11th Dec 2008 07:00
Consort Medical plc
Interim Results for the six months ended 31 October 2008
Consort Medical achieves expectations in a tough market.
Consort Medical plc (LSE: CSRT), a leader in medical devices for inhaled drug delivery and anaesthesia, today announces interim results for the six months to 31 October 2008.
Highlights:
Revenues of ongoing products and services rose by 4.6% to £55.1m (2007: £52.7m)
Profit before tax and special items down 8.7% to £8.6m (2007: £9.4m) in line with expectations
Profit before tax up 70% at £7.7m (2007: £4.5m)
Basic earnings per share up by 19.7% to 15.2p (2007: 12.7p). Adjusted earnings per share down 7.6% at 21.9p (2007: 23.7p)
Net debt as at 31 October reduced to £19.1m (2007: £23.9m)
Interim dividend maintained at 7.0p per share (2007: 7.0p per share)
Jon Glenn, Consort Medical's Chief Executive, commented:
The Group performed well in the first half of the year, meeting expectations with a sound performance from the Bespak Division and continued sales growth in the King Systems Division. The Board together with the senior management team are completing their strategic review of the opportunities for growth in the healthcare sector and we are confident that we can deliver sustained earnings growth both organically and by acquisition.
For further information, please contact:
|
Consort Medical plc |
|
|
Jonathan Glenn, Chief Executive |
Tel: +44 (0) 1442 867920 |
|
Toby Woolrych, Group Finance Director |
Tel: +44 (0) 1442 867920 |
|
Maitland |
|
|
Liz Morley |
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 Hemel Hempstead in the UK, Indianapolis, Indiana and Kent, Ohio in the US. Consort Medical is a public company quoted on the full list of the London Stock Exchange (LSE: CSRT).
Consort Medical plc
Interim Results for the six months ended 31 October 2008
Consort Medical plc has two business divisions: Bespak and King Systems.
The Bespak Division is the world's leading supplier of inhaler valves and other respiratory drug delivery devices to pharmaceutical companies. It has an emerging business in dose counters, which are increasingly being adopted for use with inhaler devices.
King Systems Division is a US leader in disposable devices for the anaesthesia market: including breathing circuits, face masks and other disposable airway management products. These are sold to anaesthetists in hospitals and to emergency medical practitioners.
Interim Results
In the six months to 31 October 2008, sales of ongoing products and services rose by 4.6% to £55.1m (2007: £52.7m), excluding Exubera and other discontinued business from prior year sales. The Group achieved record sales of HFA valves for asthma inhalers and continuing sales growth at King Systems. Total revenue was £60.8m (2007: £62.7m) which included a further £5.6m (2007: £1.3m) of tooling costs which are passed on directly to customers. Prior year sales included sales of £8.7m relating to Pfizer's discontinued Exubera therapy.
Profit before tax and special items was in line with expectations at £8.6m (2007: £9.4m) Profit before tax increased by 70% to £7.7m with the only special item being the ongoing amortisation of intangible assets (£0.9m) relating to the King Systems acquisition.
Basic earnings per share increased by 19.7% to 15.2p (2007: 12.7p). Earnings per share, adjusted for special items, fell 7.6% to 21.9p.
Net debt continued to reduce, despite adverse exchange translation and as at 31 October 2008 was £19.1m (2007: £23.9m). Net debt remains comfortably within our borrowing covenants and facilities and is less than one times EBITDA for the previous 12 month period.
The Board is maintaining an interim dividend of 7.0p per share, which is payable on 20 February 2009 to those shareholders on the register on 23 January 2009.
Business Performance
Bespak Division
The Bespak Division is well placed to face an economic downturn despite seeing some signs of de-stocking and pricing pressures from customers. Asthma and chronic obstructive pulmonary disease drug prescriptions are expected to remain resilient due to their therapeutic importance. Sales of ongoing products rose by 2.4% to £38.4m during the first half of the year. Including the Exubera sales in the previous year, sales of the Bespak Division at £38.4m were down 16.9% as expected (2007: £46.2m). Division operating margins, excluding special items, increased from 17.6% to 19.5% during the period.
The metered dose inhaler (MDI) valve business continued to perform well. Revenue in HFA valves reached a record figure of £16.1m, offset by the winding down of CFC valve sales. The Bespak Division's HFA valve market share has now reached 40%. Revenue growth is expected to slow somewhat with the completion of the HFA transition, but a significant number of valve development programmes remain in the pipeline to deliver continued modest growth over the medium term.
In the current global environment we are seeing increased price pressure from customers which is expected to continue into the next financial year. However, the Bespak Division has a high market share and a strong reputation for quality and efficiency. The Bespak Division is also well placed to maintain its high share of the global asthma treatment market as a result of its broad exposure to a range of customers in the space.
The Bespak Division has now consolidated all manufacturing onto the King's Lynn site, with significant cost reductions achieved in full and on time. At King's Lynn, the MDI valve plant expansion will complete in the first quarter of 2009. This will increase capacity by some 15%. Work has additionally begun on a building to support a long term customer device programme and a further unit has been converted for pilot scale dose counter manufacture.
