Interim results for the six months to 31/10/13

News Release

4 December 2013

Consort Medical plc

Interim results for the six months ended 31 October 2013

Solid performance; strengthening organic growth platforms

Consort Medical plc (LSE: CSRT) ("Consort" or the "Group"), a leading designer and manufacturer of drug delivery and device technologies, today announces its interim results for the six months ended 31 October 2013. 

Financial Highlights1

Special items credit of £0.4m include £0.4m amortisation of intangible assets, £0.2m of acquisition related expenses offset by a £0.1m related tax credit and a £0.9m special tax credit. The special tax credit is in respect of a significant credit arising as the Group's deferred tax assets and liabilities are revalued using the lower rate of UK Corporate Tax of 20% (reduced from 23%).

Other Financial Highlights

· Sustained strong EBIT margin before special items of 18.8% (H1 FY2013: 18.9%) reflecting central cost savings and growing service revenue, following King Systems disposal

· Continuing strong cash flow from operating activities and maintained balance sheet strength, with net cash of £33.6m at the period end

· 5% increase in Interim dividend to 7.35p / share, reflecting strength of results, and Board's confidence in the Group's outlook

Operational Highlights

· Positive market acceptance for Chiesi NEXThaler in Germany and in recently launched markets of Italy, Holland and Spain

· Secured first commercial drug handling licence for Nicoventures programme

· Awarded major multi-year exclusive supply contract for a respiratory dry powder inhaler (DEV610)

· Development pipeline advanced towards further product launches, and addition of Nasal contract (NAS030)

· Commercial unveiling of novel Syrina®, Vapoursoft® and Lila® injection technology ranges from Cambridge Innovation Team

Jon Glenn, Chief Executive Officer, commented:

We have had a very solid first half of the year, with a number of significant milestones in our development pipeline being achieved. The strategy laid out over three years ago to achieve sustained organic growth is delivering.

The award of the commercial supply contract on DEV610 is another substantial achievement in converting the pipeline into organic revenue growth. Our Innovation Team continues to perform strongly, most recently evidenced by the award of the NAS030 development contract, and the commercial unveiling of the novel Syrina®, Vapoursoft® and Lila® technologies.

The Board expects the organic growth initiatives, particularly from further development programme wins, to continue to convert into increased revenue and operating leverage for Consort over time. The Group also continues to evaluate suitable inorganic opportunities which are consistent with its strategy.

Consort is trading in line with its expectations, and the Board remains confident of its outlook for the full year.

Enquiries:

Consort Medical plc is an international medical devices company, focused on developing and manufacturing disposable medical devices for drug delivery and point of care diagnostics ("POC"). The principal business of the Company is Bespak, a global market leader in the manufacture of drug delivery devices for pharmaceutical partner companies, including respiratory, nasal, and injectables products, and the manufacture of devices for the point of care diagnostics market.

The Group has facilities in King's Lynn, Cambridge, Nelson and Hemel Hempstead in the UK. Consort Medical plc is a public company quoted on the full list of the London Stock Exchange (LSE: CSRT). The Group's website address is www.consortmedical.com.

Consort Medical plc

Group Interim Results

The first six months of the year have delivered solid growth, with progress in our development pipeline and IP portfolio continuing at pace:

· Solid revenue, EBIT and EPS growth

· Secured first commercial drug handling licence for Nicoventures programme

· Sustained execution of delivery pipeline milestones towards product launches

· Award of novel own-IP nasal device development contract, developed by Innovation Team

· Awarded potentially transformational supply contract on DEV610

· Commercial unveiling of Syrina®, Vapoursoft® and Lila® technologies, developed by Innovation Team

Financial Performance1

Revenue from products and services increased by £3.1m (6.5%) to £51.2m (H1 FY2013: £48.1m), and operating profit before special items increased by 4.8% to £9.6m (H1 FY2013: £9.1m). EBIT margin before special items was constant at 18.8% (H1 FY2013: 18.9%), as the strength of service income arising from the development pipeline continued, together with central cost savings, following the disposal of King Systems.

