation

	6 Months to  30 June  2009	6 Months to  30 June 2008	12 Months to 31 December 2008
The tax charge is made up as follows:	£'000	£'000	£'000
United Kingdom corporation tax on profits for the period	-	426	(1,317)
Overseas taxation	53	187	752
Prior year adjustment - overseas taxation	(4)	(10)	473
Total current tax	49	603	(92)
Origination and reversal of temporary differences:
Deferred tax Prior year adjustments	(3) 6	163 -	(66) (142)
Total tax on profit on ordinary activities	52	766	(300)

The tax charge for the 6 months to 30 June 2009 has been calculated based on an estimate of the tax charge for the year ending 31 December 2009.

4.  Dividends

	6 Months to 30 June  2009	6 Months to 30 June 2008	12 Months to 31 December 2008
	£'000	£'000	£'000
Final dividend of 0.9p per ordinary share accrued / paid during the period relating to previous year's results	382	381	381
Interim dividend of 0.48p per ordinary share paid during the period	-	-	204
	382	381	585

The final dividend of 0.9p relating to the previous year's results was paid on 10 July 2009 and has been accrued in the results to 30 June 2009. The final dividend in respect of the year ended 31 December 2007 was approved at the AGM on 17 June 2008 and paid on 11 July 2008. The results for the period ended 30 June 2008 have been restated to recognise this dividend in that period and as a liability at 30 June 2008.

The proposed interim dividend of 0.48p (June 2008: 0.48p) per ordinary share totalling £204,000 (June 2008: £204,000) will be paid on 13 November 2009 to shareholders registered at the close of business on 30 October 2009. The proposed interim dividend has not been accrued in the results to 30 June 2009.

5.  (Loss)/earnings per share 

The calculation of basic loss/earnings per share is based on the loss/profit attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held in employee share trusts are treated as cancelled for the purposes of this calculation.

The calculation of diluted loss/earnings per share is based on the calculation described above adjusted to allow for the issue of shares and the post tax effect of interest on the assumed conversion of all dilutive options.

		June 2009			June 2008			Dec 2008
	Loss/ Earnings £'000	Weighted average number of shares	Per Share amount p	Earnings £'000	Weighted average number of shares	Per Share amount p	Loss/ Earnings £'000	Weighted average number of shares	Per Share amount p
Post-exceptional item
Basic earnings/(loss) per share	(70)	43,387,975	(0.16)	925	43,456,241	2.13	(4,112)	43,400,198	(9.48)
Diluted earnings/(loss) per share	(70)	43,387,975	(0.16)	925	43,456,241	2.13	(4,112)	43,400,198	(9.48)
Underlying earnings per share
Basic earnings per share	415	43,387,975	0.96	2,504	43,456,241	5.76	1,316	43,400,198	3.03

The difference between the basic and diluted weighted average number of shares is wholly attributable to outstanding share options. For the periods ended 30 June 2009, 30 June 2008 and the year ended 31 December 2008 there is no difference between the basic and diluted weighted average number of shares. 

Underlying earnings per share at 30 June 2009 is before the post tax exceptional cost of £485,000 (June 2008: £1,579,000, Dec 2008: £5,428,000) as detailed in note 9.

