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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 |
RNS Number:0616G Bespak PLC 12 July 2006 Bespak plc Preliminary results for the 52 weeks ended 29 April 2006 An excellent year Bespak plc (LSE: BPK), a leader in devices for inhaled drug delivery and anaesthesia, today announces its preliminary results for the 52 weeks ended 29 April 2006. HIGHLIGHTS * Revenue up 17% to #93.1m (2005: #79.4m). * Profit before tax and special items up 24% to #13.5m (2005: #10.9m). * Profit before tax increased to #13.7m (2005: #4.8m). * Cash generated from operations up 25% to #17.8m (2005: #14.2m). * Diluted earnings per share before special items up 15% to 35.4p (2005: 30.9p). * Diluted earnings per share increased to 37.3p (2005: 8.5p). * Final dividend maintained at 12.1p per share (2005: 12.1p), making full year dividend of 19.1p per share (2005: 19.1p). * Exubera(R) for diabetes launched and inhalation device in production. * Successful acquisition in December 2005 of King Systems, a specialist in single-use breathing circuits, face masks and laryngeal tubes for use in surgery and critical care settings, reduces dependence on pharmaceutical approvals. Mark Throdahl, Bespak's Chief Executive, commented: "Last year was excellent for Bespak. Performance in our core businesses in inhaled drug delivery exceeded expectations; Exubera(R), the first inhaled drug for diabetes was approved, providing a significant market opportunity; and King Systems was acquired and successfully integrated. We look forward with confidence." For further information, please contact: Bespak plc Tel: +44 (0) 1908 525241 Mark Throdahl - Chief Executive Martin Hopcroft - Group Finance Director Maitland Tel: +44 (0) 207 3795151 Brian Hudspith Elizabeth Morley About Bespak plc Bespak, a leader in devices for inhaled drug delivery and anaesthesia, develops delivery systems for the pharmaceutical industry and disposable airway management products for critical care settings. Bespak's product range includes metered dose and dry powder inhalers, actuators, inflation valves, breathing circuits, disposable face masks and laryngeal tubes. The group, which has facilities in King's Lynn and Milton Keynes in the UK and Indianapolis, Indiana and Kent, Ohio, in the US, is quoted on the Official List of the London Stock Exchange (LSE: BPK). For more information, please visit www.bespak.com. OVERVIEW Bespak's financial year ending 29 April 2006 was excellent. All our core businesses performed ahead of plan. Exubera(R), the first inhaled drug for diabetes, was approved, opening up significant annual sales potential. The Company acquired King Systems in December and delivered the first step of its strategy to reduce its dependency on pharmaceutical approvals. Revenue, operating profit and diluted earnings per share all increased at double digit rates. Revenue increased by 17% to #93.1 million (2005: #79.4 million), operating profit before special items increased by 34% to #14.2 million (2005: #10.6 million), and diluted earnings per share before special items increased by 15% to 35.4p (2005: 30.9p). This strong financial performance was driven by growth in metered dose inhalation (MDI) valves, the commencement of manufacturing of the Exubera(R) inhaler, and the impact of the King Systems acquisition which from December 2005 contributed #11.1 million of sales. The Board has proposed a final dividend of 12.1p per share (2005: 12.1p), making a full year dividend of 19.1p per share (2005: 19.1p). This is supported by the Group's strong operating cash flow during the year, which increased 25% to #17.8 million (2005: #14.2 million). Net debt as at 29 April was #27.8 million (2005: #17.4 million net cash), reflecting the impact of new borrowings to finance the King acquisition and payment of a one-off contribution of #9.0 million to the pension scheme. In June, Bespak received an unprecedented three awards from the British Plastics Federation, which recognised our position as a world-class manufacturer of disposable medical devices. The Company won "Best Health & Safety Programme," "Best Environmental or Energy Efficiency Programme" and the coveted "Processor of the Year" awards. The citation described Bespak as "an extremely well-run multinational operation that has built an enviable business reputation through strong product niches that have enabled it to continue to strongly grow its business". OPERATIONAL REVIEW Last year, we articulated a strategy to build a consistent revenue and earnings track record. We aim to achieve this goal through organic growth, selective acquisitions and three competencies - Six Sigma manufacturing, proprietary development processes, and high-performance culture - which we will apply to our own existing businesses and bring to future acquisitions. We said that we would broaden the Group's customer base beyond pharmaceutical companies and reduce our dependency on lengthy development programmes which make growth difficult to forecast. We