24th Jun 2008 07:00
Consort Medical plc
Fit for the future
Consort Medical (LSE: CSRT), a leader in medical devices for inhaled drug delivery and anaesthesia, today announces its preliminary results for the 53 weeks to 3 May 2008.
Highlights
Profit before tax and special items up 1% at £17.6 million (2007: £17.4 million)
Profit before tax from continuing operations of £7.3 million (2007: £15.6 million) reflecting special items, including restructuring charges following the termination of the Exubera® device manufacturing contract
Adjusted earnings per share up 1% to 44.8p (2007: 44.3p)
Basic earnings per share 9.3p (2007: 34.8p) reflecting special items and discontinued operations
Strong cash generation from operations of £25.3 million (2007: £32.7 million)
Net debt as at 3 May 2008 £13.7 million (2007: £18.2 million)
Final dividend of 12.1p per share (2007: 12.1p)
Appointment of Toby Woolrych as Group Finance Director
Jon Glenn, Consort Medical's Chief Executive, commented:
"The past year has been one of significant change for the Group and one where swift and decisive management actions have resulted in a strong financial performance in spite of losing a major manufacturing contract. This achievement demonstrates the underlying quality and financial resilience of our business.
"We are now on a sound footing with long-term contracts, a blue-chip customer base and good growth prospects from the increased sales of HFA valves, the introduction of dose counters on aerosol drug dispensers and our anaesthesia franchise. In addition we continue to look at acquisition opportunities within the healthcare sector."
For further information, please contact:
|
Consort Medical plc Jon Glenn, Chief Executive Paul Boughton, Acting Group Finance Director |
Tel: +44 (0) 1908 552600 |
|
Maitland Liz Morley or Brian Hudspith |
Tel: +44 (0) 20 7379 5151 |
Consort Medical plc is a leader in medical devices for inhaled drug delivery and anaesthesia. The Group develops drug delivery systems for the pharmaceutical industry and disposable airway management products for critical care settings in hospitals.
Consort Medical develops and manufactures metered dose inhaler valves, actuators, compliance aids, dry powder devices, disposable facemasks, breathing circuits and laryngeal tubes. The Group has facilities in King's Lynn and Milton Keynes in the UK, Indianapolis, Indiana and Kent, Ohio in the US, and Mumbai, India. Consort Medical is a public company quoted on the full list of the London Stock Exchange (LSE: CSRT).
Overview
The past year has been one of significant change for the Group and also one where swift and decisive management actions have resulted in a strong financial performance in spite of losing a major manufacturing contract.
In December the Board was pleased to appoint Jon Glenn as our Chief Executive following the resignation of Mark Throdahl. Jon did a very good job as Finance Director and has stepped seamlessly into his new role. We are pleased to announce today the appointment of Toby Woolrych as Finance Director. He will take up his position in the autumn. Toby qualified with Arthur Andersen and most recently has been Chief Operating Officer at ACTA SpA, an AIM listed Italian catalyst business where he was responsible for strategy, investor relations, and strategic finance. Paul Boughton will step back to his role of Corporate Development Director and the Board would like to thank him for his ceaseless commitment to the business during this financial year.
In October we announced a restructuring of the business and the closure of the Milton Keynes plant following Pfizer's withdrawal from the promotion and marketing of Exubera®. A termination payment from our customer Nektar Therapeutics of £11 million was received in February and this has covered our margin for the remainder of the financial year for Exubera® devices together with a significant proportion of the costs of the UK restructuring. The last programme is scheduled to exit Milton Keynes at the end of this month. In the UK the Bespak division will then operate from our facility at King's Lynn.
Despite this restructuring and a very preliminary takeover approach which came to nothing, the Group is in a strong position to take advantage of the growth in both its Bespak and King Systems divisions. This year we have achieved record sales of HFA valves for the US albuterol market and benefited from strong sales of Diskus™ for Advair which is used to treat asthma and Chronic Obstructive Pulmonary Disease (COPD). These results, together with the Food & Drug Administration's (FDA's) recent guidance requiring all new aerosol drug dispensers to have dose counters, positions the Group well for the future.
Preliminary Results
Notwithstanding reduced sales of products and services, Consort Medical can report small increases in adjusted profits and earnings per share. This achievement demonstrates the underlying quality and financial resilience of our business.
In the 53 weeks to 3 May 2008, group revenues of £126.5 million were unchanged in total from 2007. Sales of products and services (excluding tooling and equipment that are customer funded) declined by 3% to £120.4 million (2007: £123.7 million), mostly reflecting the lower sales of the Exubera® device and Pfizer's decision to exit marketing Exubera® in October. Sales of other devices within the Bespak division increased in the year, driven by increased volumes of HFA valves. The King Systems anaesthesia division increased revenues by 3% to £31.9 million (2007:£31.0 million), with the increase at constant exchange rates being 8%.