Profit before tax and special items increased by £0.9m (12.4%) to £8.9m (H1 FY2013: £8.0m), reflecting lower finance costs in particular, and profit after tax and before special items rose by 17.8% to £7.0m (H1 FY2013: £6.0m). Adjusted basic earnings per share increased by 17.3% to 24.5p (H1 FY2013: 20.8p).

Including special items, profit after tax increased by £2.1m (38.6%) to £7.4m (H1 FY2013: £5.3m), and basic earnings per share rose by 38.1% to 25.7p (H1 FY2013: 18.6p).

Cash flow from operating activities2 increased to £7.3m (H1 FY2013: £4.7m). EBITDA before special items2 was up £0.2m (1.7%) at £12.3m (H1 FY2013: £12.1m). Working Capital was up £0.5m at £8.9m (FY2013: £8.4m) representing 9.1% of sales (FY2013: 8.8%). Capital expenditure of £4.5m (H1 FY2013: £6.1m) was lower than expected due to timing on key Nicoventures programme investments, although it is expected to increase during the second half.

Net cash was £33.6m (H1 FY2013: Net debt £38.5m; FY2013: Net cash £37.0m). With headroom of £75.9m under our undrawn banking facility, and a further £25.0m available under the accordion facility, the Group has significant cash resources available.

The Board is proposing a 5% increase in the interim dividend to 7.35p (H1 FY2013: 7.0p). This increase aligns with the FY2013 final dividend increase, and underlines the Board's confidence in the sustainability of the current performance, and in the prospects the Group. The dividend will be payable on 14 February 2014, with a record date of 17 January 2014.

Operational Performance

Revenue growth of 6.5% in the first half was driven principally by the Chiesi NEXThaler which launched in March 2013. This was launched initially in Germany, and has subsequently been launched in Italy, Holland and Spain. Revenue to date for the Chiesi NEXThaler is consistent with our expectations for the uptake of the drug. In addition, Diskus volumes were stronger than the prior year which were affected by a factory reconfiguration. Valves revenue was up 4.8% on the prior year. Service revenue increased by more than 70% over the prior year, driven by the significant activity in the development pipeline.

The EBIT margin before special items was broadly similar to the prior year at 18.8% (H1 FY2013: 18.9%) supported by the ongoing strength of the service revenue, and savings in corporate costs following the disposal of the King Systems business in February 2013.

Revenue diversification in products continued, with growth in particular in Respiratory - DPI to 31.8% of total sales (H1 FY2013: 25.8%), and Other to 10.7% of total sales (H1 FY2013: 7.0%), the balance being Respiratory - MDI. Customer revenue diversification also continued, with revenue to the top 5 customers at 59.1% of total sales (H1 FY2013: 62.3%), and to the next 5 customers of 15.3% of total sales (H1 FY2013: 9.6%).

As announced on 28 November, Bespak has entered into a commercial supply agreement relating to its development programme DEV610, signing a multi-year contract, with an initial exclusivity period, to serve as the contract manufacturer of a customer's proprietary dry powder inhaler (DPI). The customer is a global pharma company whose details remain confidential at this time. For Bespak this is a significant opportunity, which requires the construction of a further dedicated building at the King's Lynn site to accommodate the additional moulding and assembly capacity to produce the contracted volumes. Revenues from the contract will be dependent on sales following regulatory approval and launch of any products utilizing the device. Initial launch is expected in 2015. The contract further leverages our operational and regulatory expertise in the production of high volume, premium quality drug delivery devices, and represents a further execution of our strategy for organic growth.

In August the MHRA granted Bespak its first commercial drug handling licence for the Nicoventures programme. This was a significant achievement, which underlines Bespak's substantial quality and regulatory competence and expertise, further demonstrating our success in the delivery of our strategy to expand our service offering up the value chain.

Substantial work is in progress to develop Bespak's facilities to accommodate its organic growth. For the Nicoventures programme, construction has begun in King's Lynn to erect a new facility to accommodate the assembly operations, and the refurbishment and reopening of the Milton Keynes facility is also in progress to house the component injection moulding lines. Following the award of the DEV610 DPI supply contract, a further new dedicated facility will be constructed in King's Lynn. With the expansion of the Innovation Team in Cambridge, options are currently under review for expanding the current facilities to accommodate on-going growth.