said that the anticipated approval of Exubera(R) for diabetes would have a significant impact on the Group. These things have happened. Our Inhaled Drug Delivery business delivered double-digit sales growth in MDI valves and benefited from first production of the Exubera(R) inhaler. We delivered the first step of our diversification strategy by acquiring King Systems, which has been successfully integrated. Our Six Sigma programme delivered substantial savings and is creating a high performance culture at Bespak. Having acquired King Systems, we now have three business segments: Inhaled Drug Delivery, Anaesthesia & Respiratory Care, and Consumer Dispensers. Inhaled Drug Delivery Bespak's Inhaled Drug Delivery segment consists of Respiratory and Device & Manufacturing Services, which are product groups with common customers, similar financial returns and shared facilities in King's Lynn and Milton Keynes. Sales increased by 3% to #76.5 million (2005: #74.0 million) as a result of increased volumes of HFA valves to European customers and the commencement of manufacturing of the Exubera(R) inhaler, partially offset by the loss of revenue from the closure of our North Carolina facility in September 2005. Respiratory sales increased by 7% to #43.2 million (2005: #40.2 million) whilst Device & Manufacturing Services sales decreased by 1% to #33.3 million (2005: #33.8 million). Operating profit before special items increased by 13% to #13.1 million (2005: #11.6 million), reflecting improved margins. Respiratory Bespak develops, manufactures and sells proprietary inhalation devices, including MDI valves, actuators and accessories to deliver pharmaceuticals to the lungs and nose. These products, which are based on Bespak's extensive intellectual property portfolio, play a critical role in the delivery system for drugs treating asthma and chronic obstructive pulmonary disease (COPD). MDI valves typically are customised and sole-sourced for each drug. Switching costs are extremely high, and we sell the products as long as the drug is marketed. Two drivers in the MDI market are the transition from chlorofluorocarbon (CFC) propellant to hydrofluoroalkane (HFA) and the shift of volume from proprietary to generic drugs. The Montreal Protocol ozone depletion agreement requires that CFC propellant is replaced with HFA. This requires re-formulating the drug, new clinical trials, and submission of a new drug filing. Europe has largely converted to HFA formulations. Historically, Bespak has benefited from this conversion. Over the past four years we have become the MDI market leader by value, with the largest array of CFC and HFA valves, formulations and customers. We believe that we have won more than two-thirds of the HFA formulations approved around the world, including three HFA formulations in the USA. Last year, Bespak's HFA unit sales grew by 40% while CFC valve volumes fell by 29%. Overall MDI valve volumes grew by 4%. In addition to HFA volume growth, generic customers have grown from 39% of Bespak's volume in 2003 to 60% today. Generic customers value responsiveness and flexible manufacturing. Bespak's strong performance during the HFA transition has in part been due to our strategy of providing outstanding technical support during development. In March 2005, the FDA announced that the US albuterol market must convert to HFA by the end of 2008, which has inaugurated a period of significant change. Bespak enjoys a high share of the CFC albuterol market in the US, and none of the four approved HFA albuterol pharmaceutical suppliers currently has any meaningful market share. Bespak's customer base in CFC albuterol formulations differs from that in HFA equivalents, and its share of the market is expected to be rebased through this transition. In due course, this transition will lead to the cessation of manufacturing of CFC valves and allow Bespak to simplify its operations and achieve manufacturing economies. Bespak's MDI valves are protected by numerous patents, including the rubber seals which are in constant contact with the drug. In order to support Bespak's proprietary HFA valve elastomer formulations, we have completed the construction phase of our investment in a captive elastomer development and manufacturing facility in King's Lynn. Manufacturing processes are now undergoing validation and customer approval. This new plant will protect both the supply chain for these critical components and the intellectual property associated with them. Bespak is developing a portfolio of dose counters, which enable patients to monitor the number of doses remaining in their inhaler. We have developed our own proprietary dose counter for the US market, which has been pre-production sampled and is on test at a number of customers. In March, we signed a co-marketing and manufacturing agreement with Bang & Olufsen Medicom, who have developed a dose counter that requires reduced actuation force. Device & Manufacturing Services Bespak provides a comprehensive range of device-related