INTERIM RESULTS

10th Dec 2009 07:00



News Release 

10 December 2009

Consort Medical plc

Interim results for the six months ended 31 October 2009

Consort Medical plc continues to achieve robust results in a challenging market and acquires The Medical House plc.

Consort Medical plc (LSE: CSRT), a leader in drug delivery and device technologies, today announces results for the six months ended 31 October 2009.

 

Jon Glenn, Chief Executive Officer, commented:

"We continue to make good progress with our strategy and we are pleased to maintain operating profit before special items at last year's level despite continuing challenging markets. Revenues continue to grow at King Systems and although revenues have declined at Bespak due to a difficult market environment, it is encouraging that Bespak has maintained all its customers and is well placed for future recovery. The cost reduction programmes in both divisions continue on track. We are particularly pleased with the acquisition of The Medical House plc which gives us the opportunity to grow the Bespak business by leveraging its core competencies of design for high volume device manufacture to the highest quality levels."

* Note that prior year comparative numbers have been re-presented throughout this results announcement to consolidate the income statement of Integrated Aluminium Components Ltd (IAC Ltd), a component manufacturing subsidiary for the Bespak Division, which was previously held for sale.

 

Consort Medical plc is a leader in medical devices for drug delivery and device technologies. 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, autoinjectors, needle free injectors, 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 2009

 

We are pleased to report that Consort Medical has delivered a robust set of results in markets that continue to be challenging. Consort Medical's businesses have strong franchises and profitable platforms, which will underpin a range of opportunities for organic growth over the medium term. The acquisition of The Medical House plc will broaden the range of growth opportunities.

Consort Medical has two business divisions: Bespak and King Systems. 

 

 

Group interim results

In the six months to 31 October 2009, revenue from products and services fell by 1% to £57.8m (2008 re-presented: £58.4m). Encouraging revenue growth in King Systems was offset by challenging markets for Bespak which is experiencing widespread customer destocking but no material loss of business. Total revenue was £61.5m (2008 re-presented: £64.1m) which included £3.8m (2008 re-presented: £5.6m) of customer tooling costs which are passed directly on to customers.

Operating profit before special items remained flat at £8.6m (2008 re-presented: £8.7m) as cost reductions, especially at Bespak, mitigated the margin impact of the market conditions. Profit before tax and special items was in line with the Board's expectations at £7.8m (2008 re-presented: £8.3m), with the Group experiencing a fall in interest income due to lower rates and an increased non-cash IAS 19 pension charge. Profit before tax of £5.2m (2008 re-presented: £7.7m) was also in line with management expectations: the special items of £2.7m related to cost reduction activities and the ongoing amortisation of intangible assets at King Systems and were in line with previous guidance. 

Basic earnings per share fell by 16% to 12.8p (2008 re-presented: 15.2p). Earnings per share, adjusted for special items, fell 10% to 19.0p (2008: 21.2p). As previously projected, the Group's underlying tax rate has risen from 27.1% to 30% as the Group has now fully utilised brought forward losses in the US.

Net debt continued to reduce and as at 31 October 2009 was £17.9m (30 April 2009: £18.9m). Net debt remains comfortably within our borrowing covenants and facilities and is less than one times EBITDA. The impact of the acquisition of The Medical House after the period end is discussed below.

The Board is maintaining an interim dividend of 7.0p per share, which is payable on 19 February 2010 to those shareholders on the register on 22 January 2010.

Strategy

Consort Medical is a healthcare company focused on medical device technologies for drug delivery and life-saving patient care solutions for airways. Our strategy moving forward is to build and strengthen our core business through new product innovation, increased market reach and higher value business models. We will diversify the Group into adjacent markets and technologies which leverage our exceptional capabilities in drug delivery and medical device technologies. We will also continue to manage costs aggressively in order to maintain and increase margins in the current challenging economic environment, whilst acknowledging that we must deliver sales growth in the medium term in order to successfully develop the business and provide an adequate return to our shareholders. 

Business performance

Bespak Division 

Bespak is a leading drug delivery device manufacturer which has many of the world's top pharmaceutical companies as its largest customers. It has focused historically on the inhalation market, with devices primarily used to treat asthma and COPD (Chronic Obstructive Pulmonary Disease). Over 300 million people worldwide have been diagnosed with these diseases and Bespak devices deliver over one third of their inhaled medication. Bespak moulds or sources over 3 billion parts a year in making 500 million products, from valves and actuators to complete devices. With the acquisition of The Medical House plc, Bespak will now broaden its product portfolio to include the rapidly growing autoinjector market, which allows patients to self-administer a range of drugs including an expanding portfolio of biological products.

