TIDMCSRT
RNS Number : 0226R
Consort Medical PLC
06 December 2016
Consort Medical plc
6 December 2016
Interim results
Strong underlying(1) performance with 13%(2) increase in
EPS(3)
Significant new pipeline contracts increase confidence in longer
term outlook
Consort Medical plc (LSE: CSRT) ("Consort", "Consort Medical" or
the "Group"), a leading, global, single source drug and delivery
device company, today announces its interim results for the six
months ended 31 October 2016.
Financial Highlights
H1 FY2017 <DELTA> H1 FY2016 @ CER(2) H1 FY2016 Reported
Reported
GBPm 6 months ended 31 Oct 2016 31 Oct 2015 31 Oct 2015
------------------------- ------------ -------- ------------------- -------------------
Revenue 144.9 2.0% 142.1 135.5
EBIT(3) 18.9 8.5% 17.4 16.5
EBT(3) 16.6 10.7% 15.0 14.1
Adjusted Basic EPS(3) 28.6p 13.0% 25.3p 23.5p
Statutory Measures
Profit before tax (PBT) 10.2 181.2% 3.6
Basic EPS 20.1p 66.2% 12.1p
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange
rates. (2) CER - at constant exchange rates. (3) Before special
items of GBP6.5m - special items relate to amortisation of acquired
intangible assets (H1 FY2016: amortisation of acquired intangible
assets GBP6.5m and integration costs GBP4.0m).
-- Group revenue increases to GBP144.9m from GBP135.5m - growth
of 2.0% underlying(1) , 6.9% reported
o Bespak underlying(1) revenue growth 4.3% and EBIT growth of
5.7%
o Aesica underlying(1) revenue growth 0.5% and EBIT growth of
14.1%
-- Improvement in Aesica operational performance increases
operating margin 160 bps to 7.8% - on course for double digit
margins goal
-- 13% growth in Adjusted basic EPS at constant exchange rates
reflecting operational leverage and performance
-- Strong underlying(1) cash generation partially offset by
currency headwinds and special items cashflow
-- Interim Dividend increased 5% to 7.09p, reflecting the
Board's confidence in the Group's prospects
Operational Highlights
-- Landmark deal for Bespak with first full development
agreement for Syrina(R) / Vapoursoft(R) device application with a
leading Global Biopharma. Development pipeline expands to 16
-- Launch of second Bespak injectable device with UCB Cimzia(R)
-- Rapidly expanding Bespak Innovation funnel, with 11 early
stage development / feasibility programmes
-- Aesica an early provider in serialisation services, growing
service offering to pharma clients
Jon Glenn, Chief Executive Officer of Consort Medical,
commented:
"Consort has continued to deliver strong underlying(1) growth in
earnings whilst adding further important contract wins that build
our pipeline momentum. In particular, the recent landmark master
development agreement for Syrina(R) / VapourSoft(R) and the launch
of UCB's Cimzia(R) autoinjector underpin our longer term growth
prospects.
We continue to focus on the organic development of our business,
and will continue to consider further inorganic opportunities -
whether adding a competency or geographic opportunity - where they
present a compelling case for enhancing sustainable shareholder
value. With a robust financial position and a strong development
pipeline, the Board remains highly confident of Consort's future
prospects."
Enquiries:
Consort Medical Tel: +44 (0) 1442
867920
Jonathan Glenn - Chief Executive
Officer
Richard Cotton - Chief Financial
Officer
FTI Consulting Tel: +44 (0) 20
3727 1000
Ben Atwell / Simon Conway
Notes:
1. Foreign Exchange Rates
a. Period end exchange rates 31 Oct 2016: EUR1.11: GBP1.0; USD1.22: GBP1.0.
b. Average exchange rate 1 May 2016 to 31 Oct 2016: EUR1.20: GBP1.0; USD1.34: GBP1.0.
c. Period end exchange rates 31 Oct 2015: EUR1.40: GBP1.0; USD1.54: GBP1.0.
d. Average exchange rate 1 May 2015 to 31 Oct 2015: EUR1.39: GBP1.0; USD1.55: GBP1.0.
e. Period end exchange rates 30 April 2016: EUR1.28: GBP1.0; USD1.46: GBP1.0.
f. Average exchange rates 1 May 2015 to 30 April 2016: EUR1.36: GBP1.0; USD1.50: GBP1.0.
Consort Medical plc is a leading, global, single source pharma
services drug and delivery device company. We are at the leading
edge of innovation and we are committed to investing in patient,
clinician and customer driven innovation to create new treatments,
new markets and new opportunities.
Our businesses
Bespak is a global market leader in the manufacture of drug
delivery devices for pharmaceutical partner companies, including
respiratory, nasal, injectables and ocular products, and the
manufacture of devices for the point of care diagnostics market.
www.bespak.com.
Aesica is a leading provider of finished dose and active
pharmaceutical ingredient (API) development and manufacturing
services to pharmaceutical partners. www.aesica-pharma.com.