The operating profit before special items in the Bespak inhaled drug delivery division fell by 2% to £14.2 million (2007: £14.6 million) principally due to the reduced Exubera® device sales. Operating profit before special items in the King Systems anaesthesia division declined by 4% to £4.8 million (2007: £4.9 million). On a constant exchange rate basis, operating profit at King increased by 1% after continuing investments in new sales and marketing and research and development initiatives.
Net operating margin before special items was maintained at 15.8%.
Profit before tax and special items increased by 1% to £17.6 million (2007: £17.4 million). Whilst operating profit before special items declined by 3% to £19.0 million (2007: £19.5 million), this was offset by lower net finance costs which fell from £1.8 million in 2007 to £1.0 million this year.
Profit before tax from continuing operations declined by 53% to £7.3 million (2007: £15.6 million) due to a number of special items (The special items include impairment charges for the Milton Keynes property and equipment, employee severance costs, other plant closure costs and amortisation of acquisition related intangible assets, and amount to £9.4 million (2007: £1.8 million)) following the termination of the Exubera® device manufacturing contract.
The Group tax rate on profit before special items was 27.9% (2007: 28.2%). The tax rate on special items was 31.1% (2007: 39.6%). This reflects the higher rate of tax on the amortisation charge in the US business, and the change in the basis of calculating deferred tax on the property at Milton Keynes due to the plant closure.
Earnings per share increased 1% to 44.8p (2007: 44.3p), as adjusted for special items and the results of discontinued operations. Basic earnings per share were 9.3p (2007: 34.8p).
The Board is recommending a maintained final dividend of 12.1p per share such that the total dividend for the year amounts to 19.1p (2007: 19.1p). The final dividend will be paid on 24 October 2008 to those shareholders on the register on 26 September 2008. The maintained dividend reflects both the strength of the Group's balance sheet and its confidence in its future prospects. Dividend cover, based on earnings before special items, was 2.4 times (2007: 2.3 times).
The Group's businesses are strongly cash generative. Cash generated from continuing operations was £25.3 million (2007: £32.7 million). Net debt at 3 May 2008 was £13.7 million (2007: £18.2 million).
The Business
Consort Medical operates through two business divisions:
Bespak division which is a leading supplier of asthma inhaler valves and other respiratory drug delivery devices and has a potentially significant emerging business in dose counters; and
King Systems division which is a US market leader in breathing circuits, face masks, and other disposable airway management products that are sold to anaesthetists in hospitals and to emergency medical practitioners.
Business Performance
Bespak Division
Bespak is a leader in the manufacture of metered dose inhaler valves, produced primarily for pharmaceutical customers to deliver drugs for the prevention and treatment of asthma and Chronic Obstructive Pulmonary Disease (COPD). The division also provides a range of development, industrialization and manufacturing services which enable customers to market their own patented designs of dry powder inhalers or other specialty devices.
Mechanical dose counter programme
The FDA guidance requiring dose counters (which indicate the number of doses left in an inhaler) on all metered dose inhaler drugs in the US is an opportunity for further growth. We have invested in a dedicated clinical trial supply unit at our Kings Lynn facility and are working together with a number of pharmaceutical companies evaluating our proprietary dose counter. We estimate that a dose counter will generate approximately twice the revenue of a metered dose inhaler valve, which equates to a £20 million - £30 million revenue opportunity for us in the next three to five years.
Valve volumes
Overall valve volume sales grew 1% in the period. Sales of HFA valve volumes in the period increased 27%. This was offset by the decline (53%) in the supply of CFC valve systems. Bespak has now concluded manufacture of CFC valves and will conclude shipments of CFC valve products in the first half of 2008-09.
Our customers continue to hold a majority share of the US HFA Albuterol market; we expect the transition of the remaining CFC Albuterol products to be complete by the fourth calendar quarter of 2008. Bespak has signed an exclusive supply agreement with our largest HFA valve customer which secures our position in this market for the medium term.
Elastomer component manufacturing
A significant part of the technical superiority of Bespak's inhaler valves is our elastomer technology. The supply of these components is split between our in house facility and our long term relationship with West Pharmaceutical Services (WPS). During the period we signed a long term supply agreement with WPS which will support the expansion of their capacity and secure our dual sourced capability for the long term.
King Systems Division
King Systems is a leading supplier of anaesthesia equipment primarily to the US market. The product range is made up of proprietary airway management devices, including face masks, breathing circuits, laryngeal tubes and a disposable optical laryngoscope (AIRTRAQ®).
This year we have increased our focus on research and development, and on sales and marketing at King Systems and this has led to an increased cost base. We are currently streamlining our manufacturing operations to offset the impact on margins in future years.
Sales of proprietary airway products continued to grow throughout the year, with the KING LT™ product range of laryngeal tubes and the AIRTRAQ® range of disposable optical laryngoscopes penetrating further into the pre-hospital market. The KING LTS-D™ EMS kit, featuring the KING LTS-D™ laryngeal airway, continues to gain acceptance and is becoming the standard of care for pre-hospital airway management. Led by the Flex2 the proprietary single limb circuit continues to show strong growth taking share from the traditional two-limb circuit. The King Systems Flex2 circuit provides the benefit of having one circuit available for patients of neonatal size and greater, helping reduce inventory and simplifying the supply chain. The flexible design and lightweight features allow easy manoeuvrability and maximum convenience for the clinician.
