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
Bespak (LSE:BPK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bespak (LSE:BPK)
Historical Stock Chart
From Jul 2023 to Jul 2024