FDA guidance in the USA is that all new aerosol drug dispensers should include a dose counter, and this remains an attractive market opportunity. Bespak Division's unique platform technology is currently being evaluated by customers. Good technical progress has been made in the past six months and our first customer is on schedule to enter into clinical trials with our device. A first manufacturing unit has been commissioned to meet initial demand.
King Systems Division
King Systems Division is also a defensive business with an excellent brand in the US. Despite market conditions slowing sharply in the area of elective surgery, which represents about 10% of the anaesthesia market, King Systems Division grew revenues in the first half to £16.8m (2007: £15.3m). This represented 3.3% growth at constant exchange rates, increased to 10.1% by a favourable exchange movement. International sales were particularly strong, rising by 15%.
Don Dumoulin was appointed as CEO, King Systems, during the period. Don brings considerable experience in the healthcare sector and has already made progress in identifying opportunities for future growth.
First half operating profit before special items fell to £1.4m (2007: £2.1m). Margins were particularly impacted by the one-off effects of a voluntary product recall. We have introduced a number of process improvements to ensure that products shipped from King Systems are fit for purpose and have issued replacement products to customers. Margins were also affected by the severance costs of the previous CEO. Management are confident that margins will be restored in the second half on continuing normalised sales.
Corporate Management Team
The corporate management team has been significantly enhanced during the first half of the year to position the business for a growth strategy.
Toby Woolrych, Group Finance Director, joined the Board on 1 October, having previously been at Acta SpA, an AIM-listed renewable energy company, and Johnson Matthey plc, the FTSE 100 chemical manufacturing company.
Lisa King, Director of HR, joined Consort Medical in September, from UCB Pharma. Lisa is a member of the Executive Committee.
Phil Lever, Director of Strategic Marketing, was promoted to the Executive Committee in October and has been working on the blueprint for the Group strategic plan, including the M&A strategy.
Growth Strategy
The new team has been finalising its strategy to deliver sustained earnings growth both by organic and acquisitive means. The Group is well placed to withstand difficult markets, with low net borrowings, strong cash generation, a robust customer base and significant intellectual property.
The Group's strategy will continue to focus on developing multiple platforms for organic growth, growth through acquisition and targeted cost reduction.
Corporate Responsibility
During the period the Board has formed a new Committee chaired by Jim Dick, Non-Executive Director to formalise continuing work on the Group's corporate responsibility activities.
Outlook
Current results are in line with the Board's expectations. Market conditions continue to be challenging, with some destocking and increased margin pressure from customers and some reductions in US hospital operations. The management team is committed to continued cost management in order to mitigate the impact of market conditions. The Board remains confident that Consort Medical is on track to deliver sustained growth over the medium term.
|
John Robinson Chairman |
Jon Glenn Chief Executive |
Independent review report to Consort Medical plc
Introduction
We been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the period from 4 May 2008 to 31 October 2008, which comprises the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of recognised income and expense and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the period from 4 May 2008 to 31 October 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
|
PricewaterhouseCoopers LLP |
|
Chartered Accountants |
|
Milton Keynes |
|
10 December 2008 |
Notes:
The maintenance and integrity of the Consort Medical plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Statement of directors' responsibilities
The directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR4.2.7 and DTR4.2.8, namely:
An indication of important events that have occurred during the period from 4 May 2008 to 31 October 2008 and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
Material related party transactions in the period from 4 May 2008 to 31 October 2008 and any material changes in the related party transactions described in the last annual report.
The directors of Consort Medical plc are listed in the Consort Medical plc Annual Report for the 53 weeks ended 3 May 2008, with the exception of the following changes in the period: Mr T Woolrych was appointed on 1 October 2008. A list of current directors is maintained on the Consort Medical plc website: www.consortmedical.com.