services to pharmaceutical and drug delivery companies and operates the largest clean room in the UK. The business enjoyed double-digit sales growth from both our largest contract manufactured product as well as Innovata's ClickhalerTM device, under license to Otsuka Pharmaceutical Co. and Merck Generics. In August 2005, we commenced production of a dry powder inhaler for Chiesi Farmaceutici. In January, Pfizer announced the approval of Exubera(R) in Europe and the USA, and which is now being launched. Production demand is ahead of our original expectations and the primary risk and opportunity we face in this business is the pace of Exubera(R)'s production scale-up. Bespak's strategy is to broaden the portfolio of device development programmes, targeting high value opportunities that play to the Company's strengths in GMP programme management, precision plastic moulding and high volume automated assembly. Over the past several years, we have developed a reputation for responsiveness and, as a result, our portfolio has more than doubled over the past three years to more than 12 active programmes. Last year, we won two new programmes, including a specialty device for a leading global pharmaceutical company and Caretek's ImplaJect device. Anaesthesia & Respiratory Care King Systems develops, manufactures and sells single-use breathing circuits, face masks and laryngeal tubes for use in surgery and critical care settings. These products are manufactured in facilities in Indianapolis, Indiana and Kent, Ohio. Unlike Bespak's other products, these products are sold to anaesthetists by our own 35-person sales force, which calls on hospitals and pulls the products through medical/surgical distributors. Sales for the four months ending 29 April were #11.1 million. Operating profit before special items was #2.0 million, representing the maiden contribution from the acquisition of King Systems, after group allocations. The King Systems acquisition represents an expansion into a business adjacent to Bespak's Inhaled Drug Delivery segment, with complementary products, manufacturing and profitability. It strengthens Bespak's footprint in the large US market. The consideration for King Systems is $95 million, which consisted of an initial payment of $75 million, $10 million paid on exceeding $9.3 million of adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) for the year ended 31 December 2005 and another $10 million payable on attaining $11.0 million adjusted EBITDA for the year ended 31 December 2006. King Systems estimates that its sales on a hospital level are up 10% from the prior year. Growth has been driven by three new products: * The Universal F2 breathing circuit is a patented, dual limb circuit which is compact when stored but can be expanded during use. It can be shaped to avoid the surgical field and retains that shape during surgical procedures. * King's laryngeal tubes are available in both reusable and disposable designs. They offer superior positive pressure ventilation relative to laryngeal masks, are superior to endotracheal tubes in terms of ease of use and lower drug delivery costs. * King recently launched the Airtraq(R) device, which is the first disposable optical laryngoscope. Airtraq(R) is used for difficult endotracheal tube intubations and, together with the laryngeal tubes, broadens King Systems' airway management offering. King's five senior managers have all been retained since the acquisition. Immediately after the acquisition, the Vice President of Sales & Marketing was named President following the retirement of King's founder and CEO. A new Vice President of Finance has been recruited who reports jointly to the President and Bespak's Group Finance Director. The key risk facing King is maintaining certain Group Purchasing Organisation contracts as well as absorbing the impact of raw material cost increases similar to those seen in Bespak's other businesses. Consumer Dispensers Bespak manufactures pumps for consumer household products, toiletries and fragrances. Sales increased 3% to #5.5 million (2005: #5.4 million) and operating losses decreased to #1.0 million (2005: #1.1 million). Its market remains competitive, although the recent launch of a new product is gaining considerable traction with several large European customers. The BK580 fine mist spray pump was launched in March. It has a number of advantages, including 10% smaller mean particle size and a greatly reduced output of large spray particles. It handles viscous formulations unusually well and produces a highly symmetrical size distribution with smooth rounded patterns. Growth Strategy & Acquisitions Over the past year, we have confirmed our strategy to grow organically and through selective acquisitions. Furthermore, we have deepened competencies in Six Sigma and GMP product development, whilst promoting a high-performance culture. We believe this strategy is working. Following the successful King acquisition, it is our intention to look for further acquisitions in