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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bespak | LSE:BPK | 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% | 667.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS No 0007j
BESPAK PLC
12th January 1999
Interim Results Highlights
For the 26 weeks ended 30 October 1998
1998 1997
(Unaudited) (Unaudited and
restated)
Turnover #41.9m #42.3m Down 1%
Profit before tax #7.0m #6.6m Up 7%
Earnings per share 20.3p 18.9p Up 7%
Dividend per share 5.6p 5.1p Up 10%
Net funds #3.2m #5.5m
* Record profits
* Excellent cash generation
* Continuing growth in drug delivery
* Investment plan on-track to support major new product programmes
* HFA transition is accelerating and will impact second half-year
* Major new customer agreements in drug delivery strengthen future growth
prospects
* Interim dividend increased by 10% to 5.6p
Bespak plc Chairman, Sir David Cooksey, commented today:
"Bespak continues to serve growing markets in healthcare and the
opportunities for long term growth remain good. The first half year has been
a period of further progress and the Group has performed in line with
expectations and developed further the prospects for the future."
Enquiries:
Peter Chambre, Chief Executive
Robert J. Preece, Finance Director
Bespak plc
0171 638 9571
Bespak plc
Interim Statement
OVERVIEW
The first half of this year has been satisfactory for Bespak, with the
achievement of record profits of #7.0 million and earnings per share
increasing by 7% to 20.3 pence. The improvement in profits was achieved as a
result of the 9% growth of the drug delivery business and improved operating
effectiveness in all the Group's businesses. During the period the Group has
also strengthened its longer term prospects in drug delivery. The major
investment programme to support new product launches is on target, with
capital expenditure of #7.7 million during the period. Excellent cash
generation, once again, has resulted in the Group having net cash of #3.2
million at the end of the first half.
While the second half-year outlook is now not as strong as previously
anticipated, the future growth prospects remain good and the Board has
decided to increase the interim dividend by 10% to 5.6 pence (1997 5.1
pence).
UK
Sales in the UK increased by 12% to #30.0 million and operating profits
improved by 18% to #6.3 million. The principal business in the UK is the
supply of drug delivery products to the respiratory drug industry. Sales of
these products during the first half-year increased by 17% to #26.4 million.
Within drug delivery, sales of valves for metered dose inhalers and critical
care fluid control valves declined by 19% to #10.6 million, reflecting the
commencement of the transition from chlorofluorocarbons (CFCs) as propellants
to new hydrofluoroalkane (HFA) propellants and the anticipated short-term
reduction in Bespak's market share.
Sales of Bespak's range of devices have continued to grow rapidly during the
first half. Driven by the increases in dry powder inhalers, sales of devices
grew 68% to #15.8 million.
The capital investment programme has continued on schedule, with the new
manufacturing capacity for Glaxo Wellcome's Diskus (TM) dry powder inhaler at
Milton Keynes fully operational. Further investment in HFA valve capacity has
also been made to support the future requirements of Bespak's customers.
Turnover in the personal care business declined by 15% to #3.6 million,
reflecting a slow-down in the market, especially in continental Europe.
USA
In the USA, overall sales declined by 23% (22% at constant exchange rates) to
#11.9 million and profits also declined from #1.0 million during the first
half of last year to #0.5 million this year.
At Bespak Inc., the Group's drug delivery business in the USA, sales were 21%
lower at #7.1 million and profits were also reduced. Sales of valves for
drug delivery, which are manufactured in the UK and distributed by Bespak
Inc., fell by 19%, reflecting timing differences in customers requirements
during the year. Sales of drug delivery devices, which are manufactured by
Bespak Inc., also declined. This was due to reductions in sales to two major
customers.
At Tenax, which serves medical device customers in the USA, profits declined
on sales which reduced from #6.5 million to #4.8 million. This was due to a
reduction in off-take from the company's top three customers. The resultant
decline in profits was minimised by substantial improvements in operating
effectiveness and overhead cost reductions. Most importantly, Tenax has
begun to convert some of the new business opportunities resulting from its
strengthened quality and operating performance.
BUILDING FOR THE FUTURE
Drug Delivery
Bespak is the leading supplier of drug delivery products to the worldwide
respiratory drug industry. This is both a growing market, due to the
continuing rise in the incidence of respiratory disease, and one that is
undergoing a period of rapid change, with the introduction of new products
and technologies. Bespak is well placed to take advantage of these trends.