By order of the Board
|
Jenny Owen |
|
Company Secretary |
|
10 December 2008 |
Consolidated Income Statement
|
For the period 4 May 2008 to 31 October 2008 |
||||
|
Unaudited |
Unaudited |
Audited |
||
|
4 May 2008 |
26 weeks |
53 weeks |
||
|
to 31 October |
ended 27 |
ended 3 |
||
|
2008 |
October 2007 |
May 2008 |
||
|
Notes |
||||
|
£000 |
£000 |
£000 |
||
|
Continuing operations |
||||
|
Sales of products and services |
2 |
55,134 |
61,401 |
120,431 |
|
Sales of tooling and equipment |
2 |
5,646 |
1,281 |
6,034 |
|
Revenue |
2 |
60,780 |
62,682 |
126,465 |
|
Operating expenses |
(52,819) |
(57,299) |
(116,843) |
|
|
Operating profit before special items |
8,848 |
10,252 |
18,988 |
|
|
Special items |
3 |
(887) |
(4,869) |
(9,366) |
|
Operating profit |
2 |
7,961 |
5,383 |
9,622 |
|
Finance income |
630 |
362 |
874 |
|
|
Finance expenses |
(689) |
(1,022) |
(1,872) |
|
|
Other finance (expense)/income |
4 |
(143) |
(19) |
2 |
|
Share of post tax losses of associate |
(77) |
(185) |
(356) |
|
|
Impairment of investment in associate |
- |
- |
(953) |
|
|
Profit before tax and special items |
8,569 |
9,388 |
17,636 |
|
|
Special items |
3 |
(887) |
(4,869) |
(10,319) |
|
Profit before tax |
7,682 |
4,519 |
7,317 |
|
|
Tax on profit before special items |
(2,252) |
(2,621) |
(4,916) |
|
|
Tax on special items |
352 |
2,006 |
3,210 |
|
|
Special tax item |
(1,388) |
- |
- |
|
|
Total tax expense |
5 |
(3,288) |
(615) |
(1,706) |
|
Profit for the financial period from continuing operations |
4,394 |
3,904 |
5,611 |
|
|
Loss for the period from discontinued operations |
6 |
- |
(284) |
(2,982) |
|
Profit for the financial period |
4,394 |
3,620 |
2,629 |
|
|
Basic earnings per ordinary share |
||||
|
Continuing operations |
7 |
15.2p |
13.7p |
19.8p |
|
Discontinued operations |
7 |
- |
(1.0p) |
(10.5p) |
|
Total |
7 |
15.2p |
12.7p |
9.3p |
|
Diluted earnings per ordinary share |
||||
|
Continuing operations |
7 |
15.0p |
13.5p |
19.5p |
|
Discontinued operations |
7 |
- |
(1.0p) |
(10.4p) |
|
Total |
7 |
15.0p |
12.5p |
9.1p |
|
Non-GAAP measure: |
|
|
|
|
|
Continuing operations |
|
|||
|
Adjusted profit before tax (£000) |
8,569 |
9,388 |
17,636 |
|
|
Adjusted profit after tax (£000) |
7 |
6,317 |
6,767 |
12,720 |
|
|
|
|||
|
Adjusted earnings per ordinary share |
7 |
21.9p |
23.7p |
44.8p |
|
Adjusted diluted earnings per ordinary share |
7 |
21.5p |
23.4p |
44.3p |
Consolidated Balance Sheet
|
At 31 October 2008 |
||||||
|
Unaudited |
Unaudited |
Audited |
||||
|
31 October |
27 October |
3 May 2008 |
||||
|
2008 |
2007 |
|||||
|
Notes |
||||||
|
£000 |
£000 |
£000 |
||||
|
Assets |
||||||
|
Non-current assets |
||||||
|
Property, plant and equipment |
9 |
45,323 |
48,630 |
47,947 |
||
|
Goodwill |
44,008 |
34,913 |
36,229 |
|||
|
Other intangible assets |
11,775 |
10,859 |
10,454 |
|||
|
Investment in associates |
207 |
1,334 |
243 |
|||
|
Deferred tax assets |
- |
392 |
483 |
|||
|
|
101,313 |
|
96,128 |
|
95,356 |
|
|
Assets classified as held for sale |
10 |
7,879 |
5,022 |
2,647 |
||
|
Current assets |
||||||
|
Inventories |
8,666 |
11,437 |
8,694 |
|||
|
Trade and other receivables |
16,554 |
21,201 |
18,348 |
|||
|
Current tax receivable |
689 |
- |
- |
|||
|
Cash and cash equivalents |
17,856 |
8,710 |
18,287 |
|||
|
|
43,765 |
|
41,348 |
|
45,329 |
|
|
Liabilities |
||||||
|
Current liabilities |
||||||
|
Borrowings |
(31,580) |
(24,950) |
(25,825) |
|||
|
Trade and other payables |
11 |
(17,594) |
(18,716) |
(17,851) |
||
|
Current tax payable |
(3,394) |
(1,410) |
(1,978) |
|||
|
Provisions and other liabilities |
(1,702) |
(727) |
(5,737) |
|||
|
|
(54,270) |
|
(45,803) |
|
(51,391) |
|
|
Liabilities of subsidiary held exclusively for resale |
10 |
(2,061) |
(2,412) |
(2,147) |
||
|
|
(56,331) |
|
(48,215) |
|
(53,538) |
|
|
Net current liabilities |
(12,566) |
(6,867) |
(8,209) |
|||
|
Non-current liabilities |
||||||
|
Borrowings |
(5,415) |
(7,675) |
(6,203) |
|||
|
Deferred tax liabilities |
(5,408) |
(4,620) |
(4,328) |
|||
|
Defined benefit pension scheme deficit |
14 |
(10,054) |
(9,186) |
(7,759) |
||
|
|
(20,877) |
|
(21,481) |
|
(18,290) |
|
|
Net assets |
75,749 |
|
72,802 |
|
71,504 |
|
|
Shareholders' equity |
||||||
|
Share capital |
15 |
2,894 |
2,854 |
2,872 |
||
|
Share premium |
15 |
32,379 |
30,614 |
31,360 |
||
|