King also made further advances during the year in the paediatric segment of the market, with continued growth of its Operation: Kid Stuff® product line. Highlighted with child-friendly scented facemasks in bubblegum, strawberry, and cherry scents, the line also includes brightly coloured breathing bags, breathing circuits specially designed for the paediatric patient and paediatric sizes of the KING LT-D™ laryngeal tube.
King Systems has historically generated over 90% of its sales in the US and has had little focus on Europe and the Rest of the World. The market outside the US is at least as large as the US and presents a significant opportunity for growth for the King business. We have a general manager in place to focus specifically on these geographies and we aim to grow in this area both organically and by acquisition.
With a renewed focus on innovation and bringing new products to the market King is currently undertaking a significant research and development programme to deliver novel and proprietary airway management products, and is also in late stage discussions with two companies in reference to licensing worldwide rights to two further airway management devices.
Emergent Respiratory Products (ERP) PortO2Vent Continuous Positive Airway Pressure (CPAP) system continues to gain market share in the pre-hospital market.
CPAP continues to gain acceptance as the treatment of choice for treating Congestive Heart Failure (CHF) patients in the pre hospital setting. Work also continues to expand utilization of CPAP for other patient conditions such as Chronic Obstructive Pulmonary Disease (COPD). However, this has been slower than we had first anticipated and we have therefore written down our investment in ERP to a level consistent with our current expectations of the financial development of the business.
Strategy
As well as the restructuring we have carried out a complete review, with the help of external consultants, of all our manufacturing operations across the Group. The results of this review are still being examined but it is clear that we can achieve some significant savings by moving some of our manufacturing to lower cost environments.
We are also investing for the future and are instigating further research and development activities within both divisions. This modest cost increase will be funded by savings from our continuous improvement programmes.
Consort Medical is in a strong position to take advantage of the growth opportunities in both its Bespak and King Systems divisions. In addition to organic growth we also have plans to grow by selective acquisition. Our expertise in terms of management and operations is in the healthcare sector and we see a number of opportunities for growth, some of which are outside the confines of respiratory and anaesthesia but still fall within our strong capabilities in healthcare.
Outlook
As expected, progress in 2007/08 has been broadly flat despite the loss of the Exubera contract. Both the Bespak and King Systems divisions are performing to plan and we continue to evaluate acquisition opportunities. Looking forward into next year we expect to see modest growth as the HFA valves completely replace the CFC valves at the end of 2008, and our metered dose inhaler programs start to enter clinical trials.
With our strengthened management team, the potential for the development of new products, our marketing and distribution network and our opportunity to expand geographically we are confident of the Group's future.
|
Consolidated Income Statement |
||||||||||||||
|
For the 53 weeks ended 3 May 2008 |
|
|
|
|
|
|
|
|
||||||
|
|
|
|
2008 |
2008 |
2008 |
2007 |
2007 |
2007 |
||||||
|
|
|
|
Before special items |
Special items (note 3) |
Total |
Before special items |
Special items (note 3) |
Total |
||||||
|
|
|
Notes |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||||
|
Continuing operations |
|
|
|
|
|
|
|
|
||||||
|
Sales of products and services |
|
|
120,431 |
- |
120,431 |
123,687 |
- |
123,687 |
||||||
|
Sales of tooling and equipment |
|
|
6,034 |
- |
6,034 |
2,793 |
- |
2,793 |
||||||
|
Revenue |
|
2 |
126,465 |
- |
126,465 |
126,480 |
- |
126,480 |
||||||
|
Operating expenses |
|
|
(107,477) |
(9,366) |
(116,843) |
(106,955) |
(1,752) |
(108,707) |
||||||
|
Operating profit |
|
2 |
18,988 |
(9,366) |
9,622 |
19,525 |
(1,752) |
17,773 |
||||||
|
Finance income |
|
|
874 |
- |
874 |
601 |
- |
601 |
||||||
|
Finance expenses |
|
|
(1,872) |
- |
(1,872) |
(2,017) |
- |
(2,017) |
||||||
|
Other finance income/(expense) |