6.  Property, plant and equipment

Cost	Leasehold improvements £'000	Plant, equipment & vehicles £'000	Consigned surgical instrumentation £'000	Total £'000
At 1 January 2008	515	6,250	7,333	14,098
Additions Transfer to current assets	308 -	997 -	1,344 (17)	2,649 (17)
Exchange movement in the year	-	45	313	358
Disposals	-	(45)	(342)	(387)
At 30 June 2008	823	7,247	8,631	16,701
Additions	-	654	2,304	2,958
Transfer from current assets	-	-	(950)	(950)
Exchange movement in the year	(33)	161	1,444	1,572
Disposals	-	(18)	(44)	(62)
At 31 December 2008	790	8,044	11,385	20,219
Additions	21	309	1,045	1,375
Transfer to current assets	-	-	(40)	(40)
Exchange movement in the period	(1)	(113)	(732)	(846)
Disposals	-	(173)	-	(173)
At 30 June 2009	810	8,067	11,658	20,535
Depreciation
At 1 January 2008	156	3,279	3,526	6,961
Provided in the year	34	346	739	1,119
Exchange movement in the year	-	32	173	205
Eliminated on disposals	-	(41)	(162)	(203)
At 30 June 2008	190	3,616	4,276	8,082
Provided in the year Transfer to current assets	19 -	631 -	904 (847)	1,554 (847)
Exchange movement in the year	(1)	107	710	816
Eliminated on disposals	-	(17)	(59)	(76)
At 31 December 2008	208	4,337	4,984	9,529
Provided in the period	36	546	1,166	1,748
Exchange movement in the period	-	(68)	(409)	(477)
Eliminated on disposals	-	-	-	-
At 30 June 2009	244	4,815	5,741	10,800
Net book amount at 30 June 2009	566	3,252	5,917	9,735
Net book amount at 31 Dec 2008	582	3,707	6,401	10,690
Net book amount at 30 June 2008	633	3,631	4,355	8,619

7.  Share capital

	30 June  2009 number	30 June  2008 number	31 Dec  2008 number	30 June 2009 £'000	30 June  2008 £'000	31 Dec  2008 £'000
Authorised:
Ordinary shares of 2.5p each	66,100,000	66,100,000	66,100,000	1,653	1,653	1,653
Allotted, called up and fully paid:
Ordinary shares of 2.5p each	42,455,525	42,404,423	42,404,423	1,061	1,060	1,060

Share issues under share option schemes

The following ordinary shares were issued during the period, pursuant to the exercise of options granted under the schemes detailed below:

Share Scheme	Number of ordinary shares	Exercise price
LTIP	51,102	£0.000

The following ordinary shares were issued in the period to 30 June 2008.

Share Scheme	Number of ordinary shares	Exercise price
EMI i1	59,000	£1.355
EMI i4	63,000	£2.050
SAYE 2	107,987	£2.740
LTIP	161,313	£0.000
USCOP i1	435,000	£1.110
USCOP i2	26,200	£1.355
USCOP i3	100,000	£1.655

8.  Related party transactions

The directors are related parties within the definition of IAS24 (Related Party Disclosures) for key management personnel. During the period, other than the remuneration of each individual director, there have been no other transactions with key management personnel.

9.  Exceptional items

Items that are both material and non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the financial statements are referred to as exceptional items and disclosed within their relevant consolidated Income Statement category. Events and transactions that may give rise to classification as exceptional include, but are not limited to, significant and material announced restructuring and reorganisation programmes, gains or losses arising from the disposal of businesses not classified as discontinued operations, asset impairment charges, changes in the fair value of derivative financial instruments, amortisation of intangible assets on acquisition, and material adjustments to the fair value of acquired assets and / or liabilities on a business combination that arise after the hindsight recognition period.

For the 6 months to 30 June 2009 exceptional items comprise:

	£'000
Accelerated charge in respect of share options	245
Contractual severance payments	287
Legal fees, recruitment and associated costs of reorganisation	47
Total exceptional administrative expenses	579
Tax effect	(94)
Post tax exceptional item	485

Specific payments totalling £287,000 were made in accordance with the Group's contractual obligations to the former Group Finance Director who resigned during the period, together with legal and recruitment fees associated with these changes of £47,000. Accelerated expenditure of £245,000, as required by IFRS2, was also recognised in respect of the former Finance Director's associated share schemes which were revised as part of the terms of the resignation.

For the year to 31 December 2008 exceptional items comprised:

	£'000
Administrative expenses
Legal fees and associated costs relating to potential acquisition of subsidiary	633
Impairment to goodwill	95
Contractual severance payments	276
Legal fees, recruitment and associated costs of reorganisation	245
Accelerated charge in respect of share options	161
Impairment to investment and associated fixed assets	277
Aborted IDE trial	263
Total exceptional administrative expenses	1,950
Cost of Sales
Inventory impairments	5,180
Total exceptional item	7,130
Tax effect	(1,702)
Post tax exceptional item	5,428

As a result of the reduction in the Group's anticipated trading performance, the Board withdrew from a potential acquisition in Europe, having already incurred substantial costs of £633,000.