Retained earnings |
37,868 |
41,068 |
38,571 |
|||
|
Other reserves |
2,608 |
(1,734) |
(1,299) |
|||
|
Total equity |
16 |
75,749 |
|
72,802 |
|
71,504 |
Consolidated Cash Flow Statement
|
For the period 4 May 2008 to 31 October 2008 |
||||
|
Unaudited |
Unaudited |
Audited |
||
|
4 May 2008 |
26 weeks |
53 weeks |
||
|
to 31 |
ended 27 |
ended 3 |
||
|
October |
October 2007 |
May 2008 |
||
|
2008 |
||||
|
Notes |
||||
|
£000 |
£000 |
£000 |
||
|
Cash flows from operating activities |
||||
|
Operating profit from continuing operations |
7,961 |
5,383 |
9,622 |
|
|
Depreciation |
3,120 |
2,855 |
6,038 |
|
|
Amortisation |
952 |
883 |
1,776 |
|
|
Impairment charge |
- |
4,037 |
6,683 |
|
|
Allocation of customer settlement against impairment |
- |
- |
(2,687) |
|
|
(Profit)/loss on disposal of property, plant and equipment |
(144) |
(16) |
240 |
|
|
Share based payments |
436 |
450 |
858 |
|
|
Decrease/(increase) in inventories |
515 |
(1,029) |
1,784 |
|
|
Decrease/(increase) in trade and other receivables |
2,067 |
(1,822) |
1,723 |
|
|
Decrease in trade and other payables |
(95) |
(4,490) |
(6,066) |
|
|
(Decrease)/increase in provisions |
(3,819) |
136 |
5,067 |
|
|
Decrease/(increase) in financial instruments |
(31) |
85 |
226 |
|
|
Cash generated from continuing operations |
10,962 |
6,472 |
25,264 |
|
|
Interest paid |
(675) |
(957) |
(1,742) |
|
|
Tax paid |
(1,589) |
(1,899) |
(3,131) |
|
|
Net cash inflow from operating activities |
8,698 |
3,616 |
20,391 |
|
|
Cash flows from investing activities |
||||
|
Purchases of property, plant and equipment |
(5,481) |
(3,865) |
(8,624) |
|
|
Purchases of intangible assets |
(57) |
(46) |
(136) |
|
|
Proceeds from sale of property, plant and equipment |
365 |
21 |
36 |
|
|
Allocation of customer settlement |
- |
- |
2,687 |
|
|
Interest received |
619 |
375 |
883 |
|
|
Tax received |
- |
- |
2 |
|
|
Acquisition of subsidiary exclusively for resale |
- |
(91) |
(91) |
|
|
Loans to subsidiary held exclusively for resale |
(443) |
(2,803) |
(3,551) |
|
|
Net cash used in investing activities |
(4,997) |
(6,409) |
(8,794) |
|
|
Cash flows from financing activities |
||||
|
Net proceeds from issue of ordinary share capital |
1,795 |
418 |
428 |
|
|
Equity dividends paid to shareholders |
(3,502) |
(3,453) |
(5,451) |
|
|
Repayment of amounts borrowed |
(1,817) |
(1,760) |
(3,489) |
|
|
Payments to fund defined benefit pension scheme deficit |
(725) |
(725) |
(1,740) |
|
|
Net cash used in financing activities |
(4,249) |
(5,520) |
(10,252) |
|
|
Net (decrease)/increase in cash and short-term borrowings |
13 |
(548) |
(8,313) |
1,345 |
|
Cash and short-term borrowings at the beginning of the period |
(3,994) |
(5,048) |
(5,048) |
|
|
Effects of exchange rate changes |
(4,850) |
535 |
(291) |
|
|
Cash and short-term borrowings at the end of the period |
(9,392) |
(12,826) |
(3,994) |
Consolidated Statement of Recognised Income and Expense
|
For the period 4 May 2008 to 31 October 2008 |
|||
|
Unaudited |
Unaudited |
Audited |
|
|
4 May 2008 |
26 weeks |
53 weeks |
|
|
to 31 |
ended 27 |
ended 3 |
|
|
October |
October |
May 2008 |
|
|
2008 |
2007 |
||
|
£000 |
£000 |
£000 |
|
|
Fair value movements on cash flow hedges |
(186) |
45 |
(131) |
|
Deferred tax on fair value movements on cash flow hedges |
52 |
- |
39 |
|
Current tax on fair value movements on cash flow hedges |
- |
(13) |
- |
|
Exchange movements on translation of foreign subsidiaries |
4,373 |
(455) |
208 |
|
Current tax on exchange movements |
(332) |
93 |
(11) |
|
Deferred tax on share based payments |
(137) |
(258) |
(349) |
|
Current tax on share based payments |
22 |
48 |
126 |
|
Actuarial (loss)/gain on defined benefit pension scheme |
(2,661) |
1,172 |
1,483 |
|
Deferred tax on actuarial loss/(gain) |
745 |
(352) |
(566) |
|
Net profit recognised directly in equity |
1,876 |
280 |
799 |
|
Profit for the financial period |
4,394 |
3,620 |
2,629 |
|
Total recognised income for the period |
6,270 |
3,900 |
3,428 |
Notes to the Interim Accounts
1. Basis of preparation
These interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the 53 weeks ended 3 May 2008 were approved by the Board of Directors on 23 June 2008 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.
This condensed consolidated interim financial information has been reviewed, not audited.
