13th Nov 2007 10:00
Consort Medical PLC13 November 2007 Consort Medical plc • Restructuring and Sale of Milton Keynes Facility • Trading Update Consort Medical plc ("Consort Medical" LSE: CSRT), formerly Bespak plc,announces the restructuring of its Inhaled Drug Delivery business followingPfizer's decision last month to exit Exubera(R) inhaled insulin. At that time,and as indicated on 18 October, the Board of Consort Medical estimated that thenet effect of the withdrawal from Exubera(R) and the associated restructuring ofthe business would be to impact the adjusted profit before tax for the yearending 30 April 2009 by approximately £2m. Detailed financial analysis carriedout since then allows the Board to conclude that the adjusted profit before taxfor the year ending 2009, will only be impacted by £1m following thisrestructuring. The Board confirms that it does not expect the withdrawal of Exubera(R) byPfizer to impact the Company's current year adjusted profit before tax. Tradingin the first half ended 27 October 2007 for Consort Medical is in line with theBoard's expectations. The restructuring will involve the eventual closure and subsequent sale of theMilton Keynes facility, which was developed to manufacture the inhaler devicefor Exubera(R), and the consolidation of Bespak Technologies and Device Servicesinto one business unit at Consort Medical's existing facility in King's Lynn,Norfolk. There will be a phased relocation of certain programmes to King's Lynn over thenext 12 months, and the Milton Keynes site will be rationalised to Exubera(R)device production capacity until the future of this drug is clarified. The costof continued Exubera(R) device production is anticipated to be borne by NektarTherapeutics. The restructuring is ultimately expected to result in theredundancy of approximately 165 staff members. The accounting treatment forclosure of the site is detailed below. Consort Medical will announce its interim results on 12 December 2007. Accounting Treatment Exceptional Charges The book value of the Milton Keynes site is £11m. Net sale proceeds are expectedto be approximately £7m, and there will therefore be an exceptional charge of£4m in relation to land and buildings. Other exceptional charges in relation tothe restructuring, including plant and equipment write-downs, stock write-offsand severance costs, are expected to total no more than £10m; the Groupanticipates that it will recover a significant proportion of this from NektarTherapeutics. Cash Impact The cash impact of the restructuring, comprising severance costs, relocationcosts, contract termination costs and associated professional fees, is expectedto be approximately £6m. We would anticipate recovering a significant proportionof these costs from Nektar Therapeutics. Taking into account the expectedproceeds of the sale of the Milton Keynes site of approximately £7m the overallcash effect is expected to be positive. Mark Throdahl, Consort Medical's Chief Executive, said: "While we regret theimpact of this restructuring on our workforce in Milton Keynes, we believe theaction we are taking underpins our long-term expectations for the business.Consort Medical has exciting opportunities in asthma inhaler valves, dosecounters, and airway management products. This restructuring will bring greaterstability to our sales and earnings trajectory and make Consort Medical astronger company." For further information please contact: Consort Medical plcMark Throdahl, Chief Executive Tel: +44 (0) 1908 552600Jonathan Glenn, Group Finance Director MaitlandLiz Morley or Brian Hudspith Tel: +44 (0) 20 7379 5151 Consort Medical 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 and emergency medicine. Consort Medical develops and manufactures metered dose inhaler valves,actuators, compliance aids, dry powder devices, disposable facemasks andcircuits, laryngeal tubes, and emergency medicine breathing equipment. The Grouphas facilities in King's Lynn and Milton Keynes in the UK, Indianapolis, Indianaand Kent, Ohio in the US, and Mumbai, India. Consort Medical is a public companyquoted on the full list of the London Stock Exchange (LSE:CSRT). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CSRT.L