The Bespak division delivers good returns and margins and generates consistently high levels of cash. However, in the six months to 31 October 2009, revenues fell by 10% to £37.5m (2008: £41.7m). Around half of the impact arose from the long term renewal of a major contract last spring on reduced terms as previously reported. The remaining impact has arisen from a temporary patient and customer destocking of valves. In the prior period to 31 October 2008, revenues also included both some final sales of valves for CFC propellant prior to its cessation on 31 December 2008 and launch stocks of valves for HFA propellant. As the economic downturn subsequently deepened and the HFA market shares of the customer base have stabilised, Bespak has experienced a broad based destocking as customers seek to reduce inventories from their pre-launch peak. Nevertheless, Bespak has maintained its strong market position in this period and has lost neither customers nor product platforms.

Bespak anticipated these challenging conditions and implemented strong cost reduction activities, resulting in operating profit before special items falling by just 7% to £6.8m (2008 re-presented: £7.3m), and margins increasing from 17.5% to 18.1%.

Good progress continued to be made across a wide range of Bespak's new product development activities. The primeless valve is in the final stages of the regulatory process prior to filing with the FDA with its launch customer, and the company's bespoke dose counter technology customer is progressing through Phase III trials. The valve for emerging markets is on trial with a further customer and all four device services projects have made good progress over the period. We are also pleased to announce today a long term extension to one of our valve contracts which is expected to be worth over £25m over the next five years.

King Systems Division 

King Systems is a leading US manufacturer of medical devices used by anaesthetists and emergency practitioners to establish, manage and maintain patient airways: our products are used in around 10 million procedures every year. Products include anaesthesia circuits, masks, breathing bags, laryngeal tubes and visualisation devices.

Total sales grew by 4.2% at constant exchange rates (21% at actual exchange rates) in a market that remains flat due to the current global economic crisis. King's patented Flex 2 circuit product continued to drive growth in the circuit business and to grow overall market share and there was continuing strong growth in the Division's laryngeal tube devices. Domestic sales were particularly strong, while International sales started disappointingly but improved in the second quarter.

Operating profit before special items grew by 23% at constant exchange rates (36% at actual exchange rates) to £1.9m. Operating margins in the first half were 9.1%, up from 8.1% in the same period last year and were lower than the long term average of 14% due to significant and planned investment in R&D, the new leadership team and in the manufacturing transformation project announced with our preliminary 2008/09 results. These investments are already yielding benefits. The new R&D team has a range of portfolio products for launch in the fourth quarter, and one larger product is scheduled for launch next autumn. A new engineering and process design team has also been recruited to deliver the automation programme: long lead time capital items have been ordered and one project went live on schedule in October that is expected to deliver over $600k of annualised savings. 

Board and management changes

On 1 May Peter Fellner assumed his new role as Chairman, succeeding John Robinson. The Board welcomed William Jenkins to the Board as a non-executive director at the same time and George Kennedy CBE assumed the position of senior independent director and Chairman of the Remuneration Committee.

Consort Medical is pleased to announce that Nick Higgins will join the Group in the role of Director of Corporate Development on 4 January 2010 as a member of the Executive team. Nick has extensive experience in licensing transactions and acquisitions in the healthcare industry, including with Acambis plc and Intercytex Group plc, and will play an important role in identifying organic and acquisitive growth opportunities for the Group. As previously announced, Paul Boughton will be leaving the company as Corporate Development Director on 31 December and has today stepped down from the Board.

On 1 November, John Slater joined as Group Company Secretary and General Counsel. John has previously held similar roles with Celltech plc and with Vernalis plc and brings with him significant experience in the healthcare industry.

Post balance sheet event - the acquisition of The Medical House plc

On 24 September, Consort Medical announced a £16.8m offer for the issued and to be issued share capital of The Medical House plc, a developer of autoinjectors and needle free injectors for the pharmaceutical industry. The acquisition will combine The Medical House's design technology and commercial contacts within this very fast growing segment of the market with Bespak's scale, design for manufacture and manufacturing expertise to provide a compelling low risk proposition to pharmaceutical and biotechnology clients. On 5 November it was announced that the offer had become unconditional in all respects. On 19 November it was announced that Consort Medical had either purchased or secured acceptances for over 95% of the Medical House's shares, would be compulsorily acquiring the remainder of the share capital and The Medical House would be delisting from AIM on 18 December. The acquisition balance sheet is shown in the notes to these accounts.