This condensed consolidated interim financial information for the period 4 May 2008 to 31 October 2008 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The half-yearly condensed consolidated interim financial report should be read in conjunction with the annual financial statements for the 53 weeks ended 3 May 2008, which have been prepared in accordance with IFRSs as adopted by the European Union.
The accounting policies adopted are consistent with those of the annual financial statements for the 53 weeks ended 3 May 2008, as described in those annual financial statements.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial period ending 30 April 2009:
IFRIC 14, 'IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction'. This interpretation is not currently relevant for the Group.
2. Segmental information
|
(a) Revenue from continuing operations |
|||||||
|
Revenue by business |
|||||||
|
4 May 2008 |
26 weeks to |
53 weeks to |
|||||
|
to 31 |
27 October |
3 May |
|||||
|
October 2008 |
2007 |
2008 |
|||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
Sales of products and services |
38,434 |
46,237 |
88,745 |
||||
|
Sales of tooling and equipment |
5,646 |
1,281 |
6,034 |
||||
|
Bespak Division (UK by origin) |
44,080 |
47,518 |
94,779 |
||||
|
King Systems Division (US by origin) |
16,815 |
15,276 |
31,913 |
||||
|
Total revenues |
|
|
60,895 |
|
62,794 |
|
126,692 |
|
Intra-segment sales |
(115) |
(112) |
(227) |
||||
|
Revenue |
|
|
60,780 |
|
62,682 |
|
126,465 |
|
Revenue by destination |
|
|
4 May 2008 to 31 October 2008 |
|
26 weeks to |
|
53 weeks to |
|
27 October |
3 May |
||||||
|
2007 |
2008 |
||||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
United Kingdom |
16,996 |
12,917 |
29,555 |
||||
|
United States of America |
21,401 |
32,370 |
59,630 |
||||
|
Europe |
16,284 |
13,668 |
29,421 |
||||
|
Rest of the World |
6,099 |
3,727 |
7,859 |
||||
|
Revenue |
|
|
60,780 |
|
62,682 |
|
126,465 |
(b) Operating profit from continuing operations
|
4 May 2008 |
26 weeks to |
|
53 weeks to |
||||
|
to 31 |
27 October |
3 May |
|||||
|
October 2008 |
2007 |
2008 |
|||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
Bespak Division |
7,487 |
8,149 |
14,225 |
||||
|
Special items |
- |
(4,037) |
(7,191) |
||||
|
Bespak Division after special items |
|
|
7,487 |
|
4,112 |
|
7,034 |
|
King Systems Division |
1.361 |
2,103 |
4,763 |
||||
|
Special items |
(887) |
(832) |
(2,175) |
||||
|
King Systems Division after special items |
474 |
1,271 |
2,588 |
||||
|
Operating profit before special items |
8,848 |
10,252 |
18,988 |
||||
|
Special items |
(887) |
(4,869) |
(9,366) |
||||
|
Operating profit after special items |
|
|
7,961 |
|
5,383 |
|
9,622 |
|
(c) Net assets |
|||||||
|
Net assets by business segment |
|
|
31 October |
|
27 October |
|
3 May |
|
2008 |
2007 |
2008 |
|||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
Continuing operations |
|||||||
|
Bespak Division |
45,243 |
53,694 |
42,475 |
||||
|
King Systems Division |
66,661 |
53,903 |
55,109 |
||||
|
Unallocated net liabilities |
(37,099) |
(37,405) |
(26,580) |
||||
|
Total continuing operations |
|
|
74,805 |
|
70,192 |
|
71,004 |
|
Discontinued operations |
944 |
2,610 |
500 |
||||
|
Net assets |
|
|
75,749 |
|
72,802 |
|
71,504 |
|
Exchange rates |
31 October |
27 October |
3 May |
||||
|
|
|
|
2008 |
|
2007 |
|
2008 |
|
Average rate of exchange - USD |
1.89 |
2.01 |
2.01 |
||||
|
Closing rate of exchange - USD |
1.62 |
2.05 |
1.98 |
3. Special items
|
4 May 2008 |
26 weeks to |
53 weeks to |
|||||
|
to |
27 October |
3 May |
|||||
|
31 October |
2007 |
2008 |
|||||
|
2008 |
|||||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
Continuing operations |
|||||||
|
Exceptional operating expenses |
- |
(4,037) |
(7,701) |
||||
|
Amortisation of acquired intangible assets |
(887) |
(832) |
(1,665) |
||||
|
Special items charged to operating expenses |
|
|
(887) |
|
(4,869) |
|
(9,366) |
|
Impairment of investment in associate |
- |
- |
(953) |
||||
|
Special items before tax |
(887) |
(4,869) |
(10,319) |
||||
|
Taxation |
352 |
2,006 |
3,210 |
||||
|
Special items after tax |
|
|
(535) |
|
(2,863) |
|
(7,109) |
The exceptional operating expenses in the prior year represent costs incurred in connection with the closure of the Group's manufacturing facility at Milton Keynes, the related restructuring of the Bespak Division at King's Lynn, the change of Chief Executive and a restructuring of the King Systems Division in the USA.
Amortisation of acquired intangible assets represents the charge for other intangible assets acquired with King Systems.
