18th Jan 2007 07:01
Bespak PLC18 January 2007 Bespak plc Interim results for the 26 weeks to 28 October 2006 Bespak (LSE: BPK), a leader in medical devices for inhaled drug delivery andanaesthesia, today announces its interim results for the 26 weeks to 28 October2006. Highlights • Revenue (including the first half year of King Systems) up 61% to £62.1m (2005: £38.5m). • Organic sales from Inhaled Drug Delivery up 22% to £46.8m (2005: £38.5m) with record MDI sales and rapid growth of Exubera(R) insulin inhalers. • Profit before tax and special items up 39% to £8.5m (2005: £6.1m) • Adjusted earnings per share up 26% to 21.7 p (2005: 17.2p), reflecting continuing operations before special items • Cash generated from operations up 126% to £16.7m (2005: £7.4 m) • Interim dividend of 7.0p per share (2005: 7.0p) • King Systems attained its final earn-out target in October 2006, two months early. • Withdrawal from Consumer Dispensers business completed after sale of certain products and assets. • Target established to double the Company's profit before tax over five years Mark Throdahl, Bespak's Chief Executive, commented: "Bespak has experienced strong growth in the first half year, and the Boardbelieves that the Company will have a full year that again exceeds its originalexpectations. Demand for Exubera(R) insulin inhalers has been very strong, andwe are enjoying record sales of MDI valves. King Systems, the anaesthesiabusiness we acquired last year, has delivered 10% underlying sales growth. "Bespak has set a target to double its profit before tax over the next fiveyears, although the current profile of our businesses means that we mayout-perform or under-perform this trajectory in any given year. We arebroadening our customer base beyond pharmaceutical companies and reducing ourdependency on lengthy development programmes." For further information, please contact: Bespak plcMark Throdahl, Chief Executive Tel: +44 (0)1908 552600Jonathan Glenn, Group Finance Director MaitlandLiz Morley or Brian Hudspith Tel: +44 (0)20 7379 5151 Bespak plc is a leader in medical devices for inhaled drug delivery andanaesthesia. The Group develops drug delivery systems for the pharmaceuticalindustry and disposable airway management products for critical care settings inhospitals. Bespak develops and manufactures metered dose inhaler valves, actuators,compliance aids, dry powder devices, disposable facemasks, breathing circuitsand laryngeal tubes. The Group holds the 2005 Frost & Sullivan Award forTechnology Innovation and has facilities in King's Lynn and Milton Keynes in theUK, Indianapolis, Indiana and Kent, Ohio in the US, and Mumbai, India. Bespak isa public company quoted on the full list of the London Stock Exchange (LSE:BPK). Bespak plc Interim Results for the 26 Weeks to 28 October 2006 Trading was strong in all the Group's businesses, with record sales of metereddose inhaler valves, successful production ramp-up of the inhaler for Exubera(R)inhaled insulin, and double-digit hospital sales growth in anaesthesia products. In the 26 weeks to 28 October 2006, sales of products and services increased by61% to £62.1m (2005: £38.5m). Operating profit before special items increased by65% to £9.9m (2005: £6.0m). Profit before tax and special items increased by 39%to £8.5m (2005: £6.1m), reflecting increased financing costs for the KingSystems acquisition. Earnings per share adjusted for amortisation of intangiblesand other special items increased 26% to 21.7p (2005: 17.2p). Profit before tax increased 7% to £7.6m (2005: £7.1m), despite the current yearamortisation charge on the intangible assets acquired with the acquisition ofKing Systems and the £0.9m exceptional gain on the sale of the Carymanufacturing site during 2005. Profit after tax from continuing operations of£5.6m was flat compared with the prior year (2005: £5.6m), reflecting thenon-taxable exceptional gain on the sale of Cary. Profit for the period, whichincludes the £1.7m loss from the discontinued Consumer Dispensers business, was£3.9m (2005: £5.4m). Earnings per share were 13.8p (2005: 20.0p). Net cash flow from operations was £16.7m (2005: £7.4m). The Board is maintainingan interim dividend of 7.0p per share, which is payable on 23 February 2007 tothose shareholders on the register on 26 January 2007. The Group's net debt asat 28 October 2006 was £20.3m as opposed to net cash in 2005 of £18.8m(reflecting the financing of the King Systems acquisition) and net debt of£27.8m at the start of the period. BUSINESS SEGMENT PERFORMANCE Inhaled Drug Delivery Segment