the anaesthesiology and respiratory products industry, while also considering acquisitions that complement our inhaled drug delivery businesses. FINANCIAL REVIEW Trading Revenue increased by 17% to #93.1 million (2005: #79.4 million), of which the majority of the growth was generated by the acquisition of King Systems Corporation in December 2005. Geographically, sales outside the UK now account for 74% (2005: 70%) of revenue despite the fact that 81% (2005: 78%) of sales originate in the UK. Expenditure on research and development, which increased by 19% to #3.8 million (2005: #3.2 million), was expensed as incurred rather than capitalised, since it is not possible to demonstrate with sufficient certainty that projects will be commercially viable prior to customer and regulatory approval. Excluding the acquisition, underlying expenditure on research and development increased by 14%. Operating profit before special items increased by 34% to #14.2 million (2005: #10.6 million) reflecting growth in operating margins to 15% (2005: 13%), together with an initial contribution from the acquisition of King Systems Corporation. Excluding the acquisition, underlying operating profit before special items increased by 15% on sales that increased by 3%. Certain special items have been separately reported in order to present a more balanced perspective of the underlying trading performance. Firstly, as a result of the ability to sell the building and certain plant and equipment at prices higher than anticipated together with reduced closure costs, exceptional operating income of #0.9 million was booked in our US manufacturing operation in North Carolina. Secondly, there is an amortisation charge of #0.7 million on the intangible assets acquired with King Systems Corporation. After special items, operating profit increased to #14.4 million (2005: #4.5 million). The acquisition of King Systems Corporation was financed largely by debt, such that there is a net finance cost of #0.7 million (2005: #0.3 million net finance income) from a partial year of financing the acquisition. The financing expense has been largely fixed in the medium term with an interest rate swap. Profit before tax and special items increased by 24% to #13.5 million (2005: #10.9 million). After special items, profit before tax increased to #13.7 million (2005: #4.8 million). Tax The underlying tax charge on profit before tax and special items of 27% (2005: 23%) has benefited from the financial structuring of the acquisition as well as utilisation of losses from the closure of the US manufacturing facility. After the non-cash tax credit of #0.3 million (2005: #nil) on the amortisation of acquired intangible assets, the overall tax charge of 25% (2005: 52%) reflects the nil tax charge on the exceptional credit. The tax charge last year reflected the nil tax credit on the exceptional operating expenses. Earnings per share Diluted earnings per share before special items increased by 15% to 35.4p (2005: 30.9p) reflecting a modestly increased tax charge in view of the change in geographic mix of activities. After special items, diluted earnings per share increased to 37.3p (2005: 8.5p). Dividends The Board is recommending a maintained final dividend per share of 12.1p (2005: 12.1p), such that the total dividend for the year amounts to 19.1p (2005: 19.1p). The final dividend will be paid on 26 October 2006 to shareholders on the register on 6 October 2006. Dividend cover, based on earnings before special items, increased to 1.9 times (2005: 1.6 times). Goodwill and intangible assets Upon acquisition of King Systems Corporation, intangible assets are required to be capitalised and amortised over their useful lives. Goodwill, being the difference between purchase consideration and net assets (including intangible assets), is required to be capitalised and not amortised. At the year end, the carrying value of goodwill (#39.3 million) and intangible assets (#14.9 million) were reviewed and no impairment was required. Cash Flow Trading finished strongly last year, and inventories have increased to scale-up for manufacture of the Exubera(R) inhaler and to plan for the phase out of CFC albuterol formulations in the US. Nevertheless, cash generated from operations increased by 25% to #17.8 million (2005: #14.2 million), which was after a cash outflow of #1.7 million for the exceptional costs on closure of the US manufacturing facility. There was a cash outflow of #45.8 million for the acquisition of King Systems Corporation, together with a cash outflow of #9.5 million reflecting clearance of the acquisition with the Pensions Regulator to fund the deficit in the defined benefit pension scheme. These were financed by existing cash resources and #20.1 million of new loans. There are further payments of up to #6.2 million payable to the vendors of King Systems Corporation, mainly dependent on its financial performance in calendar 2006. In the past few years, capital expenditure has been well below the level of capital