There is a special tax charge for the period of £1.4 million relating to the change in legislation on industrial buildings allowances (see note 5).
4. Other finance costs
|
4 May 2008 |
26 weeks to |
|
53 weeks to |
||||
|
to |
27 October |
3 May |
|||||
|
31 October |
2007 |
2008 |
|||||
|
2008 |
|||||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
Expected return on defined benefit scheme assets |
1,567 |
1,466 |
2,993 |
||||
|
Interest cost on defined benefit scheme liabilities |
(1,710) |
(1,485) |
(2,991) |
||||
|
Net interest (expense)/income on defined benefit scheme |
|
(143) |
|
(19) |
|
2 |
|
5. Taxation
|
4 May 2008 |
26 weeks to |
|
53 weeks to |
||||
|
to |
27 October |
3 May |
|||||
|
31 October |
2007 |
2008 |
|||||
|
2008 |
|||||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
UK corporation tax |
2,174 |
1,253 |
2,638 |
||||
|
Overseas taxation |
(190) |
118 |
651 |
||||
|
Deferred taxation |
1,304 |
1,250 |
(1,583) |
||||
|
Income tax expense reported in the consolidated income statement |
3,288 |
|
615 |
|
1,706 |
||
|
The tax charge is analysed between: |
|||||||
|
Tax on profit before special items |
2,252 |
2,621 |
4,916 |
||||
|
Tax on special items |
(352) |
(2,006) |
(3,210) |
||||
|
Special tax item |
1,388 |
- |
- |
||||
|
3,288 |
615 |
1,706 |
|||||
The tax charge for the period 4 May 2008 to 31 October 2008 is based on the effective tax rate, which it is estimated will apply to earnings for the full year.
Tax has been provided on special items as appropriate. In addition, there is a one-off charge of £1.4 million arising in the Group's tax charge due to the accounting implications arising from the UK government's abolition of industrial buildings allowances, which is a non-cash adjustment to deferred tax balances within the financial statements.
6. Discontinued operations
On 17 July 2007, the Group formed a new subsidiary, Integrated Aluminium Components Limited, to acquire certain assets from the administrators of Decorpart Limited. The acquisition was made to secure the supply chain for components used in the manufacture of metered dose inhaler valves. The business was acquired with a view to resale; accordingly, it has not been consolidated but treated as a discontinued operation under IFRS 5. The assets and liabilities of the business are shown as separate lines in the Group balance sheet. The change in fair value from the date of acquisition to the balance sheet date is shown as a loss from discontinued operations.
|
|
|
|
4 May 2008 |
|
26 weeks |
|
53 weeks to |
|
to |
to |
3 May |
|||||
|
31 October |
27 October |
2008 |
|||||
|
2008 |
2007 |
||||||
|
|
|
|
£000 |
|
£000 |
|
£000 |
|
Loss before tax |
- |
(408) |
(3,142) |
||||
|
Attributable taxation |
- |
124 |
160 |
||||
|
Loss after tax from discontinued operations |
|
|
- |
|
(284) |
|
(2,982) |
7. Earnings per share
|
|
|
|
4 May 2008 |
|
26 weeks to |
|
53 weeks to |
|
to |
27 October |
3 May |
|||||
|
31 October |
2007 |
2008 |
|||||
|
|
|
|
2008 |
|
|
|
|
|
The calculation of earnings per ordinary share is based on the following: |
|||||||
|
Profit for the financial period (£000) |
|
|
4,394 |
|
3,620 |
|
2,629 |
|
Profit for the period from continuing operations (£000) |
4,394 |
3,904 |
5,611 |
||||
|
Add back: Special items after tax (£000) |
535 |
2,863 |
7,109 |
||||
|
Special tax item (£000) |
1,388 |
- |
- |
||||
|
Adjusted profit for the financial period (£000) |
|
|
6,317 |
|
6,767 |
|
12,720 |
|
Loss for the period from discontinued operations (£000) |
|
|
- |
|
(284) |
|
(2,982) |
|
Average number of ordinary shares in issue for basic earnings |
|
28,861,624 |
|
28,511,911 |
|
28,373,853 |
|
|
Dilutive impact of share options outstanding |
474,892 |
463,439 |
369,173 |
||||
|
Diluted average number of ordinary shares in issue |
|
|
29,336,516 |
|
28,975,350 |
|
28,743,026 |
|
Basic earnings per ordinary share |
|||||||
|
Continuing operations |
15.2p |
13.7p |
19.8p |
||||
|
Discontinued operations |
- |
(1.0p) |
(10.5p) |
||||
|
Total |
|
|
15.2p |
|
12.7p |
|
9.3p |
|
Adjusted earnings per ordinary share |
|||||||
|
Continuing operations |
|
|
21.9p |
|
23.7p |
|
44.8p |
|
Diluted earnings per ordinary share |
|||||||
|
Continuing operations |
15.0p |
13.5p |
19.5p |
||||
|
Discontinued operations |
- |
(1.0p) |
(10.4p) |
||||
|
Total |
|
|
15.0p |
|
12.5p |
|
9.1p |
|
Adjusted diluted earnings per ordinary share |
|||||||
|
Continuing operations |
|
|
21.5p |
|
23.4p |
|
44.3p |
8. Dividends
|
4 May 2008 to |
26 weeks to |
53 weeks to |
||
|
31 October |
27 October |
4 May |
||
|
2008 |
2007 |
2008 |
||
|
|
|
£000 |
£000 |
£000 |
|
Dividends |
||||
|
Final dividend paid of 12.1p per share (2007: 12.1p) |
3,502 |
3,453 |
3,453 |
|
|
Interim dividend paid of 7.0p per share (2007: 7.0p) |
- |
- |
1,998 |
|
|
|
|
3,502 |
3,453 |
5,451 |
The Directors have approved an interim dividend of 7.0p per share which, in line with the requirements of IAS10 - 'Events after the Balance Sheet Date', has not been recognised within these results. The interim dividend will be paid on 20 February 2009 to shareholders whose names are on the Register of Members at the close of business on 23 January 2009.