Sales in the Inhaled Drug Delivery segment increased by 22% to £46.8m (2005:£38.5m) as a result of record sales of metered dose inhalation (MDI) valves andstrong demand for the Exubera(R) insulin inhaler. Operating profit beforespecial items increased by 22% to £7.3m (2005: £6.0m), reflecting improvedoperating margins. Respiratory HFA valves volumes grew 33%, after approximate 40% growth in each of thepreceding two years. Sales of older chlorofluorocarbon (CFC) valves were alsoexceptionally strong in the period. Bespak enjoys a high share of the albuterolmarket in the US, currently with formulations which use its CFC valves. AfterDecember 2008, CFC albuterol formulations must be replaced by new formulationswith HFA propellant. While CFC valve sales to Bespak's largest US customer endin January 2007, the Group expects strong demand from its HFA customers andremaining CFC accounts to mitigate the impact of the transition over the next 24months. The dose counter market in the US has the potential to grow significantlybecause of FDA guidance that all new aerosol drug filings should include a dosecounter. Bespak has developed a platform dose counter technology which is nowbeing marketed in a variety of forms for the US market. In addition Bespak hassigned a co-marketing and manufacturing agreement with Bang & Olufsen Medicom,which has developed a dose counter that requires reduced actuation force. Todate, Bespak has demonstrated the technical suitability of the product and is inlate stage negotiations with a selection of customers. Commercial sales areexpected to commence in 2008, pending the anticipated completion of regulatorytesting. Device & Manufacturing Services The first half continued the successful ramp-up of the Exubera(R) insulininhaler, made in the largest clean room in the UK. Sales of Bespak'shistorically largest contract manufactured product were also strong. Exubera(R) is being launched in Europe and the United States. Production demandcontinues ahead of our original expectations, and the pace of productionscale-up has been sustained long enough that the risk of this programme isshifting from one of production scale-up to one of patient uptake. In the first half year, Bespak won significant programmes with two of theworld's largest pharmaceutical companies and a development programme for aglobal medical device company and a development programme for a cancer paintreatment delivery device for a large regional pharmaceutical company. Anaesthesia & Respiratory Care Segment King Systems' sales in the first half (the first full period under Bespak'sownership) were £15.4m ($28.9m) and operating profit was £2.6m ($4.8m). King's financial performance in 2006 has exceeded expectations, and the finalearn-out was attained approximately two months early. In accordance with thePurchase Agreement, the final cash payment of $10m will be made to King's formershareholders later this month. King's product sales to hospitals continue to grow in excess of 10% over theprior year. Growth is driven by breathing circuits, particularly the UniversalFlex2TM, a patented dual limb circuit, which is compact when stored but can beexpanded during use. This product minimises torque placed on the airway tube andcan be shaped to avoid the surgical field. Two new products were introduced in the first half year. The LTS-D laryngealtube is the first disposable laryngeal tube that enables suctioning of stomachcontents. AIRTRAQ(R), the world's first disposable optical laryngoscope, isdesigned for difficult endotracheal tube intubations. King has been encouragedby the enthusiastic clinical reception to both new products. Two risks identified six months ago have been significantly mitigated. Rawmaterial price increases have not materialised to the degree anticipated.Additionally, King has won multiple-year supply agreements at two of the largestUS group purchasing organisations, HealthTrust Purchasing Group and AscensionHealth. Discontinued Consumer Dispensers Segment In August Bespak announced its intention to withdraw from its ConsumerDispensers business. In October Bespak entered into an agreement with PlasticumGroup BV, a Netherlands-based manufacturer of plastic packaging, to dispose ofcertain product lines and related manufacturing equipment. At the time of theannouncement Bespak said that the withdrawal would result in an approximatepre-tax £3m charge, which has now been reduced to £2.3m. Bespak's first halffinancial results include £2.8m revenue and £0.1m operating loss fromoperations, which were discontinued in October 2006. Growth