Interim results for the 6 months ended 31 October

News Release

2 December 2010

Consort Medical plc

Interim results for the six months ended 31 October 2010

Consort Medical plc delivers significant revenue and profit growth.

Consort Medical plc (LSE: CSRT), a leader in drug delivery and device technologies, today announces positive results for the six months ended 31 October 2010. 

Highlights:

·; Revenues from ongoing products and services up 13% to £65.6m (2009: £57.8m).

·; Strong growth in Earnings before interest, tax depreciation and amortisation (EBITDA) up 32% to £14.0m (2009 £10.6m)

·; Operating profit before special items up 17% to £10.1m (2009: £8.6m)

·; Profit before tax and special items up 7% to £8.4m (2009: £7.8m)

·; Profit before tax up 44% to £7.5m (2009: £5.2m)

·; Adjusted earnings per share up 12% to 21.3p (2009: 19.0p)

Basic earnings per share up 55% to 19.8p (2009: 12.8p)

·; Interim dividend maintained at 7.0p per share (2009: 7.0p per share)

·; Produced our 500 millionth Diskus® device for GSK

·; King Vision™ laryngoscope launched

·; Nick Higgins appointed to the Board as Group Corporate Development Director with effect from 1 Jan 2011

Jon Glenn, Chief Executive Officer, commented:

"We have delivered a strong set of financial results in what continue to be challenging markets. Our portfolio of new products is starting to deliver with the launch of the King Vision laryngoscope and a new MDI valve at Bespak. We were also very pleased to produce our 500 millionth Diskus device in October, a great achievement for the team. I am confident that we have now positioned Consort Medical to deliver growth going forwards."

Enquiries:

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, video laryngoscopes and laryngeal tubes. The Group has a Head Office in Hemel Hempstead, UK and manufacturing facilities in King's Lynn, Norfolk, and Nelson, Lancashire 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 2010

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

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

·; The Bespak Division is a world leading manufacturer of drug delivery devices. It is a market leader in the supply of devices for respiratory applications to global pharmaceutical companies and has now added a range of self-injection applications to its portfolio.

·; King Systems Division 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. These are sold to aneasthetists in hospitals and to emergency medical practitioners.

Group interim results

In the six months to 31 October 2010, revenue from products and services grew by 13% to £65.6m (2009: £57.8m) with both divisions experiencing good revenue growth, albeit in comparison to a weak period last year. Total revenue was £69.6m (2009: £61.5m), which included £4.0m (2009: £3.8m) of customer tooling costs which are passed directly on to customers.

Operating profit before special items grew by 17% to £10.1m (2009: £8.6m) with improved operating margins in both divisions as a result of stronger volumes and tight cost control compared to the prior period. EBITDA rose by 32% to £14m (2009: £10.6m). Profit before tax and special items rose by 7% to £8.4m (2009: £7.8m), with higher margins payable on the renewed banking facilities offsetting the operating profit growth as previously forecast. Profit before tax rose 44% to £7.5m (2009: £5.2m), with a reduction in restructuring costs in comparison to last year.

Basic earnings per share rose by 55% to 19.8p (2009: 12.8p). Earnings per share, adjusted for special items, rose by 12% to 21.3p (2009: 19.0p) The Group's underlying tax rate fell from 30% to 27% mainly as a result of the reduction in the rate of UK corporation tax.

Net debt continued to reduce and as at 31 October 2010 was £31.8m (30 April 2010: £33.2m). Net debt remains comfortably within our borrowing covenants and facilities and is around 1.2 times EBITDA.

The Board is maintaining an interim dividend of 7.0p per share, which is payable on 18 February 2011 to those shareholders on the register on 21 January 2011.

Strategy

Our strategy remains unchanged and is focused on building and strengthening our core businesses through new product innovation, increased market reach and higher value business models. We have made good progress in further diversifying the Group into adjacent markets and technologies which leverage our exceptional capabilities in drug delivery and medical device technologies, and we will continue to seek further opportunities to extend this. We plan to deliver a growth portfolio of new products over the coming three years, but will also continue to manage costs aggressively in order to maintain and increase margins in the current demanding economic environment. We expect this to deliver both sales and profit growth as we reposition the business and provide an improving return to our shareholders.

Business performance

Bespak Division

Bespak is a leading drug delivery device manufacturer which has some 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 to make 500 million products, from valves and actuators to complete devices. We were delighted to celebrate in October with GSK the production of our 500 millionth Diskus® device. With Bespak's acquisition of its injectables business, Bespak has broadened 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.

Bespak enjoyed a strong six months to 31 October 2010, with revenues up 9% to £40.8m (2009: £37.4m). Bespak respiratory experienced strong valve sales, due to a mix of customer restocking, competitor supply issues, customer business wins and a new product launch driving a 33% volume increase. As expected, the device services business reported a 20% revenue fall due largely to the second round of planned reductions with a major customer that was announced in February 2009. Operating profit rose by 11% to £7.5m (2009: £6.8m) and operating margins increased over the period to 18.4% (2009: 18.1%) as the benefits of cost reduction activities undertaken in early 2010 were realized.