Development Portfolio

Development Contracts

In July we announced the award of a new development contract NAS030 for a novel patented nasal drug delivery device. This is the first development contract which has arisen out of an own-IP product innovation which originated in the Innovation Team in Cambridge - which was established just over three years ago. The major programmes in our development pipeline are listed below.

DPI = Dry Powder Inhaler, MDI = Metered Dose Inhaler, POC = Point of Care

All programmes have made further progress towards launch, except INJ300 following a response letter from the FDA, and NAS010 which has been stopped by the customer following the customer portfolio review indicated previously.

Innovation Team

In addition to the award of the development contract NAS030, the Innovation Team has continued to be highly active on a number of fronts over the last six months. The team has now grown to 16 (9 at 30 June 2013), and is in the process of evaluating its future facility requirements.

Of particular note is the commercial unveiling of the Syrina® and Vapoursoft® technologies at the PDA exhibition in Basel in November. These exciting and breakthrough technologies leverage Bespak's expertise and IP in gas propulsion, and from IP acquired with The Medical House, and combine them in a family of highly innovative next-generation auto-injectors. The IP for this platform of products has been filed, and generic product demonstrations have been enthusiastically received by potential customers.

The team also unveiled the Lila® pre-filled syringe which incorporates a novel valve technology configurable as either a stopper or a drug separation option.

The team is in discussions on a number of early stage opportunities, including potential customer applications for Syrina® and Lila®.

Other financial details

· Special items in the period include the amortisation of acquired intangibles of £0.4m, relating to the Medical House acquisition, and £0.2m of due diligence costs relating to an aborted acquisition opportunity. The application of the lower tax rate to deferred tax liabilities (23% to 20%) creates a £0.9 million credit in tax.

· The IAS19 valuation of the Bespak defined benefit pension scheme has shown an improvement: the deficit now stands at £9.1m, down from £11.8m at the FY2013 year end. The main change relates to an increase in bond yields, causing the discount rate applicable to future liabilities to rise. The next triennial actuarial valuation is due at 30 April 2014.

· The effective tax rate from continuing operations before special items for the period reduced to 21.3% (H1 FY2013: 24.9%) reflecting in particular the reduction in the headline corporation tax rate from 1 April 2013. The Group is at the initial stages of evaluating the provisions of the UK Government's new Patent Box regime and its potential applicability to the Bespak business and, as a result, has not currently assumed any benefit that may arise.

· The Group continues to retain its committed £75.9m bank facilities which are undrawn. The undrawn portion of these USD and GBP denominated facilities attract a non-utilisation fee of 0.8%, which is reflected in finance costs. The Group also has a £25.0m accordion facility available to it. These facilities expire in November 2016. The Group currently carries a significant cash balance, which is earning deposit interest with minimum 'A' credit rated financial institutions.

· With the scale and incidence of new business investment developments, the directors have reassessed the judgments made in accounting for tooling and equipment revenue, and have changed their accounting policy:

o From: accounting on a gross basis (i.e. recognising gross revenue from tooling and equipment with the related cost recorded in operating expenses);

o To: accounting for this on a net basis, having regard to the transfer of risks and rewards.

This accounting policy change is reflected as a prior year adjustment with comparatives restated accordingly with a reduction in both revenue and operating expenses for the year ended 30 April 2013 of £6.3m (H1 FY2013: £2.1m).

Outlook

We have had a very solid first half of the year, with a number of significant milestones in our development pipeline being achieved. The strategy laid out over three years ago to achieve sustained organic growth is delivering.

The award of the commercial supply contract on DEV610 is another substantial achievement in converting the pipeline into organic revenue growth. Our Innovation Team continues to perform strongly, most recently evidenced by the award of the NAS030 development contract, and the commercial unveiling of the novel Syrina®, Vapoursoft® and Lila® technologies.

The Board expects the organic growth initiatives, particularly from further development programme wins, to continue to convert into increased revenue and operating leverage for Consort over time. The Group also continues to evaluate suitable inorganic opportunities which are consistent with its strategy.

Consort is trading in line with its expectations, and the Board remains confident of its outlook for the full year.

Statement of directors' responsibilities

The directors' confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', 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 DTR 4.2.8, namely:

· an indication of important events that have occurred during the first six months 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 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 2013. A list of current directors is maintained on the Consort Medical plc website:

www.consortmedical.com.