The Group secured an additional term loan of £19.5m from RBS in order to fund the acquisition on current commercial terms. The net debt to EBITDA ratio once this loan has been fully drawn down is not expected to exceed 1.9 and remains well within our covenants. Headroom remains unchanged and is in excess of £25m.

Management have received a positive response from within the industry to the acquisition and believe that the combined businesses offer an important platform for long term growth for Bespak. Implementation of the announced £0.5m cost savings has already begun and is expected to be completed by the year end. Over the next 24 months, revenues will be derived from a newly marketed product and from the launch of three autoinjector devices currently in development with customers. These projects all relate to currently approved or generic drugs, so we believe that the regulatory risk to these projects is low. However, as with all pharmaceutical products, the precise timing of launch can be difficult to predict. The business is expected to be modestly accretive in the 2010/11 financial year and to deliver solid growth thereafter.

Outlook

Market conditions for Bespak are expected to remain challenging throughout 2010, with ongoing destocking and a second margin reduction in the device services segment next year. However, ongoing cost saving initiatives and growing revenues from The Medical House are expected to largely counteract the shortfall and to provide a solid basis for growth once the destocking ends and normal order levels resume. King Systems is expecting to see further margin improvements arising from its transformation programme in the second half. As a result, the Board believes that results will be broadly in line with its expectations for the year. The Group's solid cash flows and balance sheet mean that it has been able to continue investing strongly through this downturn in R&D and capital programmes and to maintain an attractive dividend yield in anticipation of growth in the future, both organically and by acquisition.

Enquiries:

Consort Medical plc
Jonathan Glenn, Chief Executive	Tel: +44 (0) 1442 867920
Toby Woolrych, Group Finance Director	Tel: +44 (0) 1442 867920
Brunswick
Jon Coles/Justine McIlroy	Tel: +44 (0) 20 7404 5959

Independent review report to Consort Medical plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2009, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in shareholders' equity 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 six months ended 31 October 2009 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 AccountantsMilton Keynes

9 December 2009

Notes:

a) 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.

b) 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 IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR4.2.8, namely:

 

 

The directors of Consort Medical plc are listed in the Consort Medical plc Annual Report for the year ended 30 April 2009, with the exception of the following changes in the period: Dr W Jenkins was appointed on 1 May 2009. A list of current directors is maintained on the Consort Medical plc website: www.consortmedical.com.

By order of the Board

John Slater

Company Secretary

9 December 2009

Consolidated Income Statement
For the period 1 May to 31 October 2009
		Unaudited  1 May to  31 October 2009	Unaudited  4 May to  31 October 2008	Audited 4 May 2008 to 30 April 2009
	Notes
			(Re-presented - note 1)
		£000	£000	£000
Continuing operations
Revenue from products and services	2	57,779	58,436	120,343
Revenue from tooling and equipment	2	3,759	5,646	9,560
Revenue	2	61,538	64,082	129,903
Operating expenses		(55,624)	(56,001)	(116,820)
Operating profit before special items		8,632	8,673	18,858
Special items	3	(2,718)	(592)	(5,775)
Operating profit	2	5,914	8,081	13,083
Finance income		90	524	843
Finance expenses		(547)	(703)	(1,455)
Other finance expenses	4	(338)	(143)	(276)
Share of post tax losses of associate		-	(77)	(111)
Profit on sale of associate/(impairment of investment in associate)	3	67	-	(125)
Profit before tax and special items		7,837	8,274	17,859
Special items	3	(2,651)	(592)	(5,900)
Profit before tax		5,186	7,682	11,959
Tax on profit before special items		(2,345)	(2,169)	(4,831)
Tax on special items		855	269	1,833
Special tax item		-	(1,388)	(1,383)
Tax	5	(1,490)	(3,288)	(4,381)
Profit for the financial period		3,696	4,394	7,578
Basic earnings per ordinary share	6	12.8p	15.2p	26.2p
Diluted earnings per ordinary share	6	12.6p	15.0p	26.0p
Non-GAAP measure:
Continuing operations
Adjusted profit before tax (£000)		7,837	8,274	17,859
Adjusted profit after tax (£000)		5,492	6,105	13,028
Adjusted earnings per ordinary share	6	19.0p	21.2p	45.1p
Adjusted diluted earnings per ordinary share	6	18.7p	20.8p	44.8p