We employ c.2,000 people globally of which c.1,400 are located
in the UK. We have UK facilities in King's Lynn, Cambridge, Nelson,
Milton Keynes, Cramlington, Queenborough and Hemel Hempstead,
German facilities in Monheim and Zwickau and a facility in
Pianezza, Italy. Consort Medical is a public company quoted on the
premium list of the London Stock Exchange (LSE: CSRT).
www.consortmedical.com.
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange
rates.
Consort Medical plc
Group Interim Results
During the first half Consort delivered a strong underlying(1)
performance from both businesses, in particular our further
operational improvements in Aesica translated into an enhanced
operating margin. In addition, a number of important business
development milestones have added to the Group's future growth
prospects, especially the landmark master development agreement for
Syrina(R) / VapourSoft(R) and the launch of UCB's Cimzia(R)
autoinjector.
Financial Performance
Revenue increased by GBP9.4m (6.9%) to GBP144.9m (H1 FY2016:
GBP135.5m) with Bespak delivering sustained growth of 4.3% to
GBP58.9m (H1 FY2016: GBP56.5m), and Aesica growing 8.8% to GBP86.0m
(H1 FY2016: GBP79.1m) - an increase of 0.5% at constant exchange
rates. Revenue strengthening attributable to the weakness of
sterling against the Euro is GBP6.5m or 8.3%.
EBIT before special items increased by 14.7% to GBP18.9m (H1
FY2016: GBP16.5m). This included 5.7% growth from Bespak to
GBP12.2m (H1 FY2016: GBP11.5m). Bespak EBIT margin increased by
30bps to 20.7%. Aesica EBIT increased 35.8% to GBP6.7m - an
increase of 14.0% at constant exchange rates - with EBIT margin
growing 160bps to 7.8% reflecting continuing improvements to
operating performance.
Special items before taxation amounted to GBP6.5m in the year
(H1 FY2016: GBP10.5m), comprising amortisation of acquired
intangibles (H1 FY2016: amortisation of acquired intangible assets
GBP6.5m and integration costs GBP4.0m).
Finance costs were GBP2.3m (H1 FY2016: GBP2.4m), with Earnings
before tax and special items increasing by 18.0% to GBP16.6m (H1
FY2016: GBP14.1m) - an increase of 10.7% at constant exchange
rates. Adjusted basic EPS increased by 21.7% to 28.6p per share (H1
FY2016: 23.5p) - an increase of 13.0% at constant exchange rates.
Basic EPS increased by 66.2% to 20.1p per share (H1 FY2016:
12.1p).
Cash generated from operations decreased by GBP9.2m to GBP10.1m
(H1 FY2016: GBP19.3m). EBITDA before special items grew GBP3.6m
(16.9%) to GBP25.2m (H1 FY2016: GBP21.5m). Bespak EBITDA grew 7.8%
to GBP15.2m, with Aesica's EBITDA growing 34.1% to GBP10.0m - an
increase of 21.5% at constant exchange rates. Trade working capital
increased GBP3.9m to GBP55.7m (H1 FY2016: GBP51.8m) including the
impact of sterling depreciation against the euro, which represents
19.5% of sales (H1 FY2016: 19.4% of proforma sales). Capital
expenditure reduced GBP2.1m to GBP6.2m (H1 FY2016: GBP8.3m).
The Group balance sheet closed with a net debt position of
GBP106.8m (FY2016: GBP97.0m), representing gearing of 1.91x Net
Debt: EBITDA, comfortably within the banking facility covenant
(maximum 3.0x). Interest cover was 15.79x against a covenant
minimum of 3.0x. The Group has comfortable cash resource
availability, with total committed facilities of GBP171.2m, of
which GBP124.1m was drawn at 31 October 2016.
The Board is declaring an increased interim dividend per share
of 7.09p (H1 FY2016: 6.75p), an increase of 5%. Payment will be on
17 February 2017 to holders on the register on the record date of
20 January 2017.
Further commentary on the financial results is contained in the
Bespak and Aesica business reviews below.
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange
rates.
Bespak Business Review
Operations
H1 FY2017 Underlying(1) <DELTA>% Currency <DELTA>% H1 FY2016
------------- ---------- -------------- --------- --------- --------- ----------
Revenue GBP58.9m GBP2.4m 4.3% - - GBP56.5m
------------- ---------- -------------- --------- --------- --------- ----------
EBITDA(2) GBP15.2m GBP1.1m 7.8% - - GBP14.1m
------------- ---------- -------------- --------- --------- --------- ----------
EBITDA
margin
%(2) 25.7% 24.9%
------------- ---------- -------------- --------- --------- --------- ----------
EBIT(2) GBP12.2m GBP0.7m 5.7% - - GBP11.5m
------------- ---------- -------------- --------- --------- --------- ----------
EBIT margin
%(2) 20.7% 20.4%
------------- ---------- -------------- --------- --------- --------- ----------
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange
rates. (2) Before special items
Bespak has a well-established and diverse core business of
products in volume manufacturing and a strong pipeline of
innovative products entailing respiratory, nasal, ocular and
injectable drug delivery, as well as point of care diagnostics.
