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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Consort Medical Plc | LSE:CSRT | London | Ordinary Share | GB0000946276 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1,010.00 | 1,005.00 | 1,010.00 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCSRT
RNS Number : 0226R
Consort Medical PLC
06 December 2016
Consort Medical plc
6 December 2016
Interim results
Strong underlying(1) performance with 13%(2) increase in EPS(3)
Significant new pipeline contracts increase confidence in longer term outlook
Consort Medical plc (LSE: CSRT) ("Consort", "Consort Medical" or the "Group"), a leading, global, single source drug and delivery device company, today announces its interim results for the six months ended 31 October 2016.
Financial Highlights
H1 FY2017 <DELTA> H1 FY2016 @ CER(2) H1 FY2016 Reported Reported GBPm 6 months ended 31 Oct 2016 31 Oct 2015 31 Oct 2015 ------------------------- ------------ -------- ------------------- ------------------- Revenue 144.9 2.0% 142.1 135.5 EBIT(3) 18.9 8.5% 17.4 16.5 EBT(3) 16.6 10.7% 15.0 14.1 Adjusted Basic EPS(3) 28.6p 13.0% 25.3p 23.5p Statutory Measures Profit before tax (PBT) 10.2 181.2% 3.6 Basic EPS 20.1p 66.2% 12.1p
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange rates. (2) CER - at constant exchange rates. (3) Before special items of GBP6.5m - special items relate to amortisation of acquired intangible assets (H1 FY2016: amortisation of acquired intangible assets GBP6.5m and integration costs GBP4.0m).
-- Group revenue increases to GBP144.9m from GBP135.5m - growth of 2.0% underlying(1) , 6.9% reported
o Bespak underlying(1) revenue growth 4.3% and EBIT growth of 5.7%
o Aesica underlying(1) revenue growth 0.5% and EBIT growth of 14.1%
-- Improvement in Aesica operational performance increases operating margin 160 bps to 7.8% - on course for double digit margins goal
-- 13% growth in Adjusted basic EPS at constant exchange rates reflecting operational leverage and performance
-- Strong underlying(1) cash generation partially offset by currency headwinds and special items cashflow
-- Interim Dividend increased 5% to 7.09p, reflecting the Board's confidence in the Group's prospects
Operational Highlights
-- Landmark deal for Bespak with first full development agreement for Syrina(R) / Vapoursoft(R) device application with a leading Global Biopharma. Development pipeline expands to 16
-- Launch of second Bespak injectable device with UCB Cimzia(R)
-- Rapidly expanding Bespak Innovation funnel, with 11 early stage development / feasibility programmes
-- Aesica an early provider in serialisation services, growing service offering to pharma clients
Jon Glenn, Chief Executive Officer of Consort Medical, commented:
"Consort has continued to deliver strong underlying(1) growth in earnings whilst adding further important contract wins that build our pipeline momentum. In particular, the recent landmark master development agreement for Syrina(R) / VapourSoft(R) and the launch of UCB's Cimzia(R) autoinjector underpin our longer term growth prospects.
We continue to focus on the organic development of our business, and will continue to consider further inorganic opportunities - whether adding a competency or geographic opportunity - where they present a compelling case for enhancing sustainable shareholder value. With a robust financial position and a strong development pipeline, the Board remains highly confident of Consort's future prospects."
Enquiries:
Consort Medical Tel: +44 (0) 1442 867920 Jonathan Glenn - Chief Executive Officer Richard Cotton - Chief Financial Officer FTI Consulting Tel: +44 (0) 20 3727 1000 Ben Atwell / Simon Conway
Notes:
1. Foreign Exchange Rates a. Period end exchange rates 31 Oct 2016: EUR1.11: GBP1.0; USD1.22: GBP1.0. b. Average exchange rate 1 May 2016 to 31 Oct 2016: EUR1.20: GBP1.0; USD1.34: GBP1.0. c. Period end exchange rates 31 Oct 2015: EUR1.40: GBP1.0; USD1.54: GBP1.0. d. Average exchange rate 1 May 2015 to 31 Oct 2015: EUR1.39: GBP1.0; USD1.55: GBP1.0. e. Period end exchange rates 30 April 2016: EUR1.28: GBP1.0; USD1.46: GBP1.0. f. Average exchange rates 1 May 2015 to 30 April 2016: EUR1.36: GBP1.0; USD1.50: GBP1.0.
Consort Medical plc is a leading, global, single source pharma services drug and delivery device company. We are at the leading edge of innovation and we are committed to investing in patient, clinician and customer driven innovation to create new treatments, new markets and new opportunities.
Our businesses
Bespak is a global market leader in the manufacture of drug delivery devices for pharmaceutical partner companies, including respiratory, nasal, injectables and ocular products, and the manufacture of devices for the point of care diagnostics market. www.bespak.com.
Aesica is a leading provider of finished dose and active pharmaceutical ingredient (API) development and manufacturing services to pharmaceutical partners. www.aesica-pharma.com.
We employ c.2,000 people globally of which c.1,400 are located in the UK. We have UK facilities in King's Lynn, Cambridge, Nelson, Milton Keynes, Cramlington, Queenborough and Hemel Hempstead, German facilities in Monheim and Zwickau and a facility in Pianezza, Italy. Consort Medical is a public company quoted on the premium list of the London Stock Exchange (LSE: CSRT). www.consortmedical.com.
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange rates.
Consort Medical plc
Group Interim Results
During the first half Consort delivered a strong underlying(1) performance from both businesses, in particular our further operational improvements in Aesica translated into an enhanced operating margin. In addition, a number of important business development milestones have added to the Group's future growth prospects, especially the landmark master development agreement for Syrina(R) / VapourSoft(R) and the launch of UCB's Cimzia(R) autoinjector.
Financial Performance
Revenue increased by GBP9.4m (6.9%) to GBP144.9m (H1 FY2016: GBP135.5m) with Bespak delivering sustained growth of 4.3% to GBP58.9m (H1 FY2016: GBP56.5m), and Aesica growing 8.8% to GBP86.0m (H1 FY2016: GBP79.1m) - an increase of 0.5% at constant exchange rates. Revenue strengthening attributable to the weakness of sterling against the Euro is GBP6.5m or 8.3%.
EBIT before special items increased by 14.7% to GBP18.9m (H1 FY2016: GBP16.5m). This included 5.7% growth from Bespak to GBP12.2m (H1 FY2016: GBP11.5m). Bespak EBIT margin increased by 30bps to 20.7%. Aesica EBIT increased 35.8% to GBP6.7m - an increase of 14.0% at constant exchange rates - with EBIT margin growing 160bps to 7.8% reflecting continuing improvements to operating performance.
Special items before taxation amounted to GBP6.5m in the year (H1 FY2016: GBP10.5m), comprising amortisation of acquired intangibles (H1 FY2016: amortisation of acquired intangible assets GBP6.5m and integration costs GBP4.0m).
Finance costs were GBP2.3m (H1 FY2016: GBP2.4m), with Earnings before tax and special items increasing by 18.0% to GBP16.6m (H1 FY2016: GBP14.1m) - an increase of 10.7% at constant exchange rates. Adjusted basic EPS increased by 21.7% to 28.6p per share (H1 FY2016: 23.5p) - an increase of 13.0% at constant exchange rates. Basic EPS increased by 66.2% to 20.1p per share (H1 FY2016: 12.1p).