9. Capital expenditure
In the period there were additions to property, plant and equipment of £4.3 million (2007: £4.1 million).
Capital commitments contracted for but not provided for by the Group amounted to £2.3 million (2007: £2.3 million).
10. Assets held for sale
|
31 October |
27 October |
3 May |
||
|
2008 |
2007 |
2008 |
||
|
|
|
£000 |
£000 |
£000 |
|
Assets of subsidiary held exclusively for resale (note 6) |
3,005 |
5,022 |
2,647 |
|
|
Property at Milton Keynes held for sale |
4,874 |
- |
- |
|
|
Assets classified as held for sale |
7,879 |
5,022 |
2,647 |
|
|
Liabilities of subsidiary held exclusively for resale (note 6) |
(2,061) |
(2,412) |
(2,147) |
|
|
Net carrying value of assets held for sale |
|
5,818 |
2,610 |
500 |
|
Net carrying value of subsidiary held for resale |
944 |
2,610 |
500 |
|
Bespak ceased manufacturing at its Milton Keynes facility in June 2008 at which point the property was classified as an asset available for sale. An impairment charge was included in the accounts for the 53 weeks ended 3 May 2008 to reflect the difference between its carrying value and the fair value of the property, based on an independent valuation.
11. Trade and other payables
|
31 October |
27 October |
3 May |
||
|
2008 |
2007 |
2008 |
||
|
|
|
£000 |
£000 |
£000 |
|
Amounts falling due within one year: |
||||
|
Trade payables |
7,530 |
8,647 |
7,389 |
|
|
Amounts payable to subsidiary held for resale |
8 |
181 |
56 |
|
|
Other taxation and social security |
1,333 |
482 |
729 |
|
|
Derivative financial instruments |
285 |
- |
102 |
|
|
Other creditors |
3,064 |
4,584 |
3,582 |
|
|
Accruals and deferred income |
5,374 |
4,822 |
5,993 |
|
|
|
|
17,594 |
18,716 |
17,851 |
12. Analysis of net debt
|
31 October |
27 October |
3 May |
||
|
2008 |
2007 |
2008 |
||
|
|
|
£000 |
£000 |
£000 |
|
Cash and cash equivalents |
17,856 |
8,710 |
18,287 |
|
|
Overdrafts |
(17) |
(99) |
(3) |
|
|
Revolving loan (USD) |
(27,231) |
(21,440) |
(22,278) |
|
|
Term loan (USD) |
(9,747) |
(11,086) |
(9,747) |
|
|
|
|
(19,139) |
(23,915) |
(13,741) |
Cash and cash equivalents comprise cash at bank and in hand plus short-term deposits
The revolving loan is for $44 million drawn against a £40 million facility that expires in December 2010. The loan is long term in nature but is shown in the balance sheet as a current liability as the principal sum is rolled over on a quarterly basis.
The term loan was taken out in December 2005 for a five year period and is also denominated in USD. The amount of the loan repayable within one year is shown within current liabilities.
While it seems likely that global market conditions (the 'credit crunch') will affect market confidence and consumer spending patterns, the Group is well placed to grow revenues through its existing portfolio of products and new product innovation. The Group does not have any exposure to sub-prime lending or collateralised debt obligations. The Group has sufficient headroom to enable it to conform to covenants on its existing borrowings. The Group has sufficient working capital and undrawn financing facilities to service its operating activities and ongoing investment in new capacity.