We have recently signed major new long term contracts with Boehringer
Ingelheim for the supply of HFA valves and with Rhone-Poulenc Rorer covering
both HFA valves and a range of device products. The Group is also now half
way through a major investment programme to support new products and capacity
expansion over the next three years.
Valves
The transition to HFA propellants is expected to be substantially completed
in Europe by the end of 2000, but not in the USA until 2005. A temporary
decline in market share has been anticipated for some time as our customers
implement their product launch plans for the transition. It is likely that
the reduction in Bespak's valve business during this financial year will be
greater than originally anticipated as a result of some customers
accelerating their changeover plans. However, by the end of next year, the
valve business should have recommenced its growth. The Boehringer Ingelheim
agreement will add significantly to the valve business in the future and,
overall, Bespak expects to complete the transition to HFA inhalers with a
greater share of this core market.
Devices
While the overall valve market will continue to grow modestly, the market for
dry powder inhalers is increasing much more rapidly. Bespak is a leading
supplier of dry powder inhalers. Sales to Glaxo Wellcome of the Diskus (TM)
dry powder inhaler are expected to continue growing during the 1999 and 2000
financial years, fully utilising Diskus (TM) capacity at King's Lynn and
Milton Keynes.
The Clickhaler (R) dry powder inhaler has been launched by Medeva and approval
has recently been received to market a second drug in the device. The
manufacturing capacity is now being expanded to support this opportunity.
Bespak will also supply the Ultrahaler (TM) dry powder inhaler to
Rhone-Poulenc Rorer. While the Ultrahaler (TM) development remains on
schedule, Rhone-Poulenc Rorer has announced that it will not proceed with one
of the drugs in the Ultrahaler (TM) programme. This will have some effect in
reducing Bespak's volume expectations for Ultrahaler (TM) in the early years
following its launch.
In the USA, Bespak Inc. has a number of device development programmes
underway. The first of these, as part of the supply partnership with Rhone-
Poulenc Rorer, will result in Bespak becoming the sole supplier of the
Azmacort (TM) actuator in 1999. This will help to offset the current trends
in volumes to this customer which are expected to continue into the next
financial year. There are a number of other device development programmes
underway with other major pharmaceutical customers in the USA that are
expected to result in accelerating growth for Bespak Inc. beyond that.
Expanded world-class manufacturing facilities are being created at the Cary,
North Carolina operation to support this growth. These will be completed in
1999.
Investment is also continuing in new products and technologies for drug
delivery. During the first half, Bespak licensed two nasal drug delivery
technologies that will have future application in this rapidly growing area
for therapies.
Medical Devices
Despite the downturn in sales at Tenax during the current year, the
revitalisation of the business is beginning to bring opportunities for growth
with new major medical device customers. Also the US medical device industry
is undergoing a consolidation, which will inevitably bring a rationalisation
of the number of suppliers to it. The key to the future growth of Tenax is
to be able to take advantage of this rationalisation.
OUTLOOK
In the UK, it is now expected that the more rapid short-term decline in CFC
valve volumes will offset the continuing growth of devices. In the US, the
performance of Bespak Inc. will meet expectations. However, at Tenax the
difficult trading conditions are expected to continue through to the end of
this year.
The prospects for growth in the future remain good. Bespak should continue
to benefit from the pipeline of new products and its position serving growing
markets in the global healthcare industry.