By order of the Board

Richard Cotton

Group Finance Director

3 December 2013

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 2013, 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 Conduct 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 Conduct 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 2013 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 Conduct Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

Cambridge

3 December 2013

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.

Consolidated Income Statement

For the half year ended 31 October 2013

* As restated. See note 1.

* As restated. See note 1.

Consolidated Statement of Changes in Shareholders' Equity

For the half year ended 31 October 2013

Consolidated Cash Flow Statement

For the half year ended 31 October 2013

* As restated. See note 1.

Notes to the accounts

1. Basis of preparation

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is Breakspear Park, Breakspear Way, Hemel Hempstead, Herts HP2 4TZ. The Company is listed on the London Stock Exchange.

This condensed consolidated interim financial information was approved for issue on 3 December 2013.

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 2013 were approved by the Board of directors on 12 June 2013 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 2013 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously 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 2013, which have been prepared in accordance with IFRSs as adopted by the European Union.

Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 April 2013, as described in those annual financial statements except where disclosed otherwise in this note. Taxes on income in the interim periods are accrued using the estimated tax rate that would be applicable to expected total annual earnings.

Critical accounting estimates and judgments

The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed interim financial statements, the significant judgments made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 April 2013.

Going concern

The directors have, at the time of approving the interim financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Non-GAAP performance measures

The directors believe that the 'adjusted' profit and earnings per share measures provide additional useful information for shareholders on the underlying performance of the business. These measures are consistent with how business performance is measured internally. The adjusted profit before tax measure is not a recognised profit measure under IFRS and may not be directly comparable with 'adjusted' profit measures used by other companies.

Further details on the special items can be found in note 3.

New standards, amendments and interpretations

The following new standards and amendments have been applied for the first time during the year commencing 1 May 2013:

IAS 19 (revised) "Employee benefits" amends the accounting for employment benefits. The group has applied the standard retrospectively in accordance with the transition provisions of the standard. The impact on the group has been as follows:

· The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit asset or liability and the discount rate, measured at the beginning of the year. There is no change to determining the discount rate; this continues to reflect the yield on high-quality corporate bonds. This has increased the income statement charge as the discount rate applied to assets is lower than the expected return on assets. This has no effect on total comprehensive income as the increased charge in profit or loss is offset by a credit in other comprehensive income. The effect has been that the income statement charge for the period to 31 October 2012 has increased by £129,000 and for the year to 30 April 2013 by £272,000.

· Under IAS 19, interest on the service cost was allowed to be apportioned between net finance costs and service costs in the income statement. Under the revised standard, the Company is required to report all of this interest within the service cost. This has increased operating expenses and reduced finance costs for the period to 31 October 2012 by £6,000 and for the year to 30 April 2013 by £26,000. There is no impact on total profit.

· The tax effect of the above entries reduces the tax charge in the income statement and increase the tax charge in equity by £30,000 in the period to 31 October 2013 and £63,000 for the year to 30 April 2013.

· There is a new term ''remeasurements''. This is made up of actuarial gains and losses, the difference between actual investment returns and the return implied by the net interest cost.

· The effect of the change in accounting policy has no impact on the consolidated balance sheet or consolidated cash flow statement and the impact on earnings per share is immaterial.

IFRS 13 "Fair value measurement" measurement and disclosure requirements are applicable for the financial year commencing 1 May 2013. The Group has included the relevant disclosure requirements within note 9.

Amendments to IAS 1 "Presentation of financial statements" are applicable for the financial year commencing 1 May 2013. The Group has included the relevant disclosure requirements within the interim financial statements.

In addition, IFRS 10 "Consolidated financial statements", IFRS 11 "Joint arrangements", and IFRS 12 "Disclosure of interests in other entities" are applicable for the financial year commencing 1 May 2013 and have not had a material impact on the Group.

There are no new standards that have been issued but are not yet effective for the financial year commencing 1 May 2013, that are expected to have a material impact on the Group.

Discontinued operations

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sales, or is a subsidiary acquired exclusively with a view to resale. Classification of a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is presented as if the operation had been classified as discontinued from the start of the comparative period. The disposal of King Systems, as described in note 15, gives rise to a discontinued operation and restatement of comparatives.