Good progress continued to be made across Bespak's development portfolio. VAL410, an MDI valve for Merck's Dulera product, has received FDA approval and is currently being launched to the market in a phased approach. Launch volumes are already being shipped. INJ300, an autoinjector for Dr Reddys Laboratories, continues to await FDA approval and is now expected to be launched in 2011. The elements of the supply chain for INJ300 within Bespak's remit are now ready to commence launch stock build. INJ570, an autoinjector for an un-named major pharma company, has been filed with the FDA on schedule and is expected to launch during 2011. All other programmes have achieved their planned milestones on schedule for expected launch as previously communicated. During the period, we have also been awarded a contract for a further manufacturing line to make dose counters for a customer's currently marketed product. We have also been very pleased with the activities of our new innovations team, who have identified a number of promising new areas into which to deploy the core capabilities of Bespak. We expect that these activities will deliver at least one new project into the growth portfolio over the next twelve months.

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 21% at actual exchange rates to £24.7m (14% at constant exchange rates to $37.8m). This was achieved in a market that remains very uncertain, with the hospital customer base under significant ongoing economic pressure. An element of the sales growth represented a restocking by the distribution channels following the operational issues experienced in the first calendar quarter of 2010. Nevertheless, this was a solid performance in difficult markets. International sales were particularly pleasing, growing 28% on prior year and representing 12% of total sales.

Operating margins rose on the back of strong volumes to 10.5% (2009: 9.1%) and operating profits rose by 39% at actual exchange rates (32% at constant exchange rates) to £2.6m. Progress continues with our transformation programme. The automated Flex 2 circuit line is now undergoing factory acceptance trials at the supplier in anticipation of a transfer to King Systems within the next quarter.

Most significantly, King announced the launch of the King Vision video laryngoscope at the American Society of Anaesthesiologists' annual convention in October 2010. The King Vision meets an unmet need for anaesthetists by offering premium quality visualisation of the airway at an affordable price. King Systems expects that the product will be immediately attractive for addressing the challenge of difficult airways but that over time it may become the standard of care in routine intubations. Initial orders are now being taken for the King Vision, and shipments are expected to commence by the end of the financial year. Initial feedback has been encouraging.

Outlook

Both businesses demonstrated solid growth in the first half. However, end markets remain challenging, particularly in the US. Nevertheless, we believe that results will be in line with expectations for the year. The Board further believes that the launch of the King Vision and the progress in the Bespak development portfolio will underpin medium term revenue and profit growth. Our strong balance sheet and cash flows will allow the business to continue investing strongly in R&D, capital programmes and, where value enhancing to our shareholders, in acquisitions.

Enquiries:

Independent review report to Consort Medical plc

Introduction

We have been engaged by the company to review the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 31 October 2010, 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 2010 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 LLPChartered AccountantsBirmingham

1 December 2010

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, to the best of their knowledge, that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union. The interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

·; An indication of important events that have occurred during the first six months of the financial year 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 first six months of the financial year 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 year ended 30 April 2010. A list of current directors is maintained on the Consort Medical plc website: www.consortmedical.com.

By order of the Board

Toby Woolrych

Group Finance Director

1 December 2010

Notes to the Interim Accounts

1 Basis of preparation

The Company is a 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 1 December 2010.

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 year ended 30 April 2010 were approved by the Board of directors on 27 July 2010 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 six months ended 31 October 2010 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 year ended 30 April 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30 April 2010, 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 2010:

·; IFRS 3 (revised), "Business combinations" (effective 1 July 2009). The revision to this standard continues to apply the acquisition method to business combinations but there are significant changes to the treatment of contingent payments, transaction costs, and the calculation of goodwill. This could impact the Group's financial statements in the future if it makes any further acquisitions.

The following new standards, amendments to standards, or interpretations are effective for the financial year beginning 1 May 2010 but not relevant to the Group:

·; IAS 27 (revised), "Consolidated and separate financial statements" (effective 1 July 2009).

·; IAS 39 (amendment), 'Financial Instruments; Recognition and measurement on eligible hedged items' (effective 1 July 2009).

·; Amendment to IFRS 1, 'First time adoption of IFRS' and IAS 27 'Consolidated and separate financial statements' (effective 1 July 2009).

·; Amendments to IFRS 1, 'First time adoption' on additional exemptions (effective 1 January 2010).

·; Amendment to IFRS 2, 'Share-based payments' on group cash-settled transactions (effective 1 January 2010).

Accounting policies

·; Amendment to IAS 32, 'Financial instruments: Presentation' on classification of rights issues (effective 1 February 2010).

·; IFRIC 15, 'Agreements for construction of real estates' (effective 1 January 2009 but EU-endorsed from 1 January 2010).

·; IFRIC 16, 'Hedges of a net investment in a foreign operation' (effective 1 October 2008 but EU-endorsed for use from 1 July 2009)

·; IFRIC 17, "Distributions of non-cash assets to owners" (effective 1 July 2009).

·; IFRIC 18, "Transfers of assets from customers" (effective 1 July 2009 but EU-endorsed for use from 31 October 2009).

·; Annual improvements 2009 (effective 1 January 2010).