The aborted acquisition in Europe had a major impact on the prospects of one of the Group's European subsidiaries resulting in an impairment of goodwill of £95,000.

The implementation of the Group's revised strategy resulted in the senior management team being streamlined. Specific payments totalling £276,000 were made in accordance with the Group's contractual obligations to employees that have been made redundant, together with legal and recruitment fees associated with these changes. Accelerated expenditure of £161,000, as required by IFRS2, was also recognised in respect of the staff member's associated share schemes which were revised as part of the terms of the redundancies.

An impairment charge of 50%, being £125,000, of the carrying value of the Group's investment in an equity instrument was taken. An impairment of non-current tangible assets supplied by the company in which the investment is held of £152,000 was also taken.

Costs totalling £263,000 were recognised in the Income Statement that had previously been capitalised with regard to an IDE trial on a knee product which has now been aborted. The trial has been stopped due to the new knee development that will supersede the product being trialled in line with the product portfolio strategy.

The disappointing progress of the Cormet resurfacing hip in the US, particularly in the second half of 2008, caused the Company to review its inventory holding of Cormet implants and instrumentation. As a result of this review the Company has taken an exceptional provision against these inventories of £2.0m. A provision against inventories that were not cost effective to register as Class 3 devices in Europe by September 2009 as required by the more stringent European regulations of £0.6m has been taken.  A further provision against inventories that are to be phased out as a result of the new portfolio strategy of £2.6m has also been taken. The above three circumstances have resulted in a total exceptional provision of £5.2m against inventory.

For the 6 months to 30 June 2008 exceptional items comprised:

	£'000
Legal fees and associated costs relating to potential acquisition of subsidiary	633
Impairment to goodwill	95
Provision for obsolete stock	600
Contractual severance payments and associated legal costs	429
Accelerated charge in respect of on share options	161

Total exceptional administrative expenses	1,918
Tax effect	(339)
Post tax exceptional item	1,579

10  Borrowings

In February 2009, Corin Limited entered into a new £6,000,000 term loan facility agreement with Lloyds Banking Group and repaid the £4,000,000 existing loan. This loan is repayable in 12 quarterly instalments of £300,000 which commenced in May 2009, with a final repayment of £2,400,000 in May 2012.  

At 30 June 2009 Corin International Limited had an Australian Dollar loan of $100,000 (2008: $2,461,500) with Lloyds Banking Group. The loan was repaid in full on 2 July 2009. 

11  Net debt

	6 Months to  30 June  2009	6 Months to  30 June 2008	12 Months to 31 December 2008
	£'000	£'000	£'000
Cash and cash equivalents	(1,612)	(5,500)	(1,293)
Long-term borrowings	5,484	6,931	1,269
Short-term borrowings	2,023	673	5,481
Net debt	5,895	2,104	5,457

12  Sales at constant currency

A reconciliation of reported sales to constant currency sales is set out below.

Constant currency sales are calculated by translating 2009 results at the average exchange rates used for the six month period ended 30 June 2008.

	6 Months to 30 June  2009	6 Months to  30 June  2008	Growth
	£'000	£'000
Reported sales	20,139	22,896	(12%)
Currency movement	(2,853)	-
Sales at 2008 rates	17,286	22,896	(25%)

	6 Months to 30 June  2009	6 Months to  30 June  2008	Growth
	£'000	£'000
Reported non-US sales	19,319	15,135	28%
Currency movement	(2,648)	-
Non-US sales at 2008 rates	16,671	15,135	10%

13  Principal risks and uncertainties

In common with all trading businesses, the Group is exposed to a variety of risks in the conduct of its normal business operations. Set out on page 14 of the Group's Annual Report for the year ended 31 December 2008 is a summary of some of the most important risks and uncertainties which, in the opinion of the Directors, could impact its performance. These are equally applicable to the current financial year and are unchanged from those disclosed in the Group's Annual Report. 

Responsibility Statement

We confirm that, to the best of our knowledge:

(a)  the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b)  the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and descriptions of principal risks and uncertainties for the remaining six months of the year); and

(c)  the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board:

P W Huntley	M R D Roller
Chief Executive	Finance Director
Date 25 August 2009	Date 25 August 2009

ENDIR CKQKNABKDNFB