|
4 |
2 |
- |
2 |
(433) |
- |
(433) |
||||||
|
Share of post tax losses of associate |
|
|
(356) |
- |
(356) |
(27) |
- |
(27) |
||||||
|
Impairment of investment in associate |
|
|
- |
(953) |
(953) |
(242) |
- |
(242) |
||||||
|
Profit before tax |
|
|
17,636 |
(10,319) |
7,317 |
17,407 |
(1,752) |
15,655 |
||||||
|
Taxation |
|
5 |
(4,916) |
3,210 |
(1,706) |
(4,907) |
694 |
(4,213) |
||||||
|
Profit for the financial period from continuing operations |
12,720 |
(7,109) |
5,611 |
12,500 |
(1,058) |
11,442 |
||||||||
|
Loss for the period from discontinued operations |
|
|
- |
(2,982) |
(2,982) |
(150) |
(1,485) |
(1,635) |
||||||
|
Profit for the financial period |
|
|
12,720 |
(10,091) |
2,629 |
12,350 |
(2,543) |
9,807 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Basic earnings per ordinary share |
|
|
|
|
|
|||||||||
|
Continuing operations |
|
6 |
|
|
19.8p |
|
|
40.6p |
||||||
|
Discontinued operations |
|
6 |
|
|
(10.5p) |
|
|
(5.8p) |
||||||
|
Total |
|
6 |
|
|
9.3p |
|
|
34.8p |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Diluted earnings per ordinary share |
|
|
|
|
|
|||||||||
|
Continuing operations |
|
6 |
|
|
19.5p |
|
|
39.9p |
||||||
|
Discontinued operations |
|
6 |
|
|
(10.4p) |
|
|
(5.7p) |
||||||
|
Total |
|
6 |
|
|
9.1p |
|
|
34.2p |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Dividends |
|
|
|
|
£000 |
|
|
£000 |
||||||
|
Final dividend paid of 12.1p per share (2007: 12.1p) |
|
|
|
3,453 |
|
|
3,391 |
|||||||
|
Interim dividend paid of 7.0p per share (2007: 7.0p) |
|
|
|
1,998 |
|
|
1,989 |
|||||||
|
|
|
|
|
|
5,451 |
|
|
5,380 |
||||||
|
Non-GAAP measure: |
|
|
|
|
|
|
|
|
||||||
|
Continuing operations |
|
|
|
|
£000 |
|
|
£000 |
||||||
|
Adjusted profit before tax |
|
|
|
|
17,636 |
|
|
17,407 |
||||||
|
Adjusted profit after tax |
|
|
|
|
12,720 |
|
|
12,500 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Adjusted earnings per share |
|
|
|
|
44.8p |
|
|
44.3p |
||||||
|
Adjusted diluted earnings per share |
|
|
|
|
44.3p |
|
|
43.6p |
||||||
|
|
|
|
|
|
|
|
||||||||
|
Consolidated Balance Sheet |
|
|
|
|
|
|
||||||||
|
at 3 May 2008 |
|
|
|
|
|
|
||||||||
|
|
|
|
|
2008 |
|
2007 |
||||||||
|
|
Notes |
|
|
£000 |
|
£000 |
||||||||
|
Assets |
|
|
|
|
|
|
||||||||
|
Non-current assets |
|
|
|
|
|
|
||||||||
|
Property, plant and equipment |
|
|
|
47,947 |
|
51,608 |
||||||||
|
Goodwill |
|
|
|
36,229 |
|
35,792 |
||||||||
|
Other intangible assets |
|
|
|
10,454 |
|
11,976 |
||||||||
|
Investment in associates |
|
|
|
243 |
|
1,555 |
||||||||
|
Deferred taxation |
|
|
|
483 |
|
552 |
||||||||
|
|
|
|
|
95,356 |
|
101,483 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Assets classified as held for sale |
|
|
|
2,647 |
|
- |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Current assets |
|
|
|
|
|
|
||||||||
|
Inventories |
|
|
|
8,694 |
|
10,453 |
||||||||
|
Trade and other receivables |
7 |
|
|
18,348 |
|
19,526 |
||||||||
|
Cash and cash equivalents |
|
|
|
18,287 |
|
17,274 |
||||||||
|
|
|
|
|
45,329 |
|
47,253 |
||||||||
|
Liabilities |
|
|
|
|
|
|
||||||||
|
Current liabilities |
|
|
|
|
|
|
||||||||
|
Borrowings |
9 |
|
|
(25,825) |
|
(25,829) |
||||||||
|
Trade and other payables |
8 |
|
|
(17,851) |
|
(23,007) |
||||||||
|
Current taxation payable |
|
|
|
(1,978) |
|
(2,085) |
||||||||
|
Provisions and other liabilities |
|
|
|
(5,737) |
|
(886) |
||||||||
|
|
|
|
|
(51,391) |
|
(51,807) |
||||||||
|
Liabilities of subsidiary held exclusively for resale |
|
|
|
(2,147) |
|
- |
||||||||
|
|
|
|
|
(53,538) |
|
(51,807) |
||||||||
|
Net current liabilities |
|
|
|
(8,209) |
|
(4,554) |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Non-current liabilities |
|
|
|
|
|
|
||||||||
|
Borrowings |
9 |
|
|
(6,203) |
|
(9,625) |
||||||||
|
Deferred taxation |
|
|
|
(4,328) |
|
(5,048) |
||||||||
|
Defined benefit pension scheme deficit |
10 |
|
|
(7,759) |
|
(10,769) |
||||||||
|
|
|
|
|
(18,290) |
|
(25,442) |
||||||||
|
Net assets |
|
|
|
71,504 |
|
71,487 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Shareholders' equity |
|
|
|
|
|
|
||||||||
|
Share capital |
|
|
|
2,872 |
|
2,845 |
||||||||
|
Share premium |
|
|
|
31,360 |
|
30,205 |
||||||||
|
Retained earnings |
|
|
|
38,571 |
|
39,841 |
||||||||
|
Other reserves |
|
|
|
(1,299) |
|
(1,404) |
||||||||
|
Total equity |
11 |
|
|
71,504 |
|
71,487 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
The preliminary financial statements were approved by the Board on 23 June 2008. |
||||||||||||||
|
Consolidated Cash Flow Statement |
|
|
|
|||||||