Cash generated from operations decreased by GBP9.2m to GBP10.1m (H1 FY2016: GBP19.3m). EBITDA before special items grew GBP3.6m (16.9%) to GBP25.2m (H1 FY2016: GBP21.5m). Bespak EBITDA grew 7.8% to GBP15.2m, with Aesica's EBITDA growing 34.1% to GBP10.0m - an increase of 21.5% at constant exchange rates. Trade working capital increased GBP3.9m to GBP55.7m (H1 FY2016: GBP51.8m) including the impact of sterling depreciation against the euro, which represents 19.5% of sales (H1 FY2016: 19.4% of proforma sales). Capital expenditure reduced GBP2.1m to GBP6.2m (H1 FY2016: GBP8.3m).
The Group balance sheet closed with a net debt position of GBP106.8m (FY2016: GBP97.0m), representing gearing of 1.91x Net Debt: EBITDA, comfortably within the banking facility covenant (maximum 3.0x). Interest cover was 15.79x against a covenant minimum of 3.0x. The Group has comfortable cash resource availability, with total committed facilities of GBP171.2m, of which GBP124.1m was drawn at 31 October 2016.
The Board is declaring an increased interim dividend per share of 7.09p (H1 FY2016: 6.75p), an increase of 5%. Payment will be on 17 February 2017 to holders on the register on the record date of 20 January 2017.
Further commentary on the financial results is contained in the Bespak and Aesica business reviews below.
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange rates.
Bespak Business Review
Operations
H1 FY2017 Underlying(1) <DELTA>% Currency <DELTA>% H1 FY2016 ------------- ---------- -------------- --------- --------- --------- ---------- Revenue GBP58.9m GBP2.4m 4.3% - - GBP56.5m ------------- ---------- -------------- --------- --------- --------- ---------- EBITDA(2) GBP15.2m GBP1.1m 7.8% - - GBP14.1m ------------- ---------- -------------- --------- --------- --------- ---------- EBITDA margin %(2) 25.7% 24.9% ------------- ---------- -------------- --------- --------- --------- ---------- EBIT(2) GBP12.2m GBP0.7m 5.7% - - GBP11.5m ------------- ---------- -------------- --------- --------- --------- ---------- EBIT margin %(2) 20.7% 20.4% ------------- ---------- -------------- --------- --------- --------- ----------
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange rates. (2) Before special items
Bespak has a well-established and diverse core business of products in volume manufacturing and a strong pipeline of innovative products entailing respiratory, nasal, ocular and injectable drug delivery, as well as point of care diagnostics. Once again, the business has performed strongly in the first half with increased demand for its core products as well as winning new development opportunities and contracts.
Revenue grew 4.3% to GBP58.9m. The Non-respiratory sales have now grown to over 25% of Bespak's turnover - Injectables sales were particularly strong again in both product sales and service revenue. Across the business service revenue continues to be strong, reflecting the extent of and additions to the Development and Innovation pipelines.
The strong revenue performance translated to EBIT growth, which increased 5.7% to GBP12.2m, as EBIT margin increased 30bps to 20.7%.
In October 2016, Bespak exhibited alongside Aesica at the CPHI exhibition in Barcelona. This was the second time both companies have shared a major industry exhibition platform, and the event drew increased interest in the joint services offering of device and drug.
Product Development
In line with our strategy we have assembled a full and broad product development pipeline of organic growth opportunities, which will add to the strength of the core business going forwards. Successful conversion of these opportunities will provide progressive revenue and profit growth, in both contract manufacturing and products with our own proprietary IP and across a range of therapeutic areas, including commercial drug handling.
Our published development portfolio provides an update on the key business development projects in the business. We guide that for inclusion in the published portfolio, projects must have a reasonable expectation of success, though timescales are difficult to predict, and be expected to produce peak annual sales of at least GBP3m per annum.
In the period, UCB received regulatory approval from the EMA for INJ 570, an autoinjector for UCB's Cimzia(R) , and the drug has been successfully launched in the UK market. Further launches are planned in the near term.
We also added two new projects to our development and manufacturing portfolio. These include one respiratory project and one injectable:
-- SYR075 is a significant new master development agreement for our proprietary Vapoursoft(R) Syrina(R) autoinjector technology with a leading global biopharmaceutical company. Initially there is a single drug / device combination, but the agreement allows for the addition of others, and contains outline terms for commercial supply.
-- VAL100 is a significant new commercial supply agreement for Bespak's proprietary respiratory devices with AstraZeneca AB. This is a multi-year agreement for the scale-up and supply of Bespak's proprietary pressurised metered dose inhaler (pMDI) valves and actuators. These will subsequently be assembled with AstraZeneca's Bevespi Aerosphere(R) (glycopyrrolate and formoterol fumarate) inhalation aerosol indicated for the long-term, maintenance treatment of airflow obstruction in patients with chronic obstructive pulmonary disease (COPD), including chronic bronchitis and/or emphysema. AstraZeneca announced that its device was approved by the US Food and Drug Administration on 25 April 2016.
With the addition of these two new programmes, the portfolio has grown to 16 live programmes. The status of the major programmes currently in our development pipeline is listed below.
Project Description Customer Status -------- -------------------------------------- ---------------------------- -------------------------------------- VAL310 Easifill primeless valve US Pharma Awaiting regulatory approval INJ570 Auto-injector UCB EMA approval received. Launched Oct 2016 in UK VAL020 MDI valve Global Pharma Stability trials complete; customer progressing towards approval and launch DEV200 Nicotine delivery Nicovations Ongoing progress. We continue to work with BAT towards launch POC010 POC Test Cartridge Atlas Genetics CE marking granted for Chlamydia; Combined Chlamydia / Gonorrhoea test cartridge development progressing NAS020 Nasal device Global Generic Formulation change; brief under review DEV610 DPI Mylan Potential GDUFA date 28 March 2017 NAS030 Nasal device Pharma Co. Early stage programme INJ600 PatchPump(R) infusion system for SteadyMed Therapeutics Inc. Good progress made. NDA submission Treprostinel planned H1 2017 INJ650 ASI(R) Auto-injector Global Generic Continuing progress; early stage INJ700 Lila Mix(TM) Injector Pharma Co. Development programme on track IDC300 Oral IDC Pharma Co. Launch now expected H2 FY2018 VAL050 MDI valve / actuator Aeropharm Development contract ongoing OCU050 Ocular device / formulation / filling Oxular Early stage programme VAL100 MDI valve / actuator Astra Zeneca Product approved, awaiting launch SYR075 Syrina(R) / Vapoursoft(R) Global Biopharma Newly completed master development agreement
DPI = Dry Powder Inhaler, MDI = Metered Dose Inhaler, POC = Point of Care, IDC = Integrated Dose Counter
Innovation
The Innovation team continues to be highly active on a number of fronts. The team has now grown to 32 people (21 as at H1 FY2016) at its own dedicated facilities in Cambridge, and we plan to grow this further during the current financial year.
The commercial and innovation teams continue to generate very strong interest in our new technology platforms on a range of opportunities. The Innovation funnel has progressed broadly during the period across a number of therapeutic areas and technologies. These development and feasibility programmes cover a range of therapeutic areas and are all in partnership with biotech and pharmaceutical companies that complement our current customer portfolio in our core business - this is again indicative of the strength and success of our innovation drive and strategy to broaden and diversify our product and customer base.
Syrina(R) , Lila(R) & Lapas(R) Update
Vapoursoft(R) powered Syrina(R) auto-injectors, Vapoursoft(R) powered Lapas(R) auto-injectors, and our Lila Mix(TM) and Duo(TM) technologies have continued to generate widespread interest as innovative and novel drug delivery systems and devices, with several biotech and pharmaceutical companies initiating feasibility and development programmes for their injectable drug portfolios.