Changes to accounting policy

With the scale and incidence of new business investment developments, the directors have reassessed the judgments made in accounting for tooling and equipment revenue, and have changed their accounting policy:

· From: accounting on a gross basis (i.e. recognising gross revenue from tooling and equipment with the related cost recorded in operating expenses);

· To: accounting for this on a net basis, having regard to the transfer of risks and rewards.

This accounting policy change is reflected as a prior year adjustment with comparatives restated accordingly with a reduction in both revenue and operating expenses for the year ended 30 April 2013 of £6.3m (H1 FY2013: £2.1m).

2. Revenue

The Group's operations are based in the UK.

* As restated. See note 1.

* As restated. See note 1.

Amortisation of acquired intangible assets represents the charge for other intangible assets acquired with The Medical House in 2009.

Acquisition-related expenses are diligence costs incurred in investigating potential investment opportunities.

The special tax item is in respect of a significant tax credit arising as the Group's deferred tax assets and liabilities are revalued using the lower rate of UK Corporate Tax of 20% (reduced from 23%).

In the prior year employee severance costs were in respect of the restructuring of UK operations. Plant restructuring and recall costs included a charge for an onerous property lease. The special tax item was in respect of a one off tax charge arising due to the re-opening of the site at Milton Keynes which changed the tax basis of the valuation of the industrial buildings requiring the recognition of a deferred tax liability.

Special items from discontinued operations are described in note 15.

* As restated. See note 1.

* As restated. See note 1.

The effective tax rate from continuing operations before special items for the period reduced to 21.3% (H1 FY2013: 24.9%) reflecting in particular the reduction in the headline corporation tax rate from 1 April 2013. The Group is in the initial stages of evaluating the provisions of the UK government's new Patent Box regime and their potential applicability to the Bespak business and, as a result, has not currently assumed any benefit that might arise.

* As restated. See note 1.

** - The directors consider that the carrying value amounts of these financial assets and liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values.

*** - The equity investment in Atlas Genetics is an unquoted investment and therefore held at cost, less any provision for impairment as its fair value cannot be measured reliably in the absence of an active market.

The methods and assumptions used to estimate the fair values of financial assets and liabilities are as follows:

· Forward exchange contracts - based on market prices and exchange rates at the balance sheet date;

· Interest rate swaps - based on the market values at the balance sheet date;

· Contingent consideration - the discounted value of anticipated future receipts.

The following tables categorise the Group's financial assets and liabilities held at fair value by the valuation methodology applied in determining fair value. Where possible, quoted prices in active markets are used (Level 1). Where such prices are not available, the asset or liability is classified as Level 2, provided all significant inputs to the valuation model are based on observable market data. In other cases the instrument is classified as Level 3.

9. Financial assets and liabilities (continued)

Under the terms of the disposal of King Systems, completed on 15 February 2013, the purchaser, Ambu A/S, is due to pay amounts of consideration contingent upon the performance of King following disposal. This comprises:

· a milestone payment of US$10 million upon completion of the first commercial sale of a video laryngoscope currently under development by King with a reusable display and an adaptor containing reusable optics and a disposable blade;

· payments with a potential maximum value of US$40 million related to the sales of King Vision products for the three years ending 30 April 2016.

In arriving at the fair value of contingent consideration, the Directors have assessed the amounts of contingent consideration expected to arise together with the anticipated timing of collection by Consort. They have taken account of a statement made on 15 November by Ambu A/S that the first commercial sale of the video laryngoscope is expected by the end of the current calendar year being 31 December 2013. The projected amounts receivable have been discounted with reference to the cost of capital in Ambu A/S and therefore the risk of a receivable value from it. The dollar amount receivable is converted to sterling at spot exchange rates.

As at the 30 April 2013, the fair value of contingent consideration was valued at £11,676,000. As at 31 October 2013 this value is £11,433,000, with an increase of £157,000 as a result of the unwinding of discounting with the passage of time and the change in expected timing of the cash receipts and with a reduction of £400,000 as a result of foreign exchange. All movements in contingent consideration have been recognised in the income statement as special items within discontinued operations (see note 15).

* As restated. See note 1.