|
For the 53 weeks ended 3 May 2008 |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
|
|
|
|
|
Notes |
|
|
£000 |
£000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
||||
|
Operating profit from continuing operations |
|
|
|
|
9,622 |
17,773 |
||||
|
Depreciation |
|
|
|
|
|
|
6,038 |
6,381 |
||
|
Amortisation |
|
|
|
|
|
|
1,776 |
1,883 |
||
|
Impairment charge |
|
|
|
|
|
6,683 |
- |
|||
|
Allocation of customer settlement against impairment |
|
|
|
|
(2,687) |
- |
||||
|
Loss on disposal of property, plant and equipment |
|
|
|
|
240 |
33 |
||||
|
Share based payments |
|
|
|
|
858 |
495 |
||||
|
Decrease/(increase) in inventories |
|
|
|
|
|
1,784 |
(1,317) |
|||
|
Decrease/increase) in trade and other receivables |
|
|
|
|
1,723 |
(1,246) |
||||
|
(Decrease)/increase in trade and other payables |
|
|
|
|
(6,066) |
7,821 |
||||
|
Increase in provisions |
|
|
|
|
5,067 |
1,047 |
||||
|
Increase/(decrease) in financial instruments |
|
|
|
|
226 |
(138) |
||||
|
Cash generated from continuing operations |
|
|
|
|
25,264 |
32,732 |
||||
|
Cash flows from discontinued operations |
|
|
|
|
- |
45 |
||||
|
Interest paid |
|
|
|
|
|
|
(1,742) |
(2,166) |
||
|
Tax paid |
|
|
|
|
|
|
|
(3,131) |
(4,375) |
|
|
Net cash inflow from operating activities |
|
|
|
|
20,391 |
26,236 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
||||
|
Purchases of property, plant and equipment |
|
|
|
|
(8,624) |
(7,347) |
||||
|
Purchases of intangible assets |
|
|
|
|
(136) |
(203) |
||||
|
Proceeds from sale of property, plant and equipment |
|
|
|
|
36 |
20 |
||||
|
Allocation of customer settlement |
|
|
|
|
|
|
2,687 |
- |
||
|
Interest received |
|
|
|
|
|
|
883 |
583 |
||
|
Acquisition of subsidiary |
|
|
|
|
- |
(5,883) |
||||
|
Acquisition of subsidiary held exclusively for resale |
|
|
|
|
(91) |
- |
||||
|
Tax received |
|
|
|
|
2 |
- |
||||
|
Loans to subsidiary held exclusively for resale |
|
|
|
|
(3,551) |
- |
||||
|
Investment in associate |
|
|
|
|
- |
(1,563) |
||||
|
Net cash used in investing activities from continuing operations |
|
|
|
(8,794) |
(14,393) |
|||||
|
Net cash from investing activities - discontinued operations |
|
|
|
- |
356 |
|||||
|
Net cash used in investing activities |
|
|
|
|
(8,794) |
(14,037) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
||||
|
Net proceeds from issues of ordinary share capital |
|
|
|
|
428 |
1,411 |
||||
|
Equity dividends paid to shareholders |
|
|
|
|
(5,451) |
(5,380) |
||||
|
Repayment of amounts borrowed |
|
|
|
|
(3,489) |
(3,671) |
||||
|
Payments to fund defined benefit pension scheme deficit |
|
10 |
|
|
(1,740) |
(1,775) |
||||
|
Net cash used in financing activities |
|
|
|
|
(10,252) |
(9,415) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and short-term borrowings |
9 |
|
|
1,345 |
2,784 |
|||||
|
Effects of exchange rate changes |
|
|
|
|
(291) |
1,634 |
||||
|
Cash and short-term borrowings at start of period |
|
|
|
|
(5,048) |
(9,466) |
||||
|
Cash and short-term borrowings at end of period |
|
9 |
|
|
(3,994) |
(5,048) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and short-term borrowings consist of: |
|
|
|
|
|
|
||||
|
Cash and cash equivalents |
|
|
|
|
18,287 |
17,274 |
||||
|
Bank overdrafts and short-term loans |
|
|
|
|
(22,281) |
(22,322) |
||||
|
Cash and short-term borrowings at end of period |
|
9 |
|
|
(3,994) |
(5,048) |
||||
|
Consolidated Statement of Recognised Income and Expense |
||||||||||
|
For the 53 weeks ended 3 May 2008 |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
|
|
|
|
|
Notes |
|
|
£000 |
£000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value movements on cash flow hedges |
|
|
|
(131) |
(121) |
|||||
|
Deferred tax on fair value movements on cash flow hedges |
|
|
|
39 |
- |
|||||
|
Current tax on fair value movements on cash flow hedges |
|
|
|
- |
36 |
|||||
|
Exchange movements on translation of foreign subsidiaries |
|
|
|
208 |
(1,305) |
|||||
|
Current tax on exchange movements |
|
|
|
|
(11) |
254 |
||||
|
Deferred tax on share based payments |
|
|
|
(349) |
44 |
|||||
|
Current tax on share based payments |
|
|
|
|
126 |
256 |
||||
|
Actuarial gains/(losses) on defined benefit pension scheme |
10 |
|
|
1,483 |
(106) |
|||||
|
Deferred tax on actuarial (gains)/losses |
|
|
|
|
(566) |
32 |
||||
|
Net income/(expense) recognised directly in equity |
|
|
|
|
799 |
(910) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the financial period |
|
|
|
|
2,629 |
9,807 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised income for the period |