This rapidly expanding Innovation funnel currently has an active schedule of five early stage development programmes, six feasibility programmes, and a further five programmes awaiting initiation.
Launch of Bespak's Syrina(R) AR 2.25 Auto-injector
In October 2016 Bespak unveiled its Syrina(R) AR 2.25 auto--injector. This innovative auto-injector is the latest addition to the VapourSoft(R) -powered Syrina(R) range and is suitable for delivering volumes of up to 2.0ml using a standard 2.25ml pre-filled syringe. The Syrina(R) AR 2.25 provides patients with a fully-automatic two-step, compact device for the self-administration of viscous drug formulations.
Using Bespak's proven proprietary VapourSoft(R) compact energy source, Syrina(R) AR 2.25 is able to deliver 2.0 ml of viscous drug solutions smoothly and safely in less than 15 seconds. Designed with a hidden needle, Syrina(R) AR 2.25 offers automatic needle insertion and retraction, as well as drug delivery with a single push-on-skin operation. Syrina(R) AR 2.25 has been tailored specifically for higher viscosities while still enabling the safe use of glass syringes.
Using VapourSoft(R) at its core allows a compact design and, with quiet operation, provides a discrete solution for patients. Syrina(R) AR 2.25 is clinical trial ready, enabling a fast track implementation process once paired with a specific drug formulation.
Aesica Business Review
Operations
H1 FY2017 Underlying(1) <DELTA>% Currency <DELTA>% H1 FY2016 ------------- ---------- -------------- --------- --------- --------- ---------- Revenue GBP86.0m GBP0.4m 0.5% GBP6.5m 8.3% GBP79.1m ------------- ---------- -------------- --------- --------- --------- ---------- EBITDA(2) GBP10.0m GBP1.6m 21.4% GBP1.0m 12.8% GBP7.4m ------------- ---------- -------------- --------- --------- --------- ---------- EBITDA margin %(2) 11.6% 9.4% ------------- ---------- -------------- --------- --------- --------- ---------- EBIT(2) GBP6.7m GBP0.7m 14.1% GBP1.1m 21.8% GBP4.9m ------------- ---------- -------------- --------- --------- --------- ---------- EBIT margin %(2) 7.8% 6.2% ------------- ---------- -------------- --------- --------- --------- ----------
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange rates. (2) Before special items
Aesica revenue grew 0.5% to GBP86.0m, at constant exchange rates. EBIT grew strongly, by 14.1% to GBP6.7m at constant exchange rates, reflecting the continued improvement in its operating performance, with operating margin increasing 160bps to 7.8%.
We are now routinely supplying commercial product using the first semi-continuous processing line and technology installed at the Queenborough site and are in discussion with a range of pharma customers looking to access the equipment for development activities.
Aesica has moved from validation to routine commercial supply of S+flurbiprofen to a leading Japanese pharmaceutical company to provide the active ingredient for an anti-inflammatory formulation.
Business Development and Innovation
A changing regulatory requirement within the pharmaceutical industry is for product to be uniquely identified to the individual pack level. This process is known in the industry as serialisation. Aesica has been a very early provider of serialisation services to the industry for countries such as China and Latin America and is well advanced in developing the service to take on customers for the next wave of countries adopting serialisation including the EU.
The business has identified a number of attractive business development opportunities with pharma companies looking to outsource oral products and has seen growth in demand for its liquid formulation services at the Pianezza site. One continued growth area is around the manufacture and supply of anaesthetic product for both human and veterinary use.
The Aesica commercial team is focused on a growing number of formulation development and manufacturing opportunities, including a number of early leads for drug formulation and device combinations, as well as packaging opportunities.
Other Financial
Special Items
Special items are those items which the Group considers to be non-repetitive or are not a part of the underlying performance of the business, and often where a material income statement cost or credit is incurred in one year to deliver a future benefit. In H1 FY2017 special items amounted to GBP6.5m comprising amortisation of acquired intangible assets (H1 FY2016: amortisation of acquired intangible assets GBP6.5m and integration costs GBP4.0m).
Pensions
The IAS 19 pension valuation at 31 October 2016 was a total deficit of GBP43.3m (30 April 2016: GBP27.2m). The bulk of the increase in the deficit arises primarily from the significant decline in bond yields following the EU referendum which has increased the liabilities, in particular of the Bespak scheme. Deficit recovery contributions of GBP1.5m per annum are being made to the Bespak scheme. The next triennial actuarial valuation will take place at 30 April 2017.
Tax
The effective tax rate on EBT before special items is 16.1% (H1 2016: 18.9%). The reduction in the rate from last year follows the approval and launch of UCB's Cimzia(R) autoinjector (INJ570), where historic development losses in the Medical House (ASI) Ltd. have now been recognised as a tax asset.
Principal risks and uncertainties
The principal risks and uncertainties deemed relevant for the remainder of the financial year are considered in note 14 to the financial statements.
People
As announced in August, Richard Cotton (CFO) is leaving the Group following these results to join Dechra Pharmaceuticals plc as CFO. As announced on 25 November 2016, the Board has appointed Paul Hayes to succeed Richard. Paul is currently CFO of The Vitec Group plc, and is serving his notice there until the end of April 2017 when he will join Consort. In the meantime, the Group has appointed David Tilston to act as Interim CFO until Paul joins. David is a seasoned Interim CFO, with experience in both public and private companies.
The Board would like to thank Richard for his contribution, commitment and hard work during a time of significant change and growth at the Group, and to wish him well as he embarks on the next stage of his career.
Outlook
Consort has continued to deliver strong underlying(1) growth in earnings whilst adding further important contract wins that build our pipeline momentum.
In particular, the recent landmark master development agreement for Syrina(R) / VapourSoft(R) and the launch of UCB's Cimzia(R) autoinjector further evidence our longer term growth prospects.
We continue to focus on the organic development of our business, and will continue to consider further inorganic opportunities - whether adding a competency or geographic opportunity - where they present a compelling case for enhancing sustainable shareholder value. With a robust financial position and a strong development pipeline, the Board remains highly confident of Consort's future prospects.
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange rates.
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 2016. A list of current directors is maintained on the Consort Medical plc website: www.consortmedical.com.
By order of the Board
Richard Cotton
Chief Financial Officer
5 December 2016
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 2016 which comprises the consolidated Income Statement, consolidated Statement of Comprehensive Income, consolidated Balance Sheet, consolidated Statement of Changes in Shareholders' Equity, consolidated Cash Flow Statement and the related explanatory 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.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
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 DTR of the UK FCA.
The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
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.