Consolidated Statement of Comprehensive Income
For the period 1 May to 31 October 2009
	Unaudited  1 May to  31 October 2009	Unaudited  4 May to 31 October 2008	Audited  4 May 2008 to 30 April 2009
	£000	£000	£000
Profit for the financial period	3,696	4,394	7,578
Other comprehensive income
Fair value movements on cash flow hedges (net of tax)	110	(134)	(363)
Currency translation differences (net of tax)	(2,782)	4,041	5,085
Tax on share based payments	13	(115)	(104)
Actuarial loss on defined benefit pension scheme	(5,572)	(2,661)	(5,392)
Deferred tax on actuarial loss	1,560	745	1,511
Other comprehensive (loss)/income for the period	(6,671)	1,876	737
Total comprehensive (loss)/income for the period	(2,975)	6,270	8,315

Consolidated Balance Sheet
At 31 October 2009
	Notes	Unaudited 31 October 2009		Unaudited 31 October 2008		Audited 30 April 2009
		£000		£000		£000
Assets
Non-current assets
Property, plant and equipment	8	47,758		45,323		49,758
Goodwill		43,162		44,008		47,870
Other intangible assets		9,749		11,775		11,959
Investment in associates		8		207		67
Deferred tax assets		858		-		-
		101,535		101,313		109,654
Assets classified as held for sale	9	-		7,879		-
Current assets
Inventories		11,289		8,666		12,107
Trade and other receivables		18,414		16,554		16,056
Current tax receivable		373		689		-
Cash and cash equivalents		15,173		17,856		19,195
		45,249		43,765		47,358
Liabilities
Current liabilities
Borrowings		32,039		31,580		34,545
Trade and other payables	10	17,668		17,594		18,942
Current tax payable		2,327		3,394		2,725
Provisions and other liabilities		3,603		1,702		4,186
		55,637		54,270		60,398
Liabilities of subsidiary held exclusively for resale		-		2,061		-
		55,637		56,331		60,398
Net current liabilities		(10,388)		(12,566)		(13,040)
Non-current liabilities
Borrowings		1,061		5,415		3,543
Deferred tax liabilities		4,040		5,408		5,270
Defined benefit pension scheme deficit	13	16,489		10,054		12,081
		21,590		20,877		20,894
Net assets		69,557		75,749		75,720
Shareholders' equity
Share capital		2,895		2,894		2,895
Share premium		32,378		32,379		32,378
Retained earnings		33,533		37,868		37,024
Other reserves		751		2,608		3,423
Total equity		69,557		75,749		75,720

Consolidated Cash Flow Statement
For the period 1 May to 31 October 2009
		Unaudited 1 May to 31 October 2009	Unaudited 4 May to 31 October 2008	Audited 4 May 2008 to 30 April 2009
			(Re-presented - note 1)
		£000	£000	£000
	Notes
Cash flows from operating activities
Operating profit from continuing operations		5,914	8,081	13,083
Depreciation		3,478	3,120	6,524
Amortisation		1,164	952	2,166
Impairment charge		-	-	2,747
Impairment reversal against subsidiary held for resale		-	(666)	(2,421)
Losses of subsidiary originally held for resale		-	546	-
Loss/(profit) on disposal of property, plant and equipment		13	(144)	(155)
Loss on disposal of software		-	-	16
Share based payments		314	436	860
Decrease/(increase) in inventories		434	515	(992)
(Increase)/decrease in trade and other receivables		(3,107)	2,067	4,965
Decrease in trade and other payables		(96)	(95)	(2,193)
Decrease in provisions		(750)	(3,819)	(1,302)
Decrease/(increase) in financial instruments		173	(31)	(181)
Cash generated from continuing operations		7,537	10,962	23,117
Interest paid		(586)	(675)	(1,475)
Tax paid		(2,065)	(1,589)	(3,520)
Net cash inflow from operating activities		4,886	8,698	18,122
Cash flows from investing activities
Purchases of property, plant and equipment		(3,345)	(5,481)	(8,433)
Purchases of intangible assets		(70)	(57)	(444)
Proceeds from sale of property, plant and equipment		437	365	384
Interest received		113	619	855
Purchase of investment in associate		(8)	-	-
Proceeds from disposal of investment		129	-	-
Loans to subsidiary held exclusively for resale		-	(443)	-
Net cash used in investing activities		(2,744)	(4,997)	(7,638)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		-	1,795	1,795
Purchase of own shares		-	-	(472)
Equity dividends paid to shareholders		(3,502)	(3,502)	(5,528)
Repayment of amounts borrowed		(2,178)	(1,817)	(4,208)
Finance lease payments		(40)	-	(67)
Payments to fund defined benefit pension scheme deficit		(1,335)	(725)	(1,595)
Net cash used in financing activities		(7,055)	(4,249)	(10,075)
Net (decrease)/increase in cash and short-term borrowings	12	(4,913)	(548)	409
Effects of exchange rate changes		2,881	(4,850)	(7,105)
Opening cash in subsidiary originally held for resale		-	-	103
Cash and short-term borrowings at start of the period		(10,587)	(3,994)	(3,994)
Cash and short-term borrowings at the end of the period		(12,619)	(9,392)	(10,587)