Bespak plc
Consolidated Profit and Loss Account
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
Notes (restated) (restated)
Turnover 2 41,879 42,260 86,067
Operating expenses (35,085) (35,917) (72,662)
----------- ---------- ---------
Net operating income 2 6,794 6,343 13,405
Net interest receivable 3 234 213 415
----------- ---------- ---------
Profit on ordinary activities
before taxation 7,028 6,556 13,820
Taxation 4 (1,827) (1,771) (3,734)
----------- ---------- ---------
Profit on ordinary activities
after taxation 5,201 4,785 10,086
----------- ---------- ---------
Dividends (1,437) (1,295) (3,497)
----------- ---------- ---------
Retained profit 3,764 3,490 6,589
----------- ---------- ---------
Dividends per share 5 5.6p 5.1p 13.7p
----------- ---------- ---------
Earnings per share 6 20.3p 18.9p 39.7p
----------- ---------- ---------
Bespak plc
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
Notes (restated) (restated)
Fixed assets
Tangible assets 48,983 37,718 44,501
Investments 1,177 966 1,200
----------- ---------- ---------
50,160 38,684 45,701
----------- ---------- ---------
Current assets
Stocks 4,516 5,184 4,241
Debtors 12,688 15,250 14,736
Short-term deposits 8,000 8,000 9,000
Cash at bank and in hand 6,926 5,733 6,464
----------- ---------- ---------
32,130 34,167 34,441
----------- ---------- ---------
Creditors
- amounts falling due
within one year 7 (23,872) (24,647) (28,833)
----------- ---------- ---------
Net current assets 8,258 9,520 5,608
----------- ---------- ---------
Total assets less current
liabilities 58,418 48,204 51,309
Creditors
- amounts falling due
after more than one year 8 (7,288) (3,896) (2,879)
Provisions for liabilities
and charges 9 (4,088) (5,446) (5,350)
----------- ---------- ---------
Net assets 47,042 38,862 43,080
----------- ---------- ---------
Capital and reserves
Called up share capital 2,572 2,538 2,565
Share premium account 16,131 14,853 15,923
Special reserve 308 308 308
Profit and loss account 28,031 21,163 24,284
----------- ---------- ---------
Equity shareholders funds 47,042 38,862 43,080
----------- ---------- ---------
Bespak plc
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
Notes (restated) (restated)
Cash inflow from operating
activities 10 7,713 9,266 21,541
Returns on investment and
servicing of finance
Interest received 614 525 1,042
Interest paid (389) (312) (622)
----------- ---------- ---------
Net cash inflow from returns
on investment and servicing
of finance 225 213 420
----------- ---------- ---------
Taxation
UK corporation tax - - (2,929)
Overseas tax (94) 12 (29)
----------- ---------- ---------
Net cash (outflow)/inflow
from taxation (94) 12 (2,958)
----------- ---------- ---------
Capital expenditure and
financial investment
Payments to acquire tangible
fixed assets (6,497) (8,847) (18,151)
Payments to acquire tangible
fixed assets in respect of
the Innovata Biomed contract (1,332) - -
Receipts from sales of
tangible fixed assets 52 20 111
Purchase of fixed asset
investments (36) (247) (503)
----------- ---------- ---------
Net cash outflow from
capital expenditure and
financial investment (7,813) (9,074) (18,543)
----------- ---------- ---------
Equity dividends paid (2,203) (1,948) (3,242)
----------- ---------- ---------
Net cash outflow before
management of liquid
resources and financing (2,172) (1,531) (2,782)
Management of liquid resources
Movement in short-term deposits 1,000 4,500 3,500
Financing
Issue of ordinary share capital 215 523 1,620
Proceeds of new borrowings 8,957 - -
Borrowings repaid (4,098) (264) (1,532)
----------- ---------- ---------
Net cash inflow from financing 5,074 259 88
----------- ---------- ---------
Increase in cash and cash
equivalents 3,902 3,228 806
----------- ---------- ---------
Bespak plc
Statement of Total Recognised Gains and Losses
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Profit on ordinary activities
after taxation 5,201 4,785 10,086
Exchange movements on foreign
currency net investments (17) (94) (72)
----------- ---------- ---------
Total recognised gains and
losses for the period 5,184 4,691 10,014
----------- ---------- ---------
Prior year adjustment (254)
-----------
Total gains and losses
recognised since last annual report 4,930
-----------
Reconciliation of Movements in Shareholders' Funds
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Profit on ordinary activities
after taxation 5,201 4,785 10,086
Dividends (1,437) (1,295) (3,497)
Issue of ordinary share capital 215 523 1,620
Exchange movements on foreign
currency net investments (17) (94) (72)
Shareholders funds brought
forward (originally #43,334,000
before deducting prior year
adjustment of #254,000) 43,080 34,943 34,943
----------- ---------- ---------
Shareholders funds carried
forward 47,042 38,862 43,080
----------- ---------- ---------
Bespak plc
NOTES TO THE INTERIM ACCOUNTS
1. Basis of preparation and accounting policies
The unaudited results for the 26 weeks ended 30 October 1998 have been
prepared in accordance with UK generally accepted accounting principles. The
accounting policies applied are those set out in the Group's Annual Report and
Accounts for the 52 weeks ended 1 May 1998 except that the Company has
implemented the following new Financial Reporting Standards: FRS 9 'Associates
and Joint Ventures'; FRS 10 'Goodwill and Intangible Assets'; FRS 11
'Impairment of Fixed Assets and Goodwill'; FRS 12 'Provisions, contingent
liabilities and contingent assets'; FRS 13 'Derivatives and other financial
instruments'; and FRS 14 'Earnings per share'. FRS 9, FRS 13 and FRS 14 had
no effect on the Group results in the period.