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 UK. 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 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Lynton Richmond
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
5 December 2016
Condensed Consolidated Income Statement For the half year ended 31 October 2016 Unaudited Unaudited Audited 1 May 1 May 1 May to 31 to 31 to 30 October October April 2016 2015 2016 Note GBP000 GBP000 GBP000 ----------------------------------------- ----- ----------- ---------- ----------- Revenue 2 144,933 135,548 276,910 Operating expenses before special items (126,042) (119,080) (239,935) ----------------------------------------- ----- ----------- ---------- ----------- Operating profit before special items 18,891 16,468 36,975 Special items 3 (6,478) (10,493) (21,018) ----------------------------------------- ----- ----------- ---------- ----------- Operating profit 12,413 5,975 15,957 Finance income 72 14 11 Finance costs 4 (1,587) (1,719) (3,328) Other finance costs 4 (732) (655) (1,399) ----------------------------------------- ----- ----------- ---------- ----------- Profit before tax and special items 16,644 14,108 32,259 Special items 3 (6,478) (10,493) (21,018) ----------------------------------------- ----- ----------- ---------- ----------- Profit before tax 10,166 3,615 11,241 ----------------------------------------- ----- ----------- ---------- ----------- Tax on profit before special items 5 (2,672) (2,664) (4,181) Special items - tax 3 2,333 4,985 8,908 Tax (charge) / credit 5 (339) 2,321 4,727 ----------------------------------------- ----- ----------- ---------- ----------- Profit for the financial period from continuing operations 9,827 5,936 15,968 Loss for the financial period from discontinued operations 15 - (48) (999) ----------------------------------------- ----- ----------- ---------- ----------- Profit for the financial period 9,827 5,888 14,969 ------------------------------------------------ ----------- ---------- ----------- Earnings per share, attributable to the ordinary equity holders of the parent From continuing operations: Basic earnings per ordinary share 6 20.1p 12.2p 32.7p Diluted earnings per ordinary share 6 19.9p 12.0p 32.3p From continuing and discontinued operations: Basic earnings per ordinary share 6 20.1p 12.1p 30.7p Diluted earnings per ordinary share 6 19.9p 11.9p 30.3p Non-GAAP measures From continuing operations: GBP000 GBP000 GBP000 Profit before tax before special items 16,644 14,108 32,259 Profit after tax before special items 13,972 11,444 28,078 Adjusted basic earnings per ordinary share 6 28.6p 23.5p 57.6p Adjusted diluted earnings per ordinary share 6 28.2p 23.2p 56.8p Condensed Consolidated Statement of Comprehensive Income For the half year ended 31 October 2016 Unaudited Unaudited Audited 1 May 1 May 1 May to 31 to 31 to 30 October October April 2016 2015 2016 GBP000 GBP000 GBP000 -------------------------------------------------- ---------- ---------- -------- Profit for the period from continuing operations 9,827 5,936 15,968 Loss for the period from discontinued operations - (48) (999) -------------------------------------------------- ---------- ---------- -------- Profit for the financial period 9,827 5,888 14,969 -------------------------------------------------- ---------- ---------- -------- Other comprehensive income Items that may be reclassified subsequently to profit and loss: Net gain on hedge of a net investment (4,758) 243 (2,699) Exchange movements on translation of foreign subsidiaries 17,878 (119) 10,381 Current tax on exchange movements - 8 (11) Items that will not be reclassified subsequently to profit and loss: Actuarial losses on defined benefit pension scheme (15,895) (319) (5,376) Deferred tax on actuarial losses 2,889 89 1,055 Impact of change in tax rates (439) 457 (588) -------------------------------------------------- ---------- ---------- -------- Other comprehensive (loss) / income for the period (325) 359 2,762 -------------------------------------------------- ---------- ---------- -------- Total comprehensive income for the period 9,502 6,247 17,731 -------------------------------------------------- ---------- ---------- -------- Attributable to equity holders of the parent From continuing operations 9,502 6,295 18,730 From discontinued operations - (48) (999) Condensed Consolidated Balance Sheet at 31 October 2016 Restated* Unaudited Unaudited Audited 31 October 31 October 30 April 2016 2015 2016 Note GBP000 GBP000 GBP000 ---------------------------------- ----- ------------- ------------ ----------- Assets Non-current assets Property, plant and equipment 139,050 130,366 136,673 Goodwill 131,101 117,673 122,634 Other intangible assets 66,269 70,088 67,304 Investments 9 8,250 6,266 8,250 Trade and other receivables 8 - - ---------------------------------- ----- ------------- ------------ ----------- 344,678 324,393 334,861 ---------------------------------- ----- ------------- ------------ ----------- Current assets Inventories 34,977 31,767 30,725 Trade and other receivables 62,471 57,901 54,632 Current tax asset 6,245 3,079 9,284 Cash and cash equivalents 10 16,216 11,580 16,258 ---------------------------------- ----- ------------- ------------ ----------- 119,909 104,327 110,899
---------------------------------- ----- ------------- ------------ ----------- Total assets 464,587 428,720 445,760 ---------------------------------- ----- ------------- ------------ ----------- Liabilities Current liabilities Borrowings 10 (122,977) (106,868) (113,209) Trade and other payables (56,306) (73,884) (61,705) Derivative financial instruments 9 (250) (30) (256) Provisions for other liabilities (4,446) (8,222) (3,610) ---------------------------------- ----- ------------- ------------ ----------- (183,979) (189,004) (178,780) ---------------------------------- ----- ------------- ------------ ----------- Net current liabilities (64,070) (84,677) (67,881) ---------------------------------- ----- ------------- ------------ ----------- Non-current liabilities Trade and other payables (9,453) - (9,475) Deferred tax liabilities (16,529) (19,273) (18,571) Defined benefit pension scheme deficit 12 (43,294) (20,980) (27,157) Provisions for other liabilities (361) - (2,626) ---------------------------------- ----- ------------- ------------ ----------- (69,637) (40,253) (57,829) ---------------------------------- ----- ------------- ------------ ----------- Total liabilities (253,616) (229,257) (236,609) ---------------------------------- ----- ------------- ------------ ----------- Net assets 210,971 199,463 209,151 ---------------------------------- ----- ------------- ------------ ----------- Shareholders' equity Share capital 16 4,921 4,913 4,913 Share premium 137,911 137,422 137,422 Retained earnings 55,636 65,218 67,367 Other reserves 12,503 (8,090) (551) ---------------------------------- ----- ------------- ------------ ----------- Total equity 210,971 199,463 209,151 ---------------------------------- ----- ------------- ------------ -----------
*Restated (see note 17)
Condensed Consolidated Statement of Changes in Shareholders' Equity
For the half year ended 31 October 2016 Share Share Retained Translation capital premium earnings reserve Total GBP000 GBP000 GBP000 GBP000 GBP000 ----------------------------- --------- --------- ---------- ------------ --------- Balance at 1 May 2015 (audited) 4,907 137,087 66,721 (8,222) 200,493 ----------------------------- --------- --------- ---------- ------------ --------- Profit for the financial period - - 5,888 - 5,888 Exchange movements on translation of foreign subsidiaries - - - 124 124 Actuarial gains on defined benefit scheme - - 319 - 319 Tax on amounts taken directly to equity - - (546) 8 (538) ----------------------------- --------- --------- ---------- ------------ --------- Total comprehensive income - - 5,661 132 5,793 ----------------------------- --------- --------- ---------- ------------ --------- Recognition of share-based payments - - 853 - 853 Movement on tax arising on share-based payments - - (211) - (211) Proceeds from exercise of employee options 6 335 - - 341 Consideration paid for purchase of own shares (held in trust) - - (2,084) - (2,084) Equity dividends - - (5,722) - (5,722) ----------------------------- --------- --------- ---------- ------------ --------- 6 335 (7,164) - (6,823) ----------------------------- --------- --------- ---------- ------------ --------- Balance at 31 October 2015 (unaudited) 4,913 137,422 