|
|
|
3,428 |
8,897 |
|||||
Notes to the accounts
1. Basis of preparation
The financial information in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The information has been extracted from the consolidated financial statements for the 53 weeks ended 3 May 2008 approved by the Directors on 23 June 2008 which have received an unqualified auditors' report. The financial statements will be delivered to the Registrar of Companies after the Annual General Meeting. The consolidated financial statements for the 52 weeks ended 28 April 2007 have been delivered to the Registrar of Companies and were given an unqualified audit opinion by the Company's auditors.
The financial information in this statement has been prepared in accordance with International Financial Reporting Standards ('IFRS') as endorsed by the European Union, International Financial Reporting Interpretation Committee ('IFRIC') interpretations and those parts of the Companies Act 1985 applicable to companies reporting under IFRS. There have been no new standards during the year which have significantly impacted the results of the Group.
|
2. Segmental information |
|
|
|
|
|
|
|
(a) Revenue from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by business |
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
Bespak - Inhaled drug delivery |
|
|
88,745 |
|
|
92,901 |
|
King - Anaesthesia |
|
|
31,913 |
|
|
31,047 |
|
Total revenues |
|
|
120,658 |
|
|
123,948 |
|
Intra-segment sales |
|
|
(227) |
|
|
(261) |
|
Revenue from products and services |
|
|
120,431 |
|
|
123,687 |
|
Bespak - sales of tooling and equipment |
|
6,034 |
|
|
2,793 |
|
|
Total revenue |
|
|
126,465 |
|
|
126,480 |
|
|
|
|
|
|
|
|
|
Revenue by origin |
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
United Kingdom |
|
|
94,779 |
|
|
95,694 |
|
United States of America |
|
|
31,913 |
|
|
31,047 |
|
Total revenues |
|
|
126,692 |
|
|
126,741 |
|
Intra-segment sales |
|
|
(227) |
|
|
(261) |
|
Revenue |
|
|
126,465 |
|
|
126,480 |
|
|
|
|
|
|
|
|
|
Revenue by destination |
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
United Kingdom |
|
|
29,555 |
|
|
23,614 |
|
United States of America |
|
|
59,630 |
|
|
72,592 |
|
Europe |
|
|
29,421 |
|
|
21,493 |
|
Rest of the World |
|
|
7,859 |
|
|
8,781 |
|
Revenue |
|
|
126,465 |
|
|
126,480 |
|
|
|
|
|
|
|
|
|
Notes to the accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Segmental information (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Operating profit from continuing operations |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
|
|
£000 |
|
£000 |
|
Bespak - Inhaled drug delivery |
|
|
14,225 |
|
14,572 |
|
Special items |
|
|
(7,191) |
|
- |
|
Bespak - Inhaled drug delivery after special items |
|
|
7,034 |
|
14,572 |
|
|
|
|
|
|
|
|
King - Anaesthesia |
|
|
4,763 |
|
4,953 |
|
Special items |
|
|
(2,175) |
|
(1,752) |
|
King - Anaesthesia after special items |
|
|
2,588 |
|
3,201 |
|
|
|
|
|
|
|
|
Operating profit before special items |
|
|
18,988 |
|
19,525 |
|
Special items |
|
|
(9,366) |
|
(1,752) |
|
Operating profit after special items |
|
|
9,622 |
|
17,773 |
|
|
|
|
|
|
|
|
(c) Net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets by business segment |
|
|
2008 |
|
2007 |
|
|
|
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
Bespak - Inhaled drug delivery |
|
|
42,975 |
|
49,600 |
|
King - Anaesthesia |
|
|
55,109 |
|
55,862 |
|
Unallocated net liabilities |
|
|
(26,580) |
|
(33,975) |
|
Net assets |
|
|
71,504 |
|
71,487 |
|
|
|
|
|
|
|
|
Exchange rates |
|
|
2008 |
|
2007 |
|
|
|
|
|
|
|
|
Average rate of exchange - USD |
|
|
2.01 |
|
1.91 |
|
Closing rate of exchange - USD |
|
|
1.98 |
|
2.00 |
|
|
|
|
|
|
|
|
Notes to the accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Special items |
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
Impairment charge on fixed assets at Milton Keynes |
|
|
(6,683) |
|
|
- |
|
Employee severance costs |
|
|
(3,644) |
|
|
- |
|
Other plant closure costs |
|
|
(1,807) |
|
|
- |
|
Allocation of customer settlement |
|
|
4,433 |
|
|
- |
|
Exceptional operating expenses |
|
|
(7,701) |
|
|
- |
|
Amortisation of acquisition related intangible assets |
|
(1,665) |
|
|
(1,752) |
|
|
Special items charged to operating expenses |
|
|
(9,366) |
|
|
(1,752) |
|
Impairment of investment in associate |
|
|
(953) |
|
|
- |
|
Special items before taxation |
|
|
(10,319) |
|
|
(1,752) |
|
Taxation |
|
|
3,210 |
|
|
694 |
|
Special items after tax |
|
|
(7,109) |
|
|
(1,058) |
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