In accordance with FRS 10, the Company has changed its policy on goodwill and
intangible assets. Intangible assets acquired, whether acquired as part of a
business acquisition or separately, and goodwill arising on acquisition, are
now capitalised and amortised over their useful economic life to a maximum of
20 years. Goodwill written off to reserves under the Company's previous
policy will not be reinstated. In addition patent expenditure on internally
developed products is no longer capitalised. Patent expenditure capitalised
in prior years has been written off against opening reserves as a prior year
adjustment. As a result of the change in accounting policy, comparative
figures for the 26 weeks to 31 October 1997 and 52 weeks to 1 May 1998 have
been adjusted as follows:-
Profit after Net assets Profit after Net assets
tax for the tax for the
26 weeks to 52 weeks to
31 October 1997 1 May 1998
#000 #000 #000 #000
As previously reported 4,776 39,103 10,090 43,334
Effect of the change in
accounting policy 9 (241) (4) (254)
As restated 4,785 38,862 10,086 43,080
The profit after tax for the 26 weeks ended 30 October 1998 has been
increased by #36,000 as a result of the change in accounting policy.
In accordance with FRS 11, the Company has written down the value of certain
fixed assets purchased in accordance with the Innovata Biomed variation
agreement (see note 9) on the basis of permanent impairment.
In accordance with FRS 12, the balance sheets at 31 October 1997 and 1 May
1998 have been restated to classify certain liabilities as provisions rather
than creditors.
The charge for taxation on the profits for the 26 weeks ended 30 October 1998
has been calculated by reference to the estimated effective tax rate for the
52 weeks to 30 April 1999.
The Profit and Loss Account and Cash Flow Statement for the 52 weeks ended,
and the Balance Sheet at, 1 May 1998 are an abridged statement of the full
Group Accounts for that period which have been delivered to the Registrar of
Companies. The report of the Auditors on the Accounts for the 52 weeks ended
1 May 1998 was unqualified and did not contain a statement under either
section 237 (2) or section 237 (3) of the Companies Act 1985.
2. Segment information
The geographical analysis of turnover, net operating income and net assets is
as follows:
Geographical area (turnover by destination)
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
United Kingdom 21,682 19,344 39,723
United States of America 11,089 15,352 28,589
Europe 6,099 5,710 13,697
Rest of the World 3,009 1,854 4,058
----------- ---------- ---------
41,879 42,260 86,067
----------- ---------- ---------
Average rate of exchange
#1 Sterling: US $ 1.66 1.63 1.65
Turnover by origin
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
United Kingdom 33,186 30,248 63,019
Inter-segment sales (3,205) (3,473) (5,708)
----------- ---------- ---------
External sales 29,981 26,775 57,311
----------- ---------- ---------
United States of America 11,898 15,485 28,757
Inter-segment sales - - (1)
----------- ---------- ---------
External sales 11,898 15,485 28,756
----------- ---------- ---------
Total sales 45,084 45,733 91,776
Total inter-segment sales (3,205) (3,473) (5,709)
----------- ---------- ---------
Total external sales 41,879 42,260 86,067
----------- ---------- ---------
2. Segment information cont'd
Net operating income
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Net operating income by segment
United Kingdom 6,270 5,297 11,447
United States of America 524 1,046 1,958
----------- ---------- ---------
6,794 6,343 13,405
----------- ---------- ---------
Net assets
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Operating assets by segment
United Kingdom 39,422 32,097 35,772
United States of America 12,966 10,415 10,945
----------- ---------- ---------
52,388 42,512 46,717
Unallocated net liabilities (5,346) (3,650) (3,637)
----------- ---------- ---------
47,042 38,862 43,080
----------- ---------- ---------
Closing rate of exchange #1
Sterling: US $ 1.67 1.68 1.67
3. Net interest receivable
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Interest payable (368) (325) (640)
Interest receivable 602 538 1,055
----------- ---------- ---------
234 213 415
----------- ---------- ---------
4. Taxation
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
UK Corporation tax at 31%
(1997 - 31%) 1,698 1,435 3,735
Deferred taxation 82 230 (87)
Overseas taxation 47 106 86
----------- ---------- ---------
1,827 1,771 3,734
----------- ---------- ---------
Taxation is based on an estimate of the effective rate of tax which will be
chargeable on the profit for the year.