Strategy & Acquisitions The Board has set a target to double the profit before tax of the business overthe next five years, which will result from a strategy to grow organically andthrough selective acquisitions. The Group is broadening its customer base beyondpharmaceutical companies and reducing its historical dependency on lengthydevelopment programmes. Until the non-pharmaceutical component of the Companygrows beyond its current size, Bespak may out-perform or under-perform thistrajectory in any given year. The Company has developed multiple platforms of organic growth, including HFAvalves, dose counters, Exubera(R) inhalers, a 12-programme device manufacturingportfolio, Flex2TM breathing circuits, laryngeal tubes, and AIRTRAQ(R).Following the successful King Systems acquisition, Bespak intends to makefurther acquisitions in the anaesthesiology and respiratory products industry. DIRECTORS In September George Meredith and Jack Cashman stepped down from the Board, andMartin Hopcroft resigned in July. We would like to thank them for their valuablecontributions over the years. In August, George Kennedy was appointed to theBoard as a non-executive director. Formerly Chairman of Smith Industries MedicalGroup, George is now Chairman of E2v plc and Eschmann, Vice Chairman of Vernalisplc, and a non-executive director of Spacelabs. Paul Boughton, Corporate Development Director, was made an Executive Director inJune. Jon Glenn was appointed Finance Director and Executive Director in July.These appointments add further strength to a capable management team. OUTLOOK For the financial year ending 28 April 2007, we expect strong trading tocontinue in MDI valves, Exubera(R) inhaler production, and King's anaesthesiaproducts. Concerns about a decline in Respiratory sales in the US next year havemoderated, and we now anticipate strong continuing demand for CFC valves andvery strong HFA demand over the balance of this financial year and next. Theprimary uncertainty in 2007/08 is the timing of future demand for Exubera(R)inhalers, which will be clarified as patient uptake data is ascertained. The Board has set a target to double Bespak's profit before tax over the nextfive years and is confident that in 2006/07 the Company will out-perform thistrajectory. John Robinson Mark C. ThrodahlChairman Chief Executive Independent review report to Bespak plc IntroductionWe have been instructed by the company to review the financial information forthe twenty-six weeks ended 28 October 2006 which comprises consolidated interimbalance sheet as at 28 October 2006 and the related consolidated interimstatements of income, cash flows and changes in shareholders' equity for thetwenty-six weeks then ended and related notes. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed.This interim report has been prepared in accordance with the basis set out inNote 1. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the twenty-sixweeks ended 28 October 2006. PricewaterhouseCoopers LLPChartered AccountantsCambridge17 January 2007 Notes:(a) The maintenance and integrity of the Bespak plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site.(b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. Consolidated Income StatementFor the 26 weeks ended 28 October2006 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended 28 ended 29 ended 29 October October April 2006 2005 2006 Notes Total Total Total £000 £000 £000Continuing operationsRevenue 2 62,089 38,543 87,560Operating expenses (53,086) (31,621) (72,573) -------- -------- --------Operating profit before special items 9,898 5,984 14,745Special items 3 (895) 938 242 -------- -------- --------Operating profit 2 9,003 6,922 14,987Finance income 238 468 825Finance expenses (1,160) (74) (1,030)Other finance costs 4 (229) (256) (501)Share of post tax (losses)/profitsfrom associate (27) (7) 10Impairment of investment in associate (242) - - -------- -------- --------Profit before tax and special items 8,478 6,115 14,049Special items 3 (895) 938 242 -------- -------- --------Profit before taxation 7,583 7,053 14,291Taxation 5 (2,029) (1,497) (3,570) -------- -------- --------Profit for the financial period fromcontinuing operations 5,554 5,556 10,721Loss for the period from discontinuedoperation 6 (1,678) (202) (399) -------- -------- --------Profit for the financial period 3,876 5,354 10,322 -------- -------- -------- Basic earnings per ordinary shareContinuing operations 7 19.8p 20.7p 39.4pDiscontinued operations 7 (6.0p) (0.7p) (1.5p) -------- -------- -------- Total 7 13.8p 20.0p 37.9p -------- -------- -------- Diluted earnings per ordinary shareContinuing operations 7 19.5p 20.4p 38.8pDiscontinued operations 7 (5.9p) (0.7p) (1.5p) -------- -------- -------- Total 7 13.6p 19.7p 37.3p -------- -------- -------- Dividends £000 £000 £000Final dividend paid of 12.1p pershare (2005: 12.1p) 3,391 3,241 3,241 Interim dividend paid of 7.0p pershare (2005: 7.0p) - - 1,960 -------- -------- -------- 3,391 3,241 5,201 -------- -------- -------- An interim dividend of 7.0p per share (2005: 7.0p) is proposed to be paid in respect of the 26 weeks to 28 October 2006. Consolidated Group Balance SheetAt 28 October 2006 Unaudited Unaudited Audited 28 October 29 October 29 April Notes 2006 2005 2006 Total Total Total £000 £000 £000Non-current assetsProperty, plant and equipment 50,382 47,328 52,537Goodwill 37,674 - 39,259Other intangible assets 13,481 94 14,906Investment in associate - 262 269 -------- -------- ------- 101,537 47,684 106,971 -------- -------- ------- Non-current assets held for resale 8 916 2,986 - Current assetsInventories 10,357 5,759 9,571Trade and other receivables 17,279 13,905 19,052Financial instruments 180 - 237Current tax receivable 965 - 282Cash and cash equivalents 14,167 22,822 9,782 -------- -------- ------- 42,948 42,486 38,924 -------- -------- ------- Current liabilitiesBorrowings 22,474 4,019 23,106Trade and other payables 9 18,089 10,159 15,080Financial instruments - 35 -Current tax payable 4,047 1,436 3,850Provisions and other liabilities 6,299 416 6,147 -------- -------- ------- 50,909 16,065 48,183 -------- -------- -------Net current (liabilities)/assets (7,961) 26,421 (9,259) Non-current liabilitiesBorrowings 11,997 - 14,449Deferred taxation 3,269 79 5,197Defined benefit pension scheme deficit 11 15,839 17,060 12,002 -------- -------- ------- 31,105 17,139 31,648 -------- -------- -------Net assets 63,387 59,952 66,064 -------- -------- ------- Shareholders' equityShare capital 2,802 2,684 2,802Share premium 28,853 23,191 28,837Retained earnings 32,476 34,134 34,693Other reserves (744) (57) (268) -------- -------- -------Total equity 12 63,387 59,952 66,064 -------- -------- ------- Consolidated Cash Flow StatementFor the 26 weeks ended 28 October 2006 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended 28 ended 29 ended 29 October October April Notes 2006 2005 2006 Total Total Total £000 £000 £000Cash flows from operating activitiesOperating profit from continuing operations 9,003 6,922 14,987Depreciation 3,426 3,108 6,423Amortisation 961 44 750Impairment credit - (432) (438)Loss/(profit) on disposal of property, plantand equipment 27 (262) (272)Share based payments 209 134 410(Increase)/decrease in inventories (1,130) 354 (1,504)Decrease/(increase) in trade and otherreceivables 1,252 1,058 (692)Increase/(decrease) in trade and otherpayables 2,766 (1,812) 21Increase/(decrease) in provisions 245 (1,824) (1,725)(Increase)/decrease in financial instruments (29) 123 (149) -------- -------- -------Cash generated from continuing operations 16,730 7,413 17,811Cash flows from discontinued operations 6 349 (21) (13)Interest paid (796) (35) (854)Tax paid (1,966) (1,644) (3,554) -------- -------- -------Net cash inflow from operating activities 14,317 5,713 13,390 -------- -------- ------- Cash flows from investing activitiesPurchases of property, plant and equipment (3,423) (1,979) (4,129)Purchases of intangible assets (135) (8) (182)Proceeds from sale of property, plant andequipment - 398 3,402Disposal of fixed asset investments - 82 83Interest received 214 440 815Dividend received from associate - - 10Acquisition of subsidiary (net of cashacquired) (789) - (45,772) -------- -------- -------Net cash used in investing activities fromcontinuing operations (4,133) (1,067) (45,773)Purchases of property, plant and equipment -discontinued operations - (91) (205) -------- -------- -------Net cash used in investing activities (4,133) (1,158) (45,978) -------- -------- ------- Cash flows from financing activitiesNet proceeds from issue of ordinary sharecapital 16 231 403Equity dividends paid to shareholders (3,391) (3,241) (5,201)New bank loans raised - - 20,121Repayment of amounts borrowed (1,872) - (1,008)Payments to fund defined benefit pensionscheme deficit (810) - (9,540) -------- -------- -------Net cash (used)/generated in financingactivities (6,057) (3,010) 4,775 -------- -------- ------- Net increase/(decrease) in cash and cashequivalents 10 4,127 1,545 (27,813) Cash and short-term borrowings at thebeginning of the period (9,466) 17,415 17,415Effects of exchange rate