Impairment charge |
|
|
(3,142) |
|
|
(873) |
|
Plant closure costs |
|
|
- |
|
|
(1,249) |
|
Discontinued operations before tax |
|
|
(3,142) |
|
|
(2,122) |
|
Taxation |
|
|
160 |
|
|
637 |
|
Discontinued operations after tax |
|
|
(2,982) |
|
|
(1,485) |
|
|
|
|
|
|
|
|
|
Total special items after tax |
|
|
(10,091) |
|
|
(2,543) |
The impairment charge within operating expenses arises on the property and equipment at Milton Keynes where manufacturing will cease in June 2008, at which point the site and surplus items of plant and equipment will be made available for sale.
Employee severance costs are in respect of the closure of the facility at Milton Keynes, the related restructuring of the Bespak Inhaled Drug Delivery division at King's Lynn, the change of Chief Executive and a restructuring at the King Systems division in the USA.
Other plant closure costs include settlement of contractual obligations with suppliers and customers, the costs associated with moving products to Bespak's King's Lynn facility or alternative suppliers, and decommissioning costs of remaining equipment.
Out of the £11 million received from a customer for the termination of a manufacturing agreement, £4.43 million has been allocated against the gross impairment charge, severance and other plant closure costs.
The impairment of investment in associate in 2008 reduces the value of the investment in Emergent Respiratory Products Inc. to a level consistent with current expectations of the future financial development of the business.
The impairment charge in discontinued operations of £3.142 million in 2008 represents the estimated loss that will arise on the disposal of the investment in Integrated Aluminium Components Limited, a subsidiary company acquired in July 2007 and treated as a business held for re-sale.
The special items included under the heading of discontinued operations in the 52 weeks ended 28 April 2007 represent exceptional costs associated with the closure of the Group's consumer dispenser business in that year.
|
Notes to the accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Other finance income/(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
Expected return on defined benefit plan assets |
2,993 |
|
|
2,485 |
||
|
Interest on defined benefit plan liabilities |
|
(2,991) |
|
|
(2,657) |
|
|
Net interest income/(expense) on defined benefit scheme |
|
2 |
|
|
(172) |
|
|
Unwinding of discount on deferred consideration |
- |
|
|
(261) |
||
|
Other finance income/(expense) |
|
|
2 |
|
|
(433) |
|
|
|
|
|
|
|
|
|
5. Taxation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
UK corporation tax |
|
|
2,638 |
|
|
4,023 |
|
Overseas taxation |
|
|
651 |
|
|
321 |
|
Deferred taxation |
|
|
(1,583) |
|
|
(131) |
|
|
|
|
1,706 |
|
|
4,213 |
|
|
|
|
|
|
|
|
|
Notes to the accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
|
|
£000 |
|
|
£000 |
|
The calculation of earnings per ordinary share is based on the following: |
|
|
|
|||
|
|
|
|
|
|
|
|
|
Profit for the financial period |
|
|
2,629 |
|
|
9,807 |
|
|
|
|
|
|
|
|
|
Profit for the period from continuing operations |
5,611 |
|
|
11,442 |
||
|
Add back: Special items after tax |
|
|
7,109 |
|
|
1,058 |
|
Adjusted profit for the financial period |
|
|
12,720 |
|
|
12,500 |
|
|
|
|
|
|
|
|
|
Loss for the period from discontinued operations |
(2,982) |
|
|
(1,635) |
||
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Number |
||
|
Weighted average number of ordinary shares in issue |
28,373,853 |
|
|
28,188,943 |
||
|
Dilutive impact of share options outstanding |
|
|
369,173 |
|
|
455,465 |
|
Diluted weighted average number of ordinary shares in issue |
|
28,743,026 |
|
|
28,644,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pence |
|
|
Pence |
|
Basic earnings per ordinary share |
|
|
|
|
|
|
|
Continuing operations |
|
|
19.8p |
|
|
40.6p |
|
Discontinued operations |
|
|
(10.5p) |
|
|
(5.8p) |
|
Total |
|
|
9.3p |
|
|
34.8p |
|
|
|
|
|
|
|
|
|
Adjusted earnings per ordinary share |
|
|
|
|
|
|
|
Continuing operations |
|
|
44.8p |
|
|
44.3p |
|
|
|
|
|
|
|
|
|
Diluted earnings per ordinary share |
|
|
|
|
|
|
|
Continuing operations |
|
|
19.5p |
|
|
39.9p |
|
Discontinued operations |
|
|
(10.4p) |
|
|
(5.7p) |
|
Total |
|
|
9.1p |
|
|
34.2p |
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
|
Continuing operations |
|
|
44.3p |
|
|
43.6p |
The number of shares in issue at the year end was 28,718,127. 133,225 options over ordinary shares have been exercised since 3 May 2008.