Consolidated Statement of Changes in Shareholders' Equity

	Share capital	Share premium	Retained earnings	Cash flow hedge reserve	Translation reserve	Total
	£000	£000	£000	£000	£000	£000
Balance at 4 May 2008 (audited)	2,872	31,360	38,571	(71)	(1,228)	71,504
Profit for the financial period	-	-	4,394	-	-	4,394
Other comprehensive (loss)/income for the financial period	-	-	(2,031)	(134)	4,041	1,876
Recognition of share-based payments	-	-	436	-	-	436
Proceeds from exercise of employee options	22	1,019	-	-	-	1,041
Equity dividends	-	-	(3,502)	-	-	(3,502)
Balance at 31 October 2008 (unaudited)	2,894	32,379	37,868	(205)	2,813	75,749
Balance at 4 May 2008 (audited)	2,872	31,360	38,571	(71)	(1,228)	71,504
Profit for the financial period	-	-	7,578	-	-	7,578
Other comprehensive (loss)/income for the financial period	-	-	(3,985)	(363)	5,085	737
Recognition of share-based payments	-	-	860	-	-	860
Proceeds from exercise of employee options	23	1,018	-	-	-	1,041
Consideration paid for purchase of own shares (held in trust)	-	-	(472)	-	-	(472)
Equity dividends	-	-	(5,528)	-	-	(5,528)
Balance at 30 April 2009 (audited)	2,895	32,378	37,024	(434)	3,857	75,720
Balance at 1 May 2009 (audited)	2,895	32,378	37,024	(434)	3,857	75,720
Profit for the financial period	-	-	3,696	-	-	3,696
Other comprehensive (loss)/income for the financial period	-	-	(3,999)	110	(2,782)	(6,671)
Recognition of share-based payments	-	-	314			314
Equity dividends	-	-	(3,502)	-	-	(3,502)
Balance at 31 October 2009 (unaudited)	2,895	32,378	33,533	(324)	1,075	69,557

Notes to the Interim Accounts

1 Basis of preparation

The Company is a public limited liability company incorporated and domiciled in the UK. The address of its registered office is Breakspear Park, Breakspear Way, Hemel Hempstead, Herts HP2 4UL.

The Company is listed on the London Stock Exchange.

This condensed consolidated interim financial information was approved for issue on 9 December 2009.

This condensed consolidated interim financial information does not comprise statutory accounts within

the meaning of section 434 of the Companies Act 2006. Statutory accounts for the period 4 May 2008 to 30 April 2009 were approved by the Board of directors on 23 June 2009 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 237 of the

Companies Act 1985.

This condensed consolidated interim financial information has been reviewed, not audited.

This condensed consolidated interim financial information for the six months ended 31 October 2009 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 condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the period 4 May 2008 to 30 April 2009, which have been prepared in accordance with IFRSs as adopted by the European Union.

Re-classification of business held for sale

The acquisition of Integrated Aluminium Components Limited in July 2007 was treated as a business acquired with a view to re-sale, accordingly it was not consolidated but treated as a discontinued operation under IFRS 5 , 'Non-current assets held for sale and discontinued operations'. In the 2009 financial period a decision was taken not to sell the business in the current markets but to restructure the business and retain it as part of the Group. As a result of this decision the purchase has been accounted for as an acquisition and the income statement for the period 4 May 2008 to 31 October 2008 re-presented as shown in the following table. Under IFRS 5, the Consolidated Balance Sheet at 31 October 2008 has not been re-presented.

	As previously reported	Effect of change in classification	Re-presented
	£000	£000	£000
Revenue	60,780	3,302	64,082
Operating profit before special items	8,848	(175)	8,673
Profit before tax and special items	8,569	(295)	8,274
Special items	(887)	295	(592)
Tax	(3,288)	-	(3,288)
Profit for the financial period	4,394	-	4,394
Adjusted profit after tax	6,317	(212)	6,105
Adjusted earnings per ordinary share	21.9p	(0.7p)	21.2p
Adjusted diluted earnings per ordinary share	21.5p	(0.7p)	20.8p

Notes to the Interim Accounts

1 Basis of preparation continued

Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual

financial statements for the period 4 May 2008 to 30 April 2009, as described in those annual financial

statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following new standards and amendments to standards are mandatory for the first time for the

financial year beginning 1 May 2009.