changes 730 (157) 932 -------- -------- -------Cash and short-term borrowings at the end ofthe period (4,609) 18,803 (9,466) -------- -------- ------- Consolidated Statement of Recognised Income and ExpenseFor the 26 weeks ended 28 October 2006 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended 28 ended 29 ended 29 October October April 2006 2005 2006 Total Total Total £000 £000 £000 Fair value movements on cash flow hedges (86) - 152Deferred tax on fair value movements oncash flow hedges 26 - (46)Exchange movements on translation offoreign subsidiaries (514) 85 (331)Deferred tax on exchange movements 98 - 99Deferred tax on share based payments 32 55 193Actuarial loss on defined benefit pensionscheme (4,205) (949) (5,040)Current tax on actuarial loss - - 543Deferred tax on actuarial loss 1,262 285 970 -------- -------- -------Net loss recognised directly in equity (3,387) (524) (3,460)Profit for the financial period 3,876 5,354 10,322 -------- -------- -------Total recognised income for the period 489 4,830 6,862 -------- -------- ------- Notes to the Interim Accounts 1. Basis of preparation and accounting policies The same accounting policies, methods of computation and presentation have beenused in the preparation of the interim financial statements as were applied inthe 2006 Bespak plc Annual Report and Financial Statements. The financialinformation has been prepared in accordance with the Listing Rules of theFinancial Services Authority. These interim financial statements are unaudited and do not constitute statutoryaccounts of the Group within the meaning of Section 240 of the Companies Act1985. The auditors have carried out a review of the financial information inaccordance with the guidance contained in Bulletin 1999/4 'Review of interimfinancial information' issued by the Auditing Practices Board and their reportis set out on page 6. The financial information for the 52 weeks ended 29 April 2006 has beenextracted from the Group's published financial statements for that year whichcontain an unqualified audit report and which have been filed with the Registrarof Companies. 2. Segmental information (a) Revenue from continuing operations Revenue by business 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- -------- ---------Inhaled drug delivery 46,781 38,543 76,502Anaesthesia and respiratory care 15,441 - 11,118 --------- -------- ---------Total revenues 62,222 38,543 87,620Intra-segment sales (133) - (60) --------- -------- ---------Revenue 62,089 38,543 87,560 --------- -------- --------- Revenue by origin 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- -------- ---------United Kingdom 46,781 34,648 72,568United States of America 15,441 6,812 17,802 --------- -------- ---------Total revenues 62,222 41,460 90,370Intra-segment sales (133) (2,917) (2,810) --------- -------- ---------Revenue 62,089 38,543 87,560 --------- -------- --------- Revenue by destination 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- -------- ---------United Kingdom 11,067 10,168 21,272United States of America 36,292 16,980 41,948Europe 9,983 8,467 17,936Rest of the World 4,747 2,928 6,404 --------- -------- ---------Revenue 62,089 38,543 87,560 --------- -------- --------- (b) Operating profit from continuing operations 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- -------- ---------Inhaled drug delivery 7,345 5,984 13,125Reallocation of corporate costs(note 6) - - (399) --------- -------- ---------Inhaled drug delivery - revisedsegmental basis 7,345 5,984 12,726Special items - 938 901 --------- -------- ---------Inhaled drug delivery after specialitems 7,345 6,922 13,627 --------- -------- --------- Anaesthesia and respiratory care 2,553 - 2,019Special items (895) - (659) --------- -------- ---------Anaesthesia and respiratory careafter special items 1,658 - 1,360 --------- -------- --------- Operating profit before specialitems 9,898 5,984 15,144Reallocation of corporate costs(note 6) - - (399) --------- -------- ---------Revised segmental basis 9,898 5,984 14,745Special items (895) 938 242 --------- -------- ---------Operating profit after special items 9,003 6,922 14,987 --------- -------- --------- (c) Net assets Net assets by business segment 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- -------- --------- Continuing operationsInhaled drug delivery 52,818 54,865 55,218Anaesthesia and respiratory care 60,116 - 63,231Unallocated net (liabilities)/assets (47,637) 3,060 (54,310) --------- -------- ---------Total continuing operations 65,297 57,925 64,139Discontinued operations (1,910) 2,027 1,925 --------- -------- ---------Net assets 63,387 59,952 66,064 --------- -------- --------- Exchange rates 28 October 29 October 29 April 2006 2005 2006 --------- -------- --------- Average rate of exchange - USD 1.87 1.80 1.78Closing rate of exchange - USD 1.90 1.78 1.82 3. Special items 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- --------- --------- Continuing operationsExceptional operating income - 938 901Amortisation of acquired intangibleassets (895) - (659) --------- --------- ---------Special items before tax (895) 938 242Taxation 355 - 290 --------- --------- ---------Special items after tax (540) 938 532 --------- --------- --------- Amortisation represents the charge for other intangible assets acquired withKing Systems. The tax credit relates to the amortisation charge. The exceptional income in the 26 weeks to 29 October 2005 and the 52 weeks ended29 April 2006 comprised the reversal of closure provisions and impairmentprovisions relating to the closure of the Group's manufacturing facility inNorth Carolina. 4. Other finance costs 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- --------- ---------Expected return on defined benefitscheme assets 1,238 764 1,657Interest cost on defined benefitscheme liabilities (1,330) (1,020) (2,041) --------- --------- ---------Interest net of expected return onplan assets (92) (256) (384)Unwinding of discount on deferredconsideration (137) - (117) --------- --------- ---------Other finance costs (229) (256) (501) --------- --------- --------- 5. Taxation 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- --------- ---------UK corporation tax 1,553 1,403 3,780Overseas taxation 405 15 289Deferred taxation 71 79 (499) --------- --------- --------- 2,029 1,497 3,570 --------- --------- --------- The tax charge for the 26 weeks ended 28 October 2006 is based on the effectivetax rate, which it is estimated will apply to earnings for the full year. 6. Discontinued operations In August 2006, the Group announced the closure of its consumer dispenserbusiness with effect from the end of October 2006. This business has beenclassified as a discontinued operation under IFRS 5, and the assets shown asheld for sale, as of that date. The results of the discontinued operation forthe 26 weeks ended 28 October 2006, and the comparative periods, are as follows: 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 Notes £000 £000 £000 --------- --------- --------- Revenue 2,790 2,679 5,524Operating expenses (2,936) (2,968) (6,087) --------- --------- ---------Operating loss (a) (146) (289) (563)Impairment provisions (b) (1,022) - -Closure provisions (c) (1,230) - - --------- --------- ---------Loss before tax (2,398) (289) (563)Attributable taxation 720 87 164 --------- --------- ---------Loss after tax fromdiscontinued (1,678) (202) (399)operations --------- --------- --------- (a) The operating loss for the year ended 29 April 2006 as originally disclosedwas £962,000. Certain corporate and other costs previously allocated to thisbusiness segment amounting to £399,000 have been reclassified into inhaled drugdelivery in the segmental analysis for the continuing businesses. (b) An impairment provision has been made against the carrying value of thefixed assets in the consumer dispenser business. The assets were either scrappedor sold in November 2006 for their carrying value at 28 October 2006. (c) Closure provisions comprise employee severance and other costs incurred inconnection with the closure. Cash flows from discontinuedoperations 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 Notes £000 £000 £000 --------- --------- ---------Loss before taxation (2,398) (289) (563)Depreciation 282 325 649Impairment provisions 1,022 - -(Increase)/decrease ininventories (109) 20 (2)Decrease/(increase) in tradeand other receivables 397 (77) (97)Increase in provisions 1,155 - - --------- --------- ---------Net cash flows from operatingactivities 349 (21) (13) Investing activities -purchases of property, - (91) (205)plant and equipment --------- --------- ---------Cash flows from discontinuedoperations 349 (112) (218) --------- --------- --------- 28 October 2006 £000Non-current assets held for sale comprise the following:Property, plant and equipment 540Inventory 376 ---------Total 916 --------- 7. Earnings per share 26 weeks to 26 weeks to 52 weeks to 28 October 29 October 29 April 2006 2005 2006 --------- --------- ---------The calculation of earnings perordinary share is based on thefollowing: Profit for the financial period(£000) 3,876 5,354 