|
|
|
|
|
|
|
7. Trade and other receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
|
|
£000 |
£000 |
|
Trade receivables |
|
|
15,436 |
13,065 |
|
Less: Provision for impairment of receivables |
|
(26) |
(74) |
|
|
Trade receivables - net |
|
15,410 |
12,991 |
|
|
Other receivables |
|
|
1,732 |
677 |
|
Other taxation |
|
|
294 |
1,881 |
|
Derivative financial instruments |
|
|
- |
254 |
|
Prepayments and accrued income |
|
|
912 |
3,723 |
|
|
|
|
18,348 |
19,526 |
|
Notes to the accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. Trade and other payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
|
|
|
£000 |
£000 |
|
|
Amounts falling due within one year: |
|
|
|
|
|
|
Trade payables |
|
|
7,389 |
9,915 |
|
|
Amounts payable to associated companies - trading |
|
- |
157 |
||
|
Amounts due to subsidiary held for re-sale |
|
|
56 |
- |
|
|
Other taxation and social security |
|
|
729 |
606 |
|
|
Derivative financial instruments |
|
|
102 |
- |
|
|
Other creditors |
|
|
3,582 |
5,764 |
|
|
Accruals and deferred income |
|
|
5,993 |
6,565 |
|
|
|
|
|
17,851 |
23,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Reconciliation of net cash flow to movement in net debt |
|
|
|
||
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
Current borrowings |
Non-current borrowings |
Net debt |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
At 29 April 2007 |
17,274 |
(25,829) |
(9,625) |
(18,180) |
|
|
Cash flow for the period |
1,008 |
337 |
- |
1,345 |
|
|
Loan repayments included in cash flow for the period |
- |
3,489 |
- |
3,489 |
|
|
Re-classify from non-current to current borrowings |
- |
(3,489) |
3,489 |
- |
|
|
Effect of exchange rate changes |
5 |
(333) |
(67) |
(395) |
|
|
At 3 May 2008 |
18,287 |
(25,825) |
(6,203) |
(13,741) |
|
|
|
|
|
|
|
|
|
Net debt at 3 May 2008 comprises: |
|
|
|
|
|
|
Cash and short-term borrowings |
18,287 |
(22,281) |
- |
(3,994) |
|
|
Bank term loan |
- |
(3,544) |
(6,203) |
(9,747) |
|
|
At 3 May 2008 |
18,287 |
(25,825) |
(6,203) |
(13,741) |
|
|
Notes to the accounts |
|
|
|
|
|
|
|
|
|
10. Defined benefit pension scheme deficit |
|
|
|
|
|
|
|
|
|
|
|
Total |
Total |
|
|
|
£000 |
£000 |
|
|
|
|
|
|
Pension deficit at start of period |
|
10,769 |
12,002 |
|
Current service costs |
|
1,997 |
2,110 |
|
Expected return on plan assets |
|
(2,993) |
(2,485) |
|
Interest cost |
|
2,991 |
2,657 |
|
Actuarial (gains)/losses |
|
(1,483) |
106 |
|
Regular employer contributions |
|
(1,782) |
(1,846) |
|
Employer payments to fund deficit |
|
(1,740) |
(1,775) |
|
Pension deficit at end of period |
|
7,759 |
10,769 |
|
|
|
|
|
|
11. Consolidated statement of changes in shareholders' equity |
|
||
|
|
|
|
|
|
|
|
Total |
Total |
|
|
|
£000 |
£000 |
|
|
|
|
|
|
Total equity at start of period |
|
71,487 |
66,064 |
|
Total recognised income and expense for the period |
3,428 |
8,897 |
|
|
Recognition of share-based payments |
|
858 |
495 |
|
Proceeds for sale of shares for employee options |
|
1,182 |
1,411 |
|
Equity dividends paid |
|
(5,451) |
(5,380) |
|
Total equity at end of period |
|
71,504 |
71,487 |
|
|
|
|
|
|
|
|
|
|
Related Shares:
CSRT.L