 

·; IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a performance statement.

Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income).

 

The Group has elected to present two statements: an income statement and a statement of comprehensive income. The interim financial statements have been prepared under the revised disclosure requirements.

 

·; IFRS 8, ‘Operating segments’. IFRS 8 replaces IAS 14, ‘Segment reporting’. It requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the executive committee who allocate resources to, and assess the performance of, the two divisions.

There has been no impact on the measurement of the company's assets and liabilities. 

 

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 May 2009 and have not been early adopted:

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 May 2009, but are not currently relevant for the Group.

 

 

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 May 2009 and have not been early adopted:

 

 

2. Segmental information
The analysis by business segment is presented in accordance with the basis set out in IFRS 8 'Operating segments'. The Group has two divisions. Bespak is a drug delivery device business, a market leader in the supply of valves and other devices for respiratory applications to global pharmaceutical companies. Since the period end it has acquired The Medical House plc, which is expected to broaden its franchise into the fast growing autoinjector market. King Systems is a leading supplier of life-saving patient care solutions to the US anaesthesia market including breathing circuits, face masks and other disposable airway management and airway visualisation products.
The chief operating decision-maker has been identified as the executive committee. This committee is responsible for the executive management of the Group and comprises the Chief Executive, the Group Finance Director, the Corporate Development Director, the Company Secretary/General Counsel, the Managing Directors of the Group's divisions and the Director of Human Resources. This committee meets monthly to make decisions on operational and strategic matters other than those reserved for the Board.
The executive committee assesses the performance of the operating segments based on a measure of adjusted operating profit. This measurement basis excludes the effects of special items from the operating segments. Special items are non-recurring costs that do not reflect the underlying business performance. Currently, amortisation of acquisition-related intangibles, plant closure costs, including impairment of related fixed assets, and restructuring costs are presented in special items.
Net assets exclude taxation, net debt and investment in associates, which are managed on a central basis. These are part of the reconciliation to total net assets.

(a) Revenue from continuing operations
Revenue by business	1 May to	4 May to	4 May 2008 to
	31 October	31 October	30 April
	2009	2008	2009
		(Re-presented - note 1)
	£000	£000	£000
Revenue from products and services	37,547	41,736	81,232
Revenue from tooling and equipment	3,759	5,646	9,560
Bespak division (UK by origin)	41,306	47,382	90,792
King Systems division (US by origin)	20,380	16,815	39,387
Total revenues	61,686	64,197	130,179
Intra-segment revenues	(148)	(115)	(276)
Revenue	61,538	64,082	129,903
Revenue by destination	1 May to	4 May to	4 May 2008 to
	31 October	31 October	30 April
	2009	2008	2009
	£000	£000	£000
United Kingdom	12,280	17,129	31,949
United States of America	25,305	21,401	46,608
Europe	20,979	19,381	40,529
Rest of the World	2,974	6,171	10,817
Revenue	61,538	64,082	129,903

(b) Operating profit from continuing operations
	1 May to	4 May to	4 May 2008 to
	31 October	31 October	30 April
	2009	2008	2009
		(Re-presented - note 1)
	£000	£000	£000
Bespak division	6,778	7,312	13,476
King Systems division	1,854	1,361	5,382
Operating profit for reportable segments	8,632	8,673	18,858
Special items	(2,718)	(592)	(5,775)
Operating profit after special items	5,914	8,081	13,083
(c) Net assets
Net assets by business segment	31 October	31 October	30 April
	2009	2008	2009
	£000	£000	£000
Continuing operations
Bespak division	26,940	35,189	30,437
King Systems division	65,672	66,661	72,104
Total reportable segments	92,612	101,850	102,541
Investments	8	207	67
Taxation	(5,136)	(8,113)	(7,995)
Net debt	(17,927)	(19,139)	(18,893)
Total continuing operations	69,557	74,805	75,720
Assets classified as held for sale (note 9)	-	944	-
Net assets	69,557	75,749	75,720
Exchange rates	31 October	31 October	30 April
	2009	2008	2009
Average rate of exchange - USD	1.62	1.89	1.68
Closing rate of exchange - USD	1.65	1.62	1.48

3. Special items
		1 May to	4 May to	4 May 2008 to
		31 October	31 October	30 April
		2009	2008	2009
			(Re-presented - note 1)
		£000	£000	£000
Continuing operations
Exceptional operating expenses		(1,682)	295	(3,749)
Amortisation of acquired intangible assets		(1,036)	(887)	(2,026)
Special items charged to operating expenses		(2,718)	(592)	(5,775)
Profit on sale of associate/(impairment of investment in associate)		67	-	(125)
Special items before tax		(2,651)	(592)	(5,900)
Tax on special items		855	269	1,833
Special tax item (note 5)		-	(1,388)	(1,383)
Total tax expense in special items		855	(1,119)	450
Special items after tax - continuing operations		(1,796)	(1,711)	(5,450)

Exceptional operating expenses in the period comprised employee severance costs.
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.