replacement in view of significant investments in earlier years. Going forward, capital expenditure is expected to reflect the level appropriate for capital replacement. However, there are increasing numbers of customer projects, both current and prospective, in Inhaled Drug Delivery that may warrant a stepped increase in capacity in the medium term. Treasury At the year end, the Group had net debt of #27.8 million (2005: #17.4 million net cash) and undrawn committed facilities of #25.5 million (2005: #12.8 million). Transactions in foreign currencies are matched wherever possible and the net position is hedged using forward contracts. A significant proportion of operating and intangible assets are denominated in US dollars, which are largely matched by US dollar borrowings, thereby hedging the balance sheet exposure. Translation effects of exchange rate movements on the income statement are not hedged. The treasury function does not act as a profit centre and speculative treasury transactions are not undertaken. Debt financing for the acquisition has improved the capital efficiency and will require continued discipline in financial management. Last year, the average rate of exchange between sterling and the US dollar was 1.78 (2005: 1.85), whilst the year end rate of exchange was 1.82 (2005: 1.91). Pensions Bespak operates a defined benefit pension scheme in the UK that is closed to new employees, who are eligible to join a defined contribution pension scheme. During the year, the company negotiated with the trustees and obtained clearance of the acquisition with the Pensions Regulator to fund the deficit of #15.6 million under FRS 17 as at 30 April 2005 by an initial payment of #9.0 million in December 2005 and with the balance of the deficit settled by equal monthly installments over 5 years. As at 29 April 2006, the deficit was #12.0 million under IAS 19 and the company is in dialogue with the trustees to agree a schedule of contributions in respect of the revised deficit. International Financial Reporting Standards These results for the 52 weeks ended 29 April 2006 are prepared under International Accounting Standards and International Financial Reporting Standards (IFRS) as adopted by the European Union. The adoption of IFRS represents an accounting change and does not affect the underlying operations or cash flows, although implementation of the new standards may result in increased volatility in reported results. OUTLOOK Last year, the business benefited from several positive developments: the closure of the US manufacturing facility followed by the acquisition of King Systems Corporation and commencement of manufacturing for the Exubera(R) inhaler. Looking ahead, a number of key issues will influence Bespak's performance: * Manufacturing will continue to be scaled-up for the Exubera(R) inhaler to support its global launch, with production activity expected to be ahead of our original expectations, although it will be some months before end-user demand is ascertained. * There will be a full year trading benefit from the King acquisition compared to four months last year, and we anticipate growth with the added benefit of new products. * The conversion from CFC to HFA in albuterol formulations in the US is accelerating, generating higher than expected levels of activity in the short term, but is expected to create uncertainty from the start of the next calendar year. Bespak enjoys a high share of the CFC albuterol market in the US, and its customer base in CFC albuterol formulations differs from that in HFA equivalents, and its share of the market is expected to be rebased through this transition. The Board remains confident of meeting its expectations for the current financial year. 12 July 2006 Consolidated Income Statement For the 52 weeks ended 29 April 2006 2006 2006 2006 2005 2005 2005 Before Special Total Before Special Total special items special items items items (Note 3) (Note 3) Note #000 #000 #000 #000 #000 #000 Revenue 2 93,084 - 93,084 79,386 - 79,386 Operating expenses (78,902) 242 (78,660) (68,831) (6,066) (74,897) -------- -------- -------- -------- -------- -------- Operating profit 2 14,182 242 14,424 10,555 (6,066) 4,489 Finance 825 - 825 894 - 894 income Finance expenses (1,030) - (1,030) (157) - (157) Other finance (501) - (501) (393) - (393) costs Share of post tax profits/ (losses) of 10 - 10 (17) - (17) associate -------- -------- -------- -------- -------- -------- Profit before 13,486 242 13,728 10,882 (6,066) 4,816 tax Taxation 4 (3,696) 290 (3,406) (2,498) - (2,498) -------- -------- -------- -------- -------- -------- Profit for the financial 9,790 532 10,322 8,384 (6,066) 2,318 period ======== ======== ======== ======== ======== ======== Basic earnings 5 35.9p 2.0p 37.9p 31.3p (22.6p) 8.7p per share Diluted earnings per 5 35.4p 1.9p 37.3p 30.9p (22.4p) 8.5p share Dividends per 6 19.1p 19.1p share All amounts relate to continuing operations. Consolidated Balance Sheet At 29 April 2006 2006 2005 Note #000 #000 Non-current