10,322 --------- --------- --------- Profit for the period fromcontinuing operations (£000) 5,554 5,556 10,721Add back: Special items after tax(£000) 540 (938) (532) --------- --------- ---------Adjusted profit for the financialperiod (£000) 6,094 4,618 10,189 --------- --------- --------- Loss for the period fromdiscontinued operations (£000) (1,678) (202) (399) --------- --------- --------- Weighted average number of ordinaryshares in issue 28,021,335 26,815,740 27,242,663Shares owned by Employee ShareOwnership Trusts - (16,141) (8,071) ----------- ----------- -----------Average number of ordinary sharesin issue for basic earnings 28,021,335 26,799,599 27,234,592Dilutive impact of share optionsoutstanding 524,690 346,816 422,960 ----------- ----------- -----------Diluted average number of ordinaryshares in issue 28,546,025 27,146,415 27,657,552 ----------- ----------- ----------- Basic earnings per ordinary shareContinuing operations 19.8p 20.7p 39.4pDiscontinued operations (6.0p) (0.7p) (1.5p) --------- --------- ---------Total 13.8p 20.0p 37.9p --------- --------- --------- Adjusted earnings per ordinary shareContinuing operations 21.7p 17.2p 37.4p --------- --------- --------- Diluted earnings per ordinary shareContinuing operations 19.5p 20.4p 38.8pDiscontinued operations (5.9p) (0.7p) (1.5p) --------- --------- ---------Total 13.6p 19.7p 37.3p --------- --------- --------- 8. Non current assets held for resale 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- --------- ---------Consumer dispenser assets (note 6) 916 - -Property in North Carolina - 2,986 - --------- --------- ---------Total 916 2,986 - --------- --------- --------- The property in North Carolina was sold in December 2005 for its carrying valueat October 2005. 9. Trade and other payables 28 October 29 October 29 April 2006 2005 2006 £000 £000 £000 --------- --------- ---------Amounts falling due withinone yearTrade payables 8,047 5,469 7,137Amounts payable to associatedcompanies - trading 230 205 158Other taxation and social security 825 561 692Other creditors 3,408 2,306 3,461Accruals and deferred income 5,579 1,618 3,632 --------- --------- --------- 18,089 10,159 15,080 --------- --------- --------- 10. Reconciliation of net cash flow to movement in net debt Cash and cash Current Non-current equivalents borrowings borrowings Net debt £000 £000 £000 £000 --------- --------- --------- --------- At 30 April 2006 9,782 (23,106) (14,449) (27,773)Cash flow for the period 4,436 (309) - 4,127Loan repayments included incash flow for the period - - 1,872 1,872Effect of exchange ratechanges (51) 941 580 1,470 --------- --------- --------- ---------At 28 October 2006 14,167 (22,474) (11,997) (20,304) --------- --------- --------- --------- Net debt at 28 October 2006comprises:Cash and short-termborrowings 14,167 (18,776) - (4,609)Bank term loan - (3,691) (11,994) (15,685)Finance lease obligations - (7) (3) (10) --------- --------- --------- ---------At 28 October 2006 14,167 (22,474) (11,997) (20,304) --------- --------- --------- --------- 11. Defined benefit pension scheme deficit 26 weeks 26 weeks 52 weeks ended 28 ended 29 ended 29 October 2006 October 2005 April 2006 Total Total Total £000 £000 £000 --------- --------- --------- Pension deficit at start of period 12,002 15,703 15,703Current service costs 1,092 771 1,537Expected return on plan assets (1,238) (764) (1,657)Interest cost 1,330 1,020 2,041Actuarial losses 4,205 949 5,040Regular employer contributions (742) (619) (1,122)Employer payments to fund deficit (810) - (9,540) --------- --------- ---------Pension deficit at end of period 15,839 17,060 12,002 --------- --------- --------- 12. Consolidated Statement of changes in shareholders' equity 26 weeks 26 weeks 52 weeks ended 28 ended 29 ended 29 October 2006 October 2005 April 2006 Total Total Total £000 £000 £000 --------- --------- --------- Total equity at start of period 66,064 57,998 57,998Total recognised income and expense forthe period 489 4,830 6,862Recognition of share-based payments 209 134 410Proceeds for sale of shares for employeeoptions 16 143 314Proceeds from release of own shares held - 88 88Equity dividends (3,391) (3,241) (5,201)Issue of share capital - - 5,593 --------- --------- ---------Total equity at end of period 63,387 59,952 66,064 --------- --------- --------- 13. Acquisitions No adjustments were made in the period to the provisional fair values of assetsand liabilities acquired as part of the purchase of King Systems Corporation inDecember 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CSRT.L