65,218 (8,090) 199,463 ----------------------------- --------- --------- ---------- ------------ --------- Balance at 1 May 2015 (audited) 4,907 137,087 66,721 (8,222) 200,493 Profit for the financial period - - 14,969 - 14,969 Exchange movements on translation of foreign subsidiaries - - - 7,682 7,682 Actuarial losses on defined benefit scheme - - (5,376) - (5,376) Tax on amounts taken directly to equity - - 467 (11) 456 ----------------------------- --------- --------- ---------- ------------ --------- Total comprehensive loss - - 10,060 7,671 17,731 ----------------------------- --------- --------- ---------- ------------ --------- Recognition of share-based payments - - 1,792 - 1,792 Movement on tax arising on share-based payments - - 2 - 2 Proceeds from exercise of employee options 6 335 - - 341 Consideration paid for purchase of own shares (held in trust) - - (2,209) - (2,209) Equity dividends - - (8,999) - (8,999) ----------------------------- --------- --------- ---------- ------------ --------- 6 335 (9,414) - (9,073) ----------------------------- --------- --------- ---------- ------------ --------- Balance at 1 May 2016 (audited) 4,913 137,422 67,367 (551) 209,151 ----------------------------- --------- --------- ---------- ------------ --------- Profit for the financial period - - 9,827 - 9,827 Exchange movements on translation of foreign subsidiaries - - - 13,054 13,054 Actuarial losses on defined benefit scheme - - (15,895) - (15,895) Tax on amounts taken directly to equity - - 2,450 - 2,450 ----------------------------- --------- --------- ---------- ------------ --------- Total comprehensive income - - (3,618) 13,054 9,436 ----------------------------- --------- --------- ---------- ------------ --------- Recognition of share-based payments - - 979 - 979 Movement on tax arising on share-based payments - - (51) - (51) Proceeds from exercise of employee options 8 489 - - 497 Consideration paid for purchase of own shares (held in trust) - - (2,899) - (2,899) Equity dividends - - (6,142) - (6,142) ----------------------------- --------- --------- ---------- ------------ --------- 8 489 (8,113) - (7,616) ----------------------------- --------- --------- ---------- ------------ --------- Balance at 31 October 2016 (unaudited) 4,921 137,911 55,636 12,503 210,971 ----------------------------- --------- --------- ---------- ------------ ---------
Condensed Consolidated Cash Flow Statement
For the half year ended 31 October 2016
Unaudited Unaudited Audited 1 May to 1 May to 1 May 31 October 31 October to 30 2016 2015 April 2016 Note GBP000 GBP000 GBP000 --------------------------------- --- ----- ----------------------- ------------ --------- Cash flows from operating activities Profit before taxation from continuing operations 10,166 3,615 11,241 Loss before taxation from discontinued operations - (48) (999) Finance income (72) (14) (11)
Finance costs 4 1,587 1,719 3,328 Other finance costs 4 732 655 1,399 ----------------------------------------- ----- ----------------------- ------------ --------- Operating profit 12,413 5,927 14,958 Depreciation 6,058 4,888 10,306 Amortisation 6,677 6,624 13,473 Profit on disposal of property, plant and equipment 2 10 696 Share-based payments 979 853 1,792 Change in fair value of contingent consideration - 48 999 Pension charge in excess of cash contributions 45 (183) 412 (Increase) / decrease in inventories (2,539) (450) 1,503 (Increase) / decrease in trade and other receivables (5,392) 1,643 5,388 (Decrease) / increase in trade and other payables (8,156) (2,246) (3,057) (Decrease) / increase in provisions (22) 2,291 143 (Increase) / decrease in financial instruments (6) (87) 139 ----------------------------------------- ----- ----------------------- ------------ --------- Cash generated from operations 10,059 19,318 46,752 Interest paid (1,996) (1,497) (2,791) Tax paid 1,769 (1,331) (6,548) ---------------------------------- --- ----- ----------------------- ------------ --------- Net cash inflow from operating activities 9,832 16,490 37,413 Cash flows from investing activities Purchases of property, plant and equipment (6,212) (8,311) (21,126) Purchases of intangible assets - - (357) Proceeds from sale of property, plant and equipment - 1,979 1,979 Net proceeds on disposal of businesses - 1,549 1,548 Interest received 72 8 11 Purchase of equity investment - - (1,984) ------------------------------------ ----- --------- -------------------------- ----------- Net cash outflow from investing activities (6,140) (4,775) (19,929) Cash flows from financing activities Proceeds from issues of ordinary share capital 498 334 341 Purchase of own shares (2,899) (2,120) (2,209) Equity dividends paid to shareholders (6,142) (5,722) (8,999) Defined benefit scheme (796) - (712) Proceeds from new bank funding 10,834 5,100 14,021 Repayment of amounts borrowed (6,021) (42,601) (48,316) Net cash used in financing activities (4,526) (45,009) (45,874) Net decrease in cash and cash equivalents (834) (33,294) (28,390) Effects of exchange rate changes 792 (327) (553) Cash and cash equivalents at start of period 10 16,258 45,201 45,201 ----------------------------------------- ----- --------- -------------------------- ----------- Cash and cash equivalents at end of period 10 16,216 11,580 16,258 ----------------------------------------- ----- --------- -------------------------- -----------
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 5 December 2016.
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 2016 were approved by the Board of directors on 15 June 2016 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 by the Group's auditor, not audited - see Independent Review Report.
This condensed consolidated interim financial information for the six months ended 31 October 2016 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 2016, 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 2016, 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. The Balance Sheet as at 31 October 2015 has been retrospectively restated - see note 17 for further details.
Critical accounting estimates and judgments
The preparation of interim financial information 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 this condensed consolidated interim financial information, 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 2016, with the exception of changes in estimates required in determining the provision for income taxes.
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 as the Group has net debt of GBP106.8m at 31 October 2016 (H1 FY2016: GBP95.3m) and total banking facilities (using period end exchange rates) of GBP171.2m of which GBP47.1m is undrawn at 31 October 2016 and available up to September 2019. 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.
Notes to the accounts (continued)
1. Basis of preparation (continued)
Further details on the special items can be found in note 3.
New standards, amendments and interpretations
The following accounting standards and amendments are effective for the year commencing 1 May 2016 but are not expected to have a material impact on the Group:
-- Amendments to IFRS 10, IFRS 12 and IAS 28 -- Amendments to IFRS 11, IFRS 14, IAS 1, IAS 16 and IAS 38, IAS 16 and IAS 41, IAS 27 -- Amendments to IFRS 5, IFRS 7, IAS 19, IAS 34 - Annual Improvements
The following accounting standards relevant to the Group have not been early adopted as the Group carries out an assessment of their potential impact:
-- IFRS 9 Financial Instruments -- IFRS15 Revenue from Contracts with Customers -- IAS 7 - Disclosure Initiative -- IAS 12 - Recognition of Deferred Tax Assets for Unrealised losses -- IFRS 2 - Classification and Measurement of Share Based Payment Transactions
-- Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts - Amendments to IFRS 4
-- IFRS 16 - Leases 2. Segmental information
The Group's operating segments are determined with reference to the information which is supplied to the Executive Committee in order for it to allocate the Group's resources and to monitor the performance of the Group. Following the acquisition of Aesica Holdco Limited ("Aesica") on 12 November 2014, that information analyses the Group between two divisions, Bespak and Aesica. Prior to this acquisition, the Group only had one operating segment. The Executive Committee assesses the performance of the operating segments based on a measure of adjusted operating profit which excludes the impact of special items from the operating segments. Special items are analysed in note 3.