5. Dividends
The interim dividend of 5.6p (1997 - 5.1p) will be paid on 22 February 1999
to shareholders on the register on 22 January 1999.
6. Earnings per share
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
The calculation of earnings
per share is based on the
following:
Profit on ordinary activities
after taxation 5,201 4,785 10,086
Weighted average number of
shares in issue 25,623,389 25,347,456 25,397,960
Earnings per share 20.3p 18.9p 39.7p
7. Creditors - amounts falling due within one year
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Proportion of loans due
within one year (note 8) 1,859 1,451 1,300
Bank overdrafts & short term
borrowings 2,627 2,924 6,070
Proposed dividend 1,437 1,294 2,203
Taxation 5,198 4,531 3,550
Creditors 12,751 14,447 15,710
----------- ---------- ---------
23,872 24,647 28,833
----------- ---------- ---------
8. Creditors - amounts falling due after more than one year
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
Finance leases and lease purchase 190 138 142
Industrial review bond (US $ secured) - 522 280
Bank loan (US $ secured) - 4,687 3,757
Bank loan (US $ unsecured) 8,957 - -
----------- ---------- ---------
9,147 5,347 4,179
Less proportion of loans due
within one year (1,859) (1,451) (1,300)
----------- ---------- ---------
7,288 3,896 2,879
----------- ---------- ---------
The Group negotiated new borrowing facilities during the period as a result
of which the margin on bank funding has been reduced and security on the
Group's assets released.
9. Provisions for liabilities and charges
Deferred Innovata Biomed Other Total
taxation contract provisions #000
#000 #000 #000 (restated)
At 2 May 1998 as
previously reported 300 4,496 166 4,962
Prior year adjustment (112) - 500 388
-------- --------------- ---------- -------
At 2 May 1998 restated 188 4,496 666 5,350
Profit and loss account 82 - 36 118
Utilised during the period - (1,379) - (1,379)
Exchange rate adjustments - - (1) (1)
-------- --------------- ---------- -------
At 30 October 1998 270 3,117 701 4,088
-------- --------------- ---------- -------
In 1995 the Company made a provision of #18.6 million against a disputed
contract with Innovata Biomed Limited. Agreement was reached in April 1996
whereby Bespak would incur costs of no more that #10.4 million under a
variation contract to the original agreement. As a result #8.2 million was
released from the provision in the 1996 accounts. In the period expenditure
of #1,332 million was incurred on fixed asset expenditure in accordance with
the variation agreement. An impairment loss has been recognised on these
assets which has been matched by utilisation of the existing provision as
originally intended when the variation agreement was signed and the provision
established.
10. Net cash inflow from operating activities
Reconciliation of net operating income to net cash inflow from operating
activities
26 weeks to 26 weeks to 52 weeks to
30 October 31 October 1 May
1998 1997 1998
#000 #000 #000
(restated) (restated)
Net operating income 6,794 6,343 13,405
Depreciation 3,123 2,463 5,371
Impairment loss relating to
Innovata Biomed fixed assets 1,332 - -
Profit on sale of tangible
fixed assets (17) (7) (77)
(Increase)/decrease in stocks (285) 562 1,505
Decrease/(increase) in debtors 2,009 (3,593) (3,318)
(Decrease)/increase in creditors (3,933) 3,491 4,425
Decrease in Innovata Biomed
provision (1,379) (16) (111)
Increase in other provisions 36 - 318
Dividends received from
associated undertakings 33 23 23
-------- -------- -------
Net cash inflow from
operating activities 7,713 9,266 21,541
-------- -------- -------
11. Reconciliation of net funds
The table below provides an analysis of net funds and a reconciliation of net
cashflow to movement in net funds.
At 2 May Cash Inception Exchange At 30 October
1998 Flow of leasing movements 1998
contracts
#000 #000 #000 #000 #000
Cash at bank and
in hand 6,464 461 - 1 6,926
Bank overdrafts &
short-term borrowings (6,070) 3,441 - 2 (2,627)
------ ------ ------ ------ ------
Cash and cash
equivalents 394 3,902 - 3 4,299
Loans and leasing
obligations (4,179) (4,859) (94) (15) (9,147)
Short-term deposits 9,000 (1,000) - - 8,000
------ ------ ------ ------ ------
Net funds 5,215 (1,957) (94) (12) 3,152
------ ------ ------ ------ ------
Financing items included
in cash flow movements
Issue of shares (215)
------
Net cash outflow before
management of liquid
resources and financing (2,172)
------
END
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