assets Property, plant and equipment 52,537 51,159 Goodwill 7 39,259 - Other intangible assets 8 14,906 130 Investment in associates 269 269 Available-for-sale financial assets - 77 -------- -------- 106,971 51,635 -------- -------- Current assets Inventories 9,571 6,082 Trade and other receivables 9 19,289 14,704 Current taxation receivable 282 - Cash and cash equivalents 10 9,782 20,302 -------- -------- 38,924 41,088 -------- -------- Current liabilities Borrowings 10 (23,106) (2,887) Trade and other payables (15,080) (11,621) Current taxation payable (3,850) (1,618) Provisions and other liabilities (6,147) (2,054) -------- -------- (48,183) (18,180) -------- -------- Net current (liabilities)/assets (9,259) 22,908 Non-current liabilities Borrowings 10 (14,449) - Deferred taxation (5,197) (443) Defined benefit pension scheme deficit 11 (12,002) (15,703) Other non-current liabilities - (399) -------- -------- (31,648) (16,545) -------- -------- -------- -------- Net assets 2 66,064 57,998 ======== ======== Shareholders' equity Share capital 2,802 2,681 Share premium 28,837 23,051 Retained earnings 34,693 32,509 Other reserves (268) (243) -------- -------- Total equity 12 66,064 57,998 ======== ======== The preliminary financial statements were approved by the Board on 11 July 2006 Consolidated Cash Flow Statement For the 52 weeks ended 29 April 2006 2006 2005 Note #000 #000 Cash flows from operating activities Operating profit before taxation 14,424 4,489 Depreciation 7,072 7,450 Amortisation 750 187 (Profit)/loss on disposal of property, plant and equipment (272) 97 Share based payments 410 364 Impairment (credit)/charge (438) 3,784 Increase in inventories (1,506) (171) Increase in trade and other receivables (789) (4,169) Increase in trade and other payables 21 322 (Decrease)/increase in provisions (2,140) 1,887 Decrease in financial instruments (149) (124) Increase in defined benefit pension scheme provisions 415 - Provision against fixed asset investment - 102 -------- -------- Cash generated from operations 17,798 14,218 Interest paid (854) (157) Tax paid (3,554) (2,608) -------- -------- Net cash inflow from operating activities 13,390 11,453 -------- -------- Cash flows from investing activities Purchases of property, plant and equipment (4,334) (2,590) Purchases of intangible assets (182) - Proceeds from sale of property, plant and equipment 3,402 4 Disposal of fixed asset investments 83 66 Interest received 815 900 Dividend received from associate 10 - Acquisition of subsidiary (net of cash acquired) 13 (45,772) - -------- -------- Net cash used in investing activities (45,978) (1,620) -------- -------- Cash flows from financing activities Net proceeds from issue of ordinary share capital 403 12 Equity dividends paid to shareholders 6 (5,201) (5,111) New bank loans raised 20,121 - Repayment of amounts borrowed (1,008) - Payments to fund defined benefit pension scheme deficit 11 (9,540) - -------- -------- Net cash generated/(used) in financing activities 4,775 (5,099) -------- -------- Net (decrease)/increase in cash and short-term borrowings (27,813) 4,734 Effects of exchange rate changes 932 361 Cash and short-term borrowings at start of period 17,415 12,320 -------- -------- Cash and short-term borrowings at end of period 10 (9,466) 17,415 ======== ======== Consolidated Statement of Recognised Income and Expense For the 52 weeks ended 29 April 2006 2006 2005 #000 #000 Fair value movements on cash flow hedges 152 - Deferred tax on fair value movements on cash flow hedges (46) - Exchange movements on translation of foreign subsidiaries (331) (142) Deferred tax on exchange movements 99 - Deferred tax on share based payments 193 21 Actuarial losses on defined benefit pension scheme (5,040) (2,547) Current tax on actuarial losses 543 - Deferred tax on actuarial losses 970 765 -------- -------- Net loss recognised directly in equity (3,460) (1,903) Profit for the financial period 10,322 2,318 -------- -------- Total recognised income for the period 6,862 415 ======== ======== Notes to the accounts 1. Basis of preparation The preliminary announcement for the 52 weeks ended 29 April 2006 has been prepared in accordance with International Accounting Standards and International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) at 29 April 2006. On 13 January 2006, the Group reported on the impact of IFRS on its results for the 52 weeks ended 30 April 2005 including the most significant accounting policies. Details are provided in the document "Adoption of International Financial Reporting Standards (IFRS)" that is available on the Group's website (www.bespak.com) or from the Company Secretary. The financial information in this preliminary announcement does not constitute the Company's statutory accounts for the 52 weeks ended 29 April 2006 or the 52 weeks ended 30 April 2005, but is derived from those accounts. Statutory accounts for 2005, which were prepared under accounting practices generally accepted in the UK, have been delivered to the Registrar of Companies and those for 2006 will be delivered after the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237(2) or s237(3) Companies Act 1985. 