Consequently, the segment information provided to the Executive Committee for both of these reportable segments for the period ended 31 October 2016 is as follows:
Bespak Aesica Unallocated Total For the six months ended 31 October 2016 GBP000 GBP000 GBP000 GBP000 ------------------------------------------------- --------- --------- ------------ ---------- Revenue from products and services 58,913 86,020 144,933 ------------------------------------------------- --------- --------- ------------ ---------- Revenue by business segment 58,913 86,020 144,933 ------------------------------------------------- --------- --------- ------------ ---------- Segment operating profit before special items 12,198 6,693 - 18,891 Amortisation of acquired intangible assets (414) (6,064) (6,478) ------------------------------------------------- --------- --------- ------------ ---------- Segment operating profit 11,784 629 12,413 ------------------------------------------------- --------- --------- ------------ ---------- Finance income 72 Finance costs (1,587) Other finance costs (732) ------------------------------------------------- --------- --------- ------------ ---------- Profit before tax 10,166 Taxation (339) --------- --------- ------------ ---------- Profit for the financial year 9,827 ------------------------------------------------- --------- --------- ------------ ---------- Segmental balance sheet Total assets 117,263 316,418 30,906 464,587 Total liabilities (64,126) (73,365) (116,125) (253,616) ------------------------------------------------- --------- --------- ------------ ---------- Net assets 53,137 243,053 (85,219) 210,971 ------------------------------------------------- --------- --------- ------------ ----------
Notes to the accounts (continued)
2. Segmental information (continued)
The Group's operating locations are based in the United Kingdom and Europe, with the Group also making sales in the USA and the rest of the world.
Revenue by destination Unaudited Unaudited Audited from continuing operations 1 May to 1 May 1 May 31 October to 31 to 30 2016 October April 2015 2016 GBP000 GBP000 GBP000 ----------------------------- ------------ ---------- -------- United Kingdom 20,794 19,861 30,426 United States of America 12,364 12,431 41,078 Europe 100,722 84,890 171,010 Rest of the world 11,053 18,366 34,396 ------------------------------- ------------ ---------- -------- Revenue from continuing operations 144,933 135,548 276,910 ------------------------------- ------------ ---------- -------- Unaudited Unaudited Audited 1 May to 1 May 1 May 31 to 31 to 30 October October April 3. Special items 2016 2015 2016 GBP000 GBP000 GBP000 ------------------------------------- ---------- ---------- --------- Acquisition-related expenses - - (1,344) Integration costs - (4,020) (6,534) Amortisation of acquisition-related intangible assets (6,478) (6,473) (13,140) (6,478) (10,493) (21,018) Special items before taxation from continuing operations (6,478) (10,493) (21,018) Special tax item - recognition of capital losses - 1,078 1,078 Special tax item - recognition of capital allowances - - 955 Special tax item - other prior year and lookback period adjustments - - 534 Special tax item - deferred tax credit as a result of the corporate rate change 525 1,132 1,137 Tax on special items 1,808 2,774 5,204 --------------------------------------- ---------- ---------- --------- Special items after taxation from continuing operations (4,145) (5,508) (12,110) --------------------------------------- ---------- ---------- ---------
-- Acquisition-related expenses in the prior year to 30 April 2016 include advisory costs in respect of the Bespak pension scheme and in evaluation of potential transactions.
-- Integration costs in the prior year are in relation to restructuring activity following the completion of the integration programme at Aesica; mainly employee and property or move related in nature.
-- Amortisation of acquired intangible assets represents the charge for other intangible assets within Aesica (acquired in 2014) of GBP6.1m and GBP0.4m in relation to The Medical House acquired in 2009.
-- A special tax item of GBP1.1m was recognised in the prior year as a result of the recognition of deferred tax on capital losses.
-- A special tax item of GBP1.0m was recognised in the prior year as a capital allowance review was carried out in the year which resulted in assets being reclassified from non-qualifying to qualifying.
Notes to the accounts (continued)
3. Special items (continued)
-- A special tax item of GBP0.5m was recognised in the prior year as the impact of a number of prior year adjustments made.
-- A special tax item of GBP0.5m also arises in the current period (H1 FY2016: GBP1.1m, FY2016: GBP1.1m) in respect of a significant tax credit as the Group's deferred tax assets and liabilities were revalued using the lower rate of UK Corporate Tax of 17% from 1 April 2020 (reduced from 18%).
Special items from discontinued operations are described in note 15.
4. Finance costs Unaudited Unaudited Audited 1 May to 1 May to 1 May 31 October 31 October to 30 2016 2015 April 2016 GBP000 GBP000 GBP000 ----------------------------- ------------ ------------ -------- Interest on bank overdrafts and loans including amortised fees (1,587) (1,719) (3,328) ------------------------------- ------------ ------------ -------- Total finance costs (1,587) (1,719) (3,328) Other finance costs Net interest cost on defined benefit scheme (427) (342) (667) Foreign exchange losses (305) (313) (732) ------------------------------ ------------ ------------ -------- Total other finance costs (732) (655) (1,399) ------------------------------- ------------ ------------ -------- 5. Taxation Unaudited Unaudited Audited 1 May to 1 May to 1 May 31 October 31 October to 30 2016 2015 April 2016 GBP000 GBP000 GBP000 -------------------------------- ------------ ------------ -------- Current income tax from continuing operations UK corporation tax 909 1,175 975 Adjustments in respect of prior periods (206) - (1,953) Foreign tax 1,448 653 1,130
Deferred taxation (1,812) (4,149) (4,879) ---------------------------------- ------------ ------------ -------- Income tax expense / (credit) reported in the consolidated income statement 339 (2,321) (4,727) --------------------------------- ------------ ------------ -------- The tax charge from continuing operations is analysed between: Tax on profit before special items 2,672 2,664 4,181 Special tax item - recognition of capital losses - (1,078) (1,078) Special tax item - recognition of capital allowances - - (955) Special tax item - other prior year adjustments - - (534) Special tax item - deferred tax credit as a result of the corporate rate change (525) (1,133) (1,137) Tax on special items (1,808) (2,774) (5,204) Income tax expense / (credit) reported in the consolidated income statement 339 (2,321) (4,727) --------------------------------- ------------ ------------ --------
Special tax items above are described further in note 3.
Notes to the accounts (continued)
6. Earnings per share Unaudited Unaudited Audited 1 May 1 May 1 May to 31 to 31 to 30 October October April 2016 2015 2016 GBP000 GBP000 GBP000 -------------------------------------- ---------- ---------- -------- The calculation of earnings per ordinary share is based on the following: Continuing operations (basic and diluted) Profit for the period - attributable to ordinary shareholders 9,827 5,936 15,968 Add back: Special items after taxation 4,145 5,508 12,110 -------------------------------------- ---------- ---------- -------- Adjusted earnings 13,972 11,444 28,078 -------------------------------------- ---------- ---------- -------- Discontinued operations (basic and diluted) Loss / (Profit) for the period - attributable to ordinary shareholders - (48) (999) Add back: Special items after taxation - 48 999 -------------------------------------- ---------- ---------- -------- Adjusted earnings - - - -------------------------------------- ---------- ---------- -------- Total (basic and diluted) Profit for the period - attributable to ordinary shareholders 9,827 5,888 14,969 Add back: Special items after taxation 4,145 5,556 13,109 -------------------------------------- ---------- ---------- -------- Adjusted earnings 13,972 11,444 28,078 -------------------------------------- ---------- ---------- -------- Number of shares Weighted average number of ordinary shares in issue for basic earnings 49,154,593 49,090,720 49,110,569 Weighted average number of shares owned by Employee Share Ownership Trust (300,759) (374,130) (338,024) ---------------------------------------- ----------- ----------- ----------- Average number of ordinary shares for in issue for basic earnings 48,853,834 48,716,590 48,772,545 Dilutive impact of share options outstanding 622,701 571,474 631,856 ---------------------------------------- ----------- ----------- ----------- Diluted weighted average number of ordinary shares in issue 49,476,535 49,288,064 49,404,401 Pence Pence Pence ---------------------------------------- ----------- ----------- ----------- Continuing operations ---------------------------------------- ----------- ----------- ----------- Adjusted basic earnings per share 28.6 23.5 57.6 Unadjusted basic earnings per share 20.1 12.2 32.7 Adjusted diluted earnings per share 28.2 23.2 56.8 Unadjusted diluted earnings per share 19.9 12.0 32.3 Continuing and discontinued operations ---------------------------------------- ----------- ----------- ----------- Unadjusted basic earnings per share 20.1 12.1 30.7 Unadjusted diluted earnings per share 19.9 11.9 30.3
Notes to the accounts (continued)
7. Dividends Unaudited Unaudited Audited 1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016 GBP000 GBP000 GBP000 --------------------------------- -------------------------- -------------------------- ------------------------ Final dividend for the year ended 30 April 2016 of 12.56p per share (2016: final dividend for 2015 of 11.68p per share) 6,142 5,722 5,703 Interim dividend paid in 2016: 6.75p per share - - 3,296 ---------------------------------- -------------------------- -------------------------- ------------------------ 6,142 5,722 8,999 --------------------------------- -------------------------- -------------------------- ------------------------
The directors are proposing an interim dividend for the year ending 30 April 2017 of 7.09p per share which will absorb an estimated GBP3.5 million of shareholders' equity. It will be paid on 17 February 2017 to shareholders who are on the register on 20 January 2017.