4. Other finance expenses
	1 May to	4 May to	4 May 2008 to
	31 October	31 October	30 April
	2009	2008	2009
	£000	£000	£000
Expected return on defined benefit scheme assets	1,434	1,567	3,134
Interest cost on defined benefit scheme liabilities	(1,772)	(1,710)	(3,410)
Net interest expense on defined benefit scheme	(338)	(143)	(276)

5. Tax
		1 May to	4 May to	4 May 2008 to
		31 October	31 October	30 April
		2009	2008	2009
			(Re-presented - note 1)
		£000	£000	£000
UK corporation tax		919	2,174	2,446
Overseas taxation		643	(190)	484
Deferred taxation		(72)	1,304	1,451
Income tax expense reported in the consolidated income statement		1,490	3,288	4,381
The tax charge is analysed between:
Tax on profit before special items		2,345	2,169	4,831
Tax on special items		(855)	(269)	(1,833)
Special tax item		-	1,388	1,383
		1,490	3,288	4,381

The tax charge for the period ended 31 October 2009 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, in the prior year there was 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. Earnings per share

	1 May 2009  to 31 October 2009	4 May 2008 to 31 October 2008 (Re-presented - note 1)	4 May 2008 to 30 April 2009
The calculation of earnings per ordinary share is based on the following:
Profit for the financial period (£000)	3,696	4,394	7,578
Add back: Special items after tax (£000)	1,796	1,711	5,450
Adjusted profit for the financial period (£000)	5,492	6,105	13,028
Weighted average number of shares in issue	28,943,922	28,861,624	28,902,773
Weighted average number of shares owned by Employee Share Ownership Trust	(1,777)	-	(417)
Average number of ordinary shares in issue for basic earnings	28,942,145	28,861,624	28,902,356
Dilutive impact of share options outstanding	417,586	474,892	198,506
Diluted average number of ordinary shares in issue	29,359,731	29,336,516	29,100,862
Basic earnings per ordinary share	12.8p	15.2p	26.2p
Adjusted earnings per ordinary share	19.0p	21.2p	45.1p
Diluted earnings per ordinary share	12.6p	15.0p	26.0p
Adjusted diluted earnings per ordinary share	18.7p	20.8p	44.8p

7. Dividends
		31 October	31 October	30 April
		2009	2008	2009
		£000	£000	£000
Dividends		£000	£000	£000
Final dividend paid of 12.1p per share (2008: 12.1p)		3,502	3,502	3,502
Interim dividend paid of 7.0p per share (2008: 7.0p)		-	-	2,026
		3,502	3,502	5,528

 

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 19 February 2010 to shareholders whose names are on the Register of Members at the close of business on 22 January 2010.

8. Capital expenditure
In the period there were additions to property, plant and equipment of £2.8 million (2008: £4.3 million).
Capital commitments contracted for but not provided for by the Group amounted to £3.2 million (2008: £2.3 million).

9. Disposal Groups
		31 October	31 October	30 April
		2009	2008	2009
		£000	£000	£000
Assets of subsidiary held exclusively for resale		-	3,005	-
Property at Milton Keynes held for sale		-	4,874	-
Assets classified as held for sale		-	7,879	-
Liabilities of subsidiary held exclusively for resale		-	(2,061)	-
Net carrying value of assets held for sale		-	5,818	-
Net carrying value of subsidiary held exclusively for resale		-	944	-

Bespak ceased manufacturing at its Milton Keynes facility in June 2008 at which point the property was classified as an asset held for sale. The property was transferred back into fixed assets in April 2009 following a revaluation, with consequent impairment charge, and will be used as an auxiliary warehouse until market conditions improve.