2. Segmental information Revenue by business segment 2006 2005 #000 #000 Inhaled Drug Delivery 76,502 74,009 Consumer Dispensers 5,524 5,377 Anaesthesia & Respiratory Care 11,118 - -------- -------- Sales 93,144 79,386 Intra-segmental sales (60) - ======== ======== Revenue 93,084 79,386 ======== ======== Revenue by origin 2006 2005 #000 #000 United Kingdom 78,092 67,882 United States of America 17,802 18,923 -------- -------- Sales 95,894 86,805 Intra-segmental sales (2,810) (7,419) -------- -------- Revenue 93,084 79,386 ======== ======== Revenue by destination 2006 2005 #000 #000 United Kingdom 23,796 23,613 United States of America 41,982 27,808 Europe 19,852 20,276 Rest of the World 7,454 7,689 -------- -------- Revenue 93,084 79,386 ======== ======== Operating profit by business segment 2006 2006 2006 Before Special Total Special items Items (Note 3) #000 #000 #000 Inhaled Drug Delivery 13,125 901 14,026 Consumer Dispensers (962) - (962) Anaesthesia & Respiratory Care 2,019 (659) 1,360 -------- -------- -------- Operating profit 14,182 242 14,424 ======== ======== ======== 2. Segmental information (continued) Operating profit by business segment 2005 2005 2005 Before Special Total Special items Items (Note 3) #000 #000 #000 Inhaled Drug Delivery 11,644 (6,066) 5,578 Consumer Dispensers (1,089) - (1,089) Anaesthesia & Respiratory Care - - - -------- -------- -------- Operating profit 10,555 (6,066) 4,489 ======== ======== ======== Net assets by business segment 2006 2005 #000 #000 Inhaled Drug Delivery 52,903 53,586 Consumer Dispensers 4,240 4,415 Anaesthesia & Respiratory Care 63,231 - Unallocated net liabilities (54,310) (3) -------- -------- Net assets 66,064 57,998 ======== ======== Exchange rates 2006 2005 Average rate of exchange US$: #1 1.78 1.85 Closing rate of exchange US$ : #1 1.82 1.91 3. Special items 2006 2005 #000 #000 Exceptional operating income/(expenses) 901 (6,066) Amortisation of acquired intangible assets (659) - -------- -------- Special items before tax 242 (6,066) Taxation on amortisation of acquired intangible assets 290 - -------- -------- Special items after tax 532 (6,066) ======== ======== The exceptional operating income in the 52 weeks ended 29 April 2006 comprised the reversal of closure provisions and impairment provisions against the carrying value of the Group's fixed assets in the United States following closure of the manufacturing facility in North Carolina. Amortisation represents the charge for other intangible assets acquired with King Systems. The tax credit represents that related to the amortisation charge. The exceptional operating expenses in the 52 weeks ended 30 April 2005 comprised an impairment charge for the land, buildings, plant and equipment, together with a provision for closure costs, on which there was no tax impact. 4. Taxation 2006 2005 #000 #000 Current income tax 3,905 2,923 Deferred income tax (499) (425) -------- -------- 3,406 2,498 ======== ======== 5. Earnings per share 2006 2005 #000 #000 Net profit after tax before special items attributable to ordinary shareholders 9,790 8,384 Special items after taxation 532 (6,066) -------- -------- Net profit after tax attributable to ordinary shareholders 10,322 2,318 -------- -------- Weighted average number of shares in issue (shares) 27,242,663 26,805,889 Weighted average number of shares owned by ESOT (shares) (8,071) (34,114) -------- -------- Average number of ordinary shares in issue for basic earnings (shares) 27,234,592 26,771,775 Dilutive impact of share options outstanding (shares) 422,960 353,691 -------- -------- Diluted average number of ordinary shares in issue (shares) 27,657,552 27,125,466 -------- -------- Basic earnings per share before special items (pence) 35.9p 31.3p Basic profit/(loss) per share on special items (pence) 2.0p (22.6p) -------- -------- Basic earnings per share (pence) 37.9p 8.7p ======== ======== Diluted earnings per share before special items (pence) 35.4p 30.9p Diluted profit/(loss) per share on special items (pence) 1.9p (22.4p) -------- -------- Diluted earnings per share (pence) 37.3p 8.5p ======== ======== 6. Dividends 2006 2005 #000 #000 Final dividend paid for 2005 of 12.1p per share (2005: 12.1p per share) 3,241 3,237 Interim dividend paid for 2006 of 7.0p per share (2005: 7.0p per share) 1,960 1,874 -------- -------- 5,201 5,111 ======== ======== A final dividend of 12.1p per share for the 52 weeks ended 29 April 2006 is to be proposed for approval at the Annual General Meeting and which will utilise an estimated #3.4m of shareholders' equity. It will be paid on 26 October 2006 to shareholders on the register on 6 October 2006. 