8. Capital expenditure
In the period there were additions to property, plant and equipment of GBP5.7 million (H1 FY2016: GBP9.3 million). Capital commitments contracted for but not provided for by the Group amounted to GBP5.4 million (H1 FY2016: GBP6.5 million).
9. Financial assets and liabilities
The following table sets out the classification of the Group's financial assets and liabilities. Receivables and payables have been included to the extent that they are classified as financial assets and liabilities in accordance with IAS 32, Financial Instruments: Presentation. Provisions have been included where there is a contractual obligation to settle in cash.
Unaudited Unaudited Audited 31 October 31 October 30 April 2016 2015 2016 Financial assets GBP000 GBP000 GBP000 ------------------------------------ ------------ ------------ ---------- Cash and cash equivalents* 16,216 11,580 16,258 -------------------------------------- ------------ ------------ ---------- Trade receivables 46,765 45,665 45,186 Other receivables 8,688 7,130 3,659 ------------------------------------- ------------ ------------ ---------- Total loans and receivables * 55,453 52,795 48,845 Available for sale financial asset - contingent consideration - 950 - Equity investments 8,250 6,266 8,250 ------------------------------------- ------------ ------------ ---------- Total available-for-sale financial assets 8,250 7,216 8,250 ------------------------------------- ------------ ------------ ---------- Unaudited Unaudited Audited 31 October 31 October 30 April 2016 2015 2016 Financial liabilities GBP000 GBP000 GBP000 --------------------------------- ------------ ------------ ---------- Trade payables (26,017) (25,641) (27,225) Other creditors and accruals (21,101) (28,309) (26,978) Interest bearing loans and borrowings (124,118) (108,401) (114,547) Total amortised cost * (171,236) (162,351) (168,750) Currency exchange contracts (250) (30) (256) ---------------------------------- ------------ ------------ ---------- Total fair value through profit and loss financial liabilities (250) (30) (256) ---------------------------------- ------------ ------------ ----------
* The directors consider that the carrying value of amounts of these financial assets and liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values.
Notes to the accounts (continued)
9. Financial assets and liabilities (continued)
All financial liabilities have a contractual maturity date that is less than 12 months from the balance sheet date. The equity investments in Atlas Genetics Limited and Precision Ocular Limited are unquoted investments and therefore held at cost, less any provision for impairment as their fair value cannot be measured reliably in the absence of an active market.
Interest bearing loans and borrowings includes a borrowing of GBP37.4m at 31 October 2016 (H1 FY2016: GBP27.3m) which has been designated as a hedge of the net investments in the two subsidiaries in Germany and Italy, Aesica Pharmaceuticals GmbH. and Aesica Pharmaceuticals S.r.l. This borrowing is being used to hedge the Group's exposure to the euro exchange risk on these investments. Gains or losses on the retranslation of this borrowing are transferred to OCI to offset any gains or losses on translation of the net investments in the subsidiaries.
Financial assets at fair value Level Level Level 1 2 3 Total GBP000 GBP000 GBP000 GBP000 --------------------------------------------------------------- --------- -------- ------- ------- At 31 October 2016 Available for sale financial asset - contingent consideration - - - - At 31 October 2015 Available for sale financial asset - contingent consideration - - 950 950 At 30 April 2016 Available for sale financial asset - contingent consideration - - - - --------------------------------------------------------------- --------- -------- ------- ------- Financial liabilities at fair value Level Level Level 1 2 3 Total GBP000 GBP000 GBP000 GBP000 ----------------------------- -------- ------- ------- ------- At 31 October 2016 Currency exchange contracts - (250) - (250) At 31 October 2015 Currency exchange contracts - (30) - (30) At 30 April 2016 Currency exchange contracts - (256) - (256) ----------------------------- -------- ------- ------- -------
Under the terms of the disposal of King Systems, completed on 15 February 2013, the purchaser, Ambu A/S, was due to pay amounts of consideration contingent upon the performance of King following disposal. The financial asset at 31 October 2015 related to the final payment for the sales of King Vision products for the year ending 30 April 2016. King Vision sales by Ambu in FY2016 were insufficient to trigger a further contingent consideration payment to Consort Medical, therefore the remaining contingent consideration was reduced to nil at 30 April 2016.
Notes to the accounts (continued)
10. Analysis of net debt Unaudited Unaudited Audited 31 October 31 October 30 April 2016 2015 2016 GBP000 GBP000 GBP000 ---------------------------- ------ --------------- ------------- ------------- Current assets: Cash and cash equivalents 16,216 11,580 16,258 ---------------------------- ------ --------------- ------------- ------------- 16,216 11,580 16,258 ------------------------------------ --------------- ------------- ------------- Group borrowings: Interest-bearing loans and borrowings (124,118) (108,401) (114,547) Unamortised facility fees 1,141 1,533 1,338 Net borrowings (122,977) (106,868) (113,209) ------------------------------------- --------------- ------------- ------------- Net debt (106,761) (95,288) (96,951) ------------------------------------- --------------- ------------- -------------
In September 2014, the Group cancelled its $56m multicurrency revolving facility and GBP40m multicurrency revolving facility and signed a new GBP160m multicurrency revolving facility. The Group also has a GBP65m "accordion" facility by which further facilities may be made available by Barclays, Lloyds, RBS and Santander under the current terms to support significant investment or acquisition opportunities which may arise. The revolving credit facilities expire in September 2019. Whilst the multi-year revolving committed credit facility does not expire for nearly three years, the debt within this is disclosed as less than one year on the balance sheet, as it is drawn for one-month periods, and then redrawn as appropriate to minimise the amount of debt drawn relative to the Group's needs to minimise the interest payable. The undrawn facilities are unsecured. The bank loans and overdrafts are subject to cross-guarantees between Group undertakings. Interest on the multicurrency revolving credit facility is charged at LIBOR plus a margin of between 1.65% and 1.90%, depending upon the ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortisation), and on UK overdrafts at 1.75% above UK base rate.
11. Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited 1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016 GBP000 GBP000 GBP000 ----------------------------------- -------------------------- -------------------------- ------------------- Net debt at the beginning of the period (96,951) (99,213) (99,213) Net (increase) / decrease in cash and short-term borrowings (5,069) 4,198 5,590 Effects of exchange rate changes (4,536) 283 (2,698) Amortisation of facility fees (197) (198) (393) Other non-cash movements (8) (358) (237) ------------------------------------- -------------------------- -------------------------- ------------------- Net debt at the end of the period (106,761) (95,288) (96,951) ------------------------------------- -------------------------- -------------------------- -------------------
Notes to the accounts (continued)
12. Defined benefit pension scheme deficit Unaudited Unaudited Audited 1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016 GBP000 GBP000 GBP000 ------------------------------ -------------------------- -------------------------- ------------------------ Pension deficit at start of the period 27,157 21,147 21,147 Current service cost 44 790 1,479 Interest income (1,556) (1,685) (3,371) Interest cost 1,985 2,026 4,038 Return on scheme assets excluding interest (10,475) 4,768 5,728 Effect of demographic adjustments - - (568) Loss / (gain) from changes in financial assumptions 26,370 (5,087) 216 Employer contributions (797) (983) (1,776) Payments from plans - - (6) Foreign exchange 566 4 270 -------------------------------- -------------------------- -------------------------- ------------------------ Pension deficit at end of the period 43,294 20,980 27,157 -------------------------------- -------------------------- -------------------------- ------------------------
13. Related party transactions
The Group's significant related parties are its subsidiaries as disclosed in the Consort Medical plc annual report for the year ended 30 April 2016. There were no material related party transactions in the period.
14. Principal risks and uncertainties
The principal risks and uncertainties which could impact the Group's long-term performance remain those detailed on pages 26 to 28 of the Group's 2016 Annual Report & Accounts, a copy of which is available on the Group's website www.consortmedical.com. The risks are summarised below:
-- Reliance upon key customers / products -- Major operational incident -- Growth risk -- Acquisition risk -- Legal risk -- Political / Socio-economic risk -- Development risk -- Product quality failure -- Corporate Social Responsibility -- Regulatory risk -- IT / Cyber risk -- Human Resources risk -- Financial risks including currency risk, interest rate risk, liquidity and leverage risk -- Pension risk
In the period the Group has recognised two additional principal risks:
-- Impact of Brexit - The vote to leave the EU has resulted in some uncertainty, including currency volatility and a significant weakening of sterling. Whilst the weakening of sterling has had a beneficial translation impact on the Group's sterling results, it continues to monitor the impact of Brexit on its principal risks and any direct or indirect resultant complexities this may bring.
-- Distributable reserves - Following the Brexit vote and subsequent changes in UK monetary policy, corporate bond yields have fallen sharply, leading to substantial increases in the Bespak pension deficit. The Group continues to monitor the impact of this on its ability to pay dividends in future periods.
Notes to the accounts (continued)
15. Discontinued operations
The results arising from King Systems are classified as discontinued operations and special items and have been included in the consolidated income statement as follows:
Unaudited Unaudited Audited 1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016 GBP000 GBP000 GBP000 ----------------------------- --------------------------- -------------------------- ------------------------ Loss on disposal: movement in fair value of contingent consideration - (48) (999) ------------------------------- --------------------------- -------------------------- ------------------------ Loss before tax on discontinued operations - (48) (999) ------------------------------- ------------------------- -------------------------- ------------------------ Net loss on discontinued operations attributable to the owners of the Company - (48) (999) ------------------------------- ------------------------- -------------------------- ------------------------
16. Share capital
Share capital as at 31 October 2016 amounted to GBP4.9 million (April 2016: GBP4.9 million). During the period, the Group issued 75,590 shares as part of exercises under the Consort Savings Related Share Option Scheme for total consideration of GBP0.5 million.
The Group purchases its own shares using an Employee Share Ownership Trust (ESOT) to satisfy entitlements under the Group's long-term incentive plan. The cost of the shares held by the ESOT is deducted from retained earnings. The Group purchased 276,244 shares for a consideration of GBP2.9 million during the period (H1 FY2016: GBP2.1 million, FY2016: GBP2.2 million). As at 31 October 2016, the ESOT held a total of 300,375 ordinary shares (30 April 2016: 301,521 shares) at a cost of GBP2.8 million (30 April 2016: GBP2.5 million) and market value of GBP2.3 million (30 April 2016: GBP2.3 million).
17. Acquisition of subsidiary
On 12 November 2014, the Group acquired 100 per cent of the issued share capital of Aesica Holdco Limited, obtaining control of Aesica Holdco Limited ('Aesica'). The goodwill balance as at 31 October 2016 in relation to Aesica is GBP115.3m (FY 2016: GBP106.8m).
During the year ended 30 April 2016, the Group completed the initial accounting for the acquisition as disclosed in the 2016 annual report and accounts. Therefore, as set out in the table below, the 31 October 2015 comparative information has been adjusted retrospectively to amend the provisional fair values of the identifiable assets acquired and liabilities assumed as at the date of acquisition. The financial statements for the year ended 30 April 2016 included the same restatement to its 30 April 2015 comparatives.
Notes to the accounts (continued)
17. Acquisition of subsidiary (continued)
The fair values of the identifiable assets acquired and liabilities assumed as at the date of acquisition were as set out in the table below:
Provisional fair values as Restatement Restated previously reported Fair value recognised on acquisition GBP000 GBP000 GBP000 ---------------------------------- --------------------------------- ------------ --------------------------------- Assets Property, plant and equipment 71,312 (5,713) 65,599 Cash and cash equivalents 6,221 - 6,221 Trade receivables 33,307 (1,288) 32,019 Inventory 26,930 41 26,971 Identified intangible assets 82,299 - 82,299 Other intangible assets 410 - 410 Current tax 1,765 (1,578) 187 Other receivables 3,550 (38) 3,512 ---------------------------------- --------------------------------- ------------ --------------------------------- Total identified assets 225,794 (8,576) 217,218 Liabilities Trade and other payables (24,377) - (24,377) Accruals, deferred income , provisions and other payables (46,079) (1,022) (47,101) Deferred tax liability (29,812) 4,029 (25,783) ---------------------------------- --------------------------------- ------------ --------------------------------- Total identified liabilities (100,268) 3,007 (97,261) Net identified assets 125,526 (5,569) 119,957 Goodwill 101,103 5,569 106,672 ---------------------------------- --------------------------------- ------------ --------------------------------- Total consideration 226,629 - 226,629 ---------------------------------- --------------------------------- ------------ ---------------------------------
The significant adjustments made to fair values were as follows:
-- Property, plant and equipment - decrease of GBP5.7m as a result of concluding a detailed review and valuation exercise
-- Trade receivables - decrease of GBP1.3m to increase provisions against old debtor balances and credit notes
-- Accruals, deferred income, provisions and other payables - decrease of GBP1.0m mainly as a result of new information obtained which reflects circumstances in existence at the acquisition date
-- Current tax - decrease of GBP1.6m to record additional provisions
-- Deferred tax - increase of GBP2.1m on the non-tax related opening balance sheet adjustments above
-- Deferred tax - since 31 October 2015, a deferred tax asset of GBP1.9m has been recognised as the amount of spend treated as qualifying for capital allowances has been reduced by customer contributions in Aesica which were received pre-acquisition. The impact of this change has been to decrease goodwill by the same amount.
The directors have not restated the income statement for the year ended 30 April 2015 for the effect of this restatement as it was not material.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LFFLIFSLEIIR
(END) Dow Jones Newswires
December 06, 2016 02:00 ET (07:00 GMT)
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