13. Reconciliation of net cash flow to movement in net debt
|
Cash and cash |
Current |
Non-current |
Net Debt |
|
|
equivalents |
borrowings |
borrowings |
||
|
|
£000 |
£000 |
£000 |
£000 |
|
At 28 April 2007 |
17,274 |
(25,829) |
(9,625) |
(18,180) |
|
Cash flow for the period |
(8,528) |
215 |
- |
(8,313) |
|
Loan repayments included in cash flow for the period |
- |
3 |
1,757 |
1,760 |
|
Effect of exchange rate changes |
(36) |
661 |
193 |
818 |
|
At 27 October 2007 |
8,710 |
(24,950) |
(7,675) |
(23,915) |
|
Cash flow for the period |
9,546 |
112 |
- |
9,658 |
|
Loan repayments included in cash flow for the period |
- |
6 |
1,723 |
1,729 |
|
Effect of exchange rate changes |
31 |
(993) |
(251) |
(1,213) |
|
At 3 May 2008 |
18,287 |
(25,825) |
(6,203) |
(13,741) |
|
Cash flow for the period |
(589) |
41 |
- |
(548) |
|
Loan repayments included in cash flow for the period |
- |
- |
1,817 |
1,817 |
|
Effect of exchange rate changes |
158 |
(5,796) |
(1,029) |
(6,667) |
|
At 31 October 2008 |
17,856 |
(31,580) |
(5,415) |
(19,139) |
|
Net debt at 31 October 2008 comprises: |
||||
|
Cash and short-term borrowings |
17,856 |
(27,248) |
- |
(9,392) |
|
Bank term loan |
- |
(4,332) |
(5,415) |
(9,747) |
|
At 31 October 2008 |
17,856 |
(31,580) |
(5,415) |
(19,139) |
14. Defined benefit pension scheme deficit
|
4 May 2008 to |
26 weeks to 27 |
53 weeks to 3 |
||
|
31 October |
October 2007 |
May 2008 |
||
|
2008 |
||||
|
Total |
Total |
Total |
||
|
|
|
£000 |
£000 |
£000 |
|
Pension deficit at start of period |
7,759 |
10,769 |
10,769 |
|
|
Current service cost |
855 |
1,066 |
1,997 |
|
|
Expected return on plan assets |
(1,567) |
(1,466) |
(2,993) |
|
|
Interest cost |
1,710 |
1,485 |
2,991 |
|
|
Actuarial losses/(gains) |
2,661 |
(1,172) |
(1,483) |
|
|
Regular employer contributions |
(639) |
(771) |
(1,782) |
|
|
Employer payments to fund deficit |
(725) |
(725) |
(1,740) |
|
|
Pension deficit at end of period |
|
10,054 |
9,186 |
7,759 |
15. Share capital and share premium account
|
Number of ordinary shares |
Share capital £000 |
Share premium £000 |
||
|
At 28 April 2007 |
|
28,449,264 |
2,845 |
30,205 |
|
Shares issued under share option schemes |
91,643 |
9 |
409 |
|
|
At 27 October 2007 |
|
28,540,907 |
2,854 |
30,614 |
|
Shares issued under share option schemes |
177,220 |
18 |
746 |
|
|
At 3 May 2008 |
|
28,718,127 |
2,872 |
31,360 |
|
Shares issued under share option schemes |
225,795 |
22 |
1,019 |
|
|
At 31 October 2008 |
|
28,943,922 |
2,894 |
32,379 |
16. Consolidated statement of changes in shareholders' equity
|
4 May 2008 to |
26 weeks |
53 weeks |
||
|
31 October |
ended 27 |
Ended 3 May |
||
|
2008 |
October 2007 |
2008 |
||
|
Total |
Total |
Total |
||
|
|
|
£000 |
£000 |
£000 |
|
Total equity at start of period |
71,504 |
71,487 |
71,487 |
|
|
Total recognised income and expense for the period |
6,270 |
3,900 |
3,428 |
|
|
Recognition of share-based payments |
436 |
450 |
858 |
|
|
Proceeds for sale of shares for employee options |
1,041 |
418 |
1,182 |
|
|
Equity dividends |
(3,502) |
(3,453) |
(5,451) |
|
|
Total equity at end of period |
|
75,749 |
72,802 |
71,504 |
17. Related party transactions
The Group's significant related parties are its associates as disclosed in the Consort Medical plc Annual Report and Financial Statements for the 53 weeks ended 3 May 2008. There were no material related party transactions in the period or prior half year period.
The following table provides the total amount of transactions with Integrated Aluminium Components Limited (IACL) in the period
|
4 May 2008 |
26 weeks |
53 weeks |
||
|
to 31 |
ended 27 |
ended 3 |
||
|
October |
October |
May |
||
|
2008 |
2007 |
2008 |
||
|
Total |
Total |
Total |
||
|
£000 |
£000 |
£000 |
||
|
Purchase of components from IACL by subsidiary in the period |
1,386 |
887 |
2,537 |
|
|
31 October |
27 October |
3 May |
||
|
2008 |
2007 |
2008 |
||
|
£000 |
£000 |
£000 |
||
|
Amounts owing to IACL by parent company and subsidiary |
8 |
181 |
56 |
|
|
Amounts owing by IACL to parent company and subsidiary |
4,004 |
2,983 |
3,551 |
|
The amounts owing by IACL are made up of loans to finance the business and trading balances for expenses incurred by Group companies on behalf of IACL.
The carrying value of the investment in the Group balance sheet at 31 October is £0.944 million which represents the fair value less costs to sell (3 May 2008: £0.5 million).
18. Principal risks and uncertainties
The principal risks and uncertainties which could impact the Group's long-term performance remain those detailed on pages 22 and 23 of the Group's 2008 Annual Report and Financial Statements, a copy of which is available on the Group's website www.consortmedical.com.
Related Shares:
CSRT.L