7. Goodwill #000 At 1 May 2005 - Additions through acquisition (note 13) 40,966 Effects of exchange rate changes (1,707) -------- At 29 April 2006 39,259 -------- 8. Other intangible assets #000 At 1 May 2005 130 Additions 182 Additions through acquisition (note 13) 16,000 Transfer from property, plant and equipment 18 Amortisation (750) Effects of exchange rate changes (674) -------- At 29 April 2006 14,906 -------- 9. Trade and other receivables 2006 2005 #000 #000 Trade and other receivables falling due within one year 19,064 13,838 Trade and other receivables falling due after more than one year 225 866 -------- -------- 19,289 14,704 ======== ======== 10. Reconciliation of net cash flow to movement in net debt Cash and Current Non-current Net cash borrowings borrowings cash/(debt) equivalents #000 #000 #000 #000 At 1 May 2005 20,302 (2,887) - 17,415 Cash flow for the period (10,504) (17,309) - (27,813) New long-term bank debt (4,024) (16,097) (20,121) raised Debt repayments included in - - 1,008 1,008 cash flow for the period Finance lease acquired - (7) (9) (16) Effect of exchange rate changes (16) 1,121 649 1,754 -------- -------- -------- -------- At 29 April 2006 9,782 (23,106) (14,449) (27,773) ======== ======== ======== ======== Net debt at 29 April 2006 comprises: Cash and short-term borrowings 9,782 (19,248) - (9,466) Bank term loan - (3,851) (14,442) (18,293) Finance lease obligations - (7) (7) (14) -------- -------- -------- -------- At 29 April 2006 9,782 (23,106) (14,449) (27,773) ======== ======== ======== ======== Cash flow includes an outflow of #1,687,000 in the 52 weeks ended 29 April 2006 and an outflow of #235,000 in the 52 weeks ended 30 April 2005 relating to exceptional operating income/expenses. 11. Defined benefit pension scheme deficit 2006 2005 #000 #000 Pension deficit at start of period 15,703 12,773 Current service costs 1,537 1,281 Expected return on plan assets (1,657) (1,505) Interest cost 2,041 1,898 Actuarial losses 5,040 2,547 Regular employer contributions (1,122) (1,291) Employer payments to fund defined benefit pension scheme deficit (9,540) - -------- -------- Pension deficit at end of period 12,002 15,703 ======== ======== 12. Consolidated Statement of Changes in Shareholders' Equity 2006 2005 #000 #000 Total equity at start of period 57,998 62,318 Total recognised income for the period 6,862 415 Recognition of share-based payments 410 364 Proceeds from sale of shares for employee options 314 - Proceeds from release of own shares held 88 12 Equity dividends (5,201) (5,111) Issue of share capital as part of consideration for acquisition of subsidiary 5,593 - -------- -------- Total equity at end of period 66,064 57,998 ======== ======== 13. Acquisition On 22 December 2005, the group purchased 100% of the shares of King Systems Corp ("King") for total consideration and acquisition costs of #57.7m. This purchase has been accounted for as an acquisition. From the date of acquisition to 29 April 2006, King contributed #11.1m to turnover, #2.0m to operating profit before special items and #1.4m to profit before tax. King contributed #2.3m to the group's net operating cash flows, paid #0.6m in respect of taxation and utilised #0.3m for capital expenditure. Intangible fixed assets were recognised at their respective fair values where these could be measured reliably. The residual excess over the net assets acquired is recognised as goodwill in the financial statements. Carrying Fair value Provisional values pre- adjustments fair values acquisition #000 #000 #000 Other intangible assets - 16,000 16,000 Property, plant and equipment 5,031 1,764 6,795 Inventories 2,003 - 2,003 Receivables 3,688 - 3,688 Payables (2,831) - (2,831) Current taxation (187) (2,122) (2,309) Deferred taxation 294 (7,034) (6,740) Cash and cash equivalents 189 - 189 Lease obligations (16) - (16) -------- -------- -------- Net assets acquired 8,171 8,608 16,779 -------- -------- Goodwill 40,966 -------- Total consideration 57,745 ======== Total consideration satisfied by: Ordinary shares issued 5,593 Cash 43,090 Net asset adjustment paid in May 2006 833 Deferred contingent consideration 5,358 Directly attributable costs 2,871 -------- Total consideration 57,745 ======== The fair value adjustments contain some provisional amounts which are subject to finalisation within 12 months of the date of acquisition. Shares issued were valued at market price at the date of acquisition. Goodwill represents the value of synergies and the assembled work force. The outflow of cash and cash equivalents on the acquisition of King is calculated as follows: #000 Cash consideration 43,090 Directly attributable costs 2,871 -------- Cash outflow 45,961 Cash acquired (189) -------- Net cash impact 45,772 ======== The other intangible assets acquired as part of the acquisition of King can be analysed as follows: #000 Patented and unpatented technology and know-how 5,122 Trademarks and trade names 4,703 Customer contracts and relationships 2,999 Distribution agreements 3,176 -------- Other intangible assets 16,000 ======== This information is provided by RNS The company news service from the London Stock Exchange END FR SFFSMESMSEDW
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