10. Trade and other payables
	31 October	31 October	30 April
	2009	2008	2009
	£000	£000	£000
Amounts falling due within one year:
Trade payables	7,304	7,530	7,559
Amounts payable to subsidiary held for resale	-	8	-
Other taxation and social security	941	1,333	624
Derivative financial instruments	449	285	602
Other creditors	2,538	3,064	3,014
Accruals and deferred income	6,436	5,374	7,143
	17,668	17,594	18,942

11. Analysis of net debt
	31 October	31 October	30 April
	2009	2008	2009
	£000	£000	£000
Cash and cash equivalents	15,173	17,856	19,195
Overdrafts	(1,099)	(17)	(93)
Revolving loan	(26,693)	(27,231)	(29,689)
Term loan	(5,308)	(9,747)	(8,266)
Finance leases	-	-	(40)
	(17,927)	(19,139)	(18,893)

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.

12. 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
Balance 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)
Balance at 31 October 2008	17,856	(31,580)	(5,415)	(19,139)
Cash flow for the period	1,623	(666)	-	957
Loan repayments included in cash flow for the period	-	67	2,391	2,458
Cash and finance lease in subsidiary originally held for resale	103	(107)	-	(4)
Effect of exchange rate changes	(387)	(2,259)	(519)	(3,165)
Balance at 30 April 2009	19,195	(34,545)	(3,543)	(18,893)
Cash flow for the period	(3,868)	(1,045)	-	(4,913)
Loan repayments included in cash flow for the period	-	-	2,178	2,178
Effect of exchange rate changes	(154)	3,551	304	3,701
Balance at 31 October 2009	15,173	(32,039)	(1,061)	(17,927)
Net debt at 31 October 2009 comprises:
Cash and short-term borrowings	15,173	(27,792)	-	(12,619)
Bank term loan	-	(4,247)	(1,061)	(5,308)
Balance at 31 October 2009	15,173	(32,039)	(1,061)	(17,927)

13. Defined benefit pension scheme deficit
	1 May 2009 to 31 October 2009	4 May 2008 to 31 October 2008	4 May 2008 to 30 April 2009
	Total	Total	Total
	£000	£000	£000
Pension deficit at start of period	12,081	7,759	7,759
Current service cost	466	855	1,622
Expected return on plan assets	(1,434)	(1,567)	(3,134)
Interest cost	1,772	1,710	3,410
Actuarial losses	5,572	2,661	5,392
Regular employer contributions	(633)	(639)	(1,373)
Employer payments to fund deficit	(1,335)	(725)	(1,595)
Pension deficit at end of period	16,489	10,054	12,081
14. Related party transactions

The Group's significant related parties are its associates as disclosed in the Consort Medical plc annual report for the period from 4 May 2008 to 30 April 2009. There were no material related party transactions in the period or prior half-year period.
The following table shows the amounts owed by and to Integrated Aluminium Components Limited ('IACL') which were not consolidated in the Consolidated Balance Sheet at 31 October 2008 when the business was treated as available for sale.

			4 May 2008 to 31 October 2008
			Total
			£000
Amounts owed to IACL by subsidiary at 31 October 2008			8
Amounts owed by IACL to parent company and subsidiary at 31 October 2008			4,004

The amounts owed by IACL were 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 2008 was £0.944 million which represented the fair value less costs to sell.

15. Principal risks and uncertainties

The principal risks and uncertainties which could impact the Group's long-term performance remain those detailed on pages 20 and 21 of the Group's 2009 Annual Report and Financial Statements, a copy of which is available on the Group's website www.consortmedical.com

Notes to the Interim Accounts
16. Post balance sheet event
On 5 November 2009 the Group announced that its recommended cash offer (with a loan notes alternative) for the entire issued and to be issued share capital of The Medical House plc was unconditional in all respects. On 19 November 2009 the Group announced that it had received sufficient acceptances under the offer to acquire compulsorily any outstanding Medical House shares to which the offer relates. The Medical House plc is a designer and developer of disposable autoinjector systems and reusable needle-free injectors.

Details of the net assets acquired and goodwill are as follows:
Purchase consideration
				£000
Cash payable				11,225
Loan notes issuable				5,584
Direct costs relating to the acquisition				795
Total purchase consideration				17,604
Provisional fair value of net identifiable assets and liabilities acquired (see below)				1,942
Provisional goodwill				15,662
The assets and liabilities arising from the acquisition are as follows:
			Acquiree's	Provisional
			carrying	fair
			amount	value
			£000	£000
Property, plant and equipment			670	670
Intangible assets			2,423	8,288
Inventories			103	103
Receivables			704	704
Payables			(1,517)	(1,517)
Deferred income			(187)	(1,687)
Bank borrowings and other loans			(798)	(2,298)
Net deferred tax assets/(liabilities)			567	(2,321)
Net identifiable assets acquired			1,965	1,942

 

ENDIR ILFITFLLAIIA

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