Once again, the business has performed strongly in the first half
with increased demand for its core products as well as winning new
development opportunities and contracts.
Revenue grew 4.3% to GBP58.9m. The Non-respiratory sales have
now grown to over 25% of Bespak's turnover - Injectables sales were
particularly strong again in both product sales and service
revenue. Across the business service revenue continues to be
strong, reflecting the extent of and additions to the Development
and Innovation pipelines.
The strong revenue performance translated to EBIT growth, which
increased 5.7% to GBP12.2m, as EBIT margin increased 30bps to
20.7%.
In October 2016, Bespak exhibited alongside Aesica at the CPHI
exhibition in Barcelona. This was the second time both companies
have shared a major industry exhibition platform, and the event
drew increased interest in the joint services offering of device
and drug.
Product Development
In line with our strategy we have assembled a full and broad
product development pipeline of organic growth opportunities, which
will add to the strength of the core business going forwards.
Successful conversion of these opportunities will provide
progressive revenue and profit growth, in both contract
manufacturing and products with our own proprietary IP and across a
range of therapeutic areas, including commercial drug handling.
Our published development portfolio provides an update on the
key business development projects in the business. We guide that
for inclusion in the published portfolio, projects must have a
reasonable expectation of success, though timescales are difficult
to predict, and be expected to produce peak annual sales of at
least GBP3m per annum.
In the period, UCB received regulatory approval from the EMA for
INJ 570, an autoinjector for UCB's Cimzia(R) , and the drug has
been successfully launched in the UK market. Further launches are
planned in the near term.
We also added two new projects to our development and
manufacturing portfolio. These include one respiratory project and
one injectable:
-- SYR075 is a significant new master development agreement for
our proprietary Vapoursoft(R) Syrina(R) autoinjector technology
with a leading global biopharmaceutical company. Initially there is
a single drug / device combination, but the agreement allows for
the addition of others, and contains outline terms for commercial
supply.
-- VAL100 is a significant new commercial supply agreement for
Bespak's proprietary respiratory devices with AstraZeneca AB. This
is a multi-year agreement for the scale-up and supply of Bespak's
proprietary pressurised metered dose inhaler (pMDI) valves and
actuators. These will subsequently be assembled with AstraZeneca's
Bevespi Aerosphere(R) (glycopyrrolate and formoterol fumarate)
inhalation aerosol indicated for the long-term, maintenance
treatment of airflow obstruction in patients with chronic
obstructive pulmonary disease (COPD), including chronic bronchitis
and/or emphysema. AstraZeneca announced that its device was
approved by the US Food and Drug Administration on 25 April
2016.
With the addition of these two new programmes, the portfolio has
grown to 16 live programmes. The status of the major programmes
currently in our development pipeline is listed below.
Project Description Customer Status
-------- -------------------------------------- ---------------------------- --------------------------------------
VAL310 Easifill primeless valve US Pharma Awaiting regulatory approval
INJ570 Auto-injector UCB EMA approval received. Launched Oct
2016 in UK
VAL020 MDI valve Global Pharma Stability trials complete; customer
progressing towards approval and
launch
DEV200 Nicotine delivery Nicovations Ongoing progress. We continue to work
with BAT towards launch
POC010 POC Test Cartridge Atlas Genetics CE marking granted for Chlamydia;
Combined Chlamydia / Gonorrhoea test
cartridge development
progressing
NAS020 Nasal device Global Generic Formulation change; brief under
review
DEV610 DPI Mylan Potential GDUFA date 28 March 2017
NAS030 Nasal device Pharma Co. Early stage programme
INJ600 PatchPump(R) infusion system for SteadyMed Therapeutics Inc. Good progress made. NDA submission
Treprostinel planned H1 2017
INJ650 ASI(R) Auto-injector Global Generic Continuing progress; early stage
INJ700 Lila Mix(TM) Injector Pharma Co. Development programme on track
IDC300 Oral IDC Pharma Co. Launch now expected H2 FY2018
VAL050 MDI valve / actuator Aeropharm Development contract ongoing
OCU050 Ocular device / formulation / filling Oxular Early stage programme
VAL100 MDI valve / actuator Astra Zeneca Product approved, awaiting launch
SYR075 Syrina(R) / Vapoursoft(R) Global Biopharma Newly completed master development
agreement
DPI = Dry Powder Inhaler, MDI = Metered Dose Inhaler, POC =
Point of Care, IDC = Integrated Dose Counter
Innovation
The Innovation team continues to be highly active on a number of
fronts. The team has now grown to 32 people (21 as at H1 FY2016) at
its own dedicated facilities in Cambridge, and we plan to grow this
further during the current financial year.
The commercial and innovation teams continue to generate very
strong interest in our new technology platforms on a range of
opportunities. The Innovation funnel has progressed broadly during
the period across a number of therapeutic areas and technologies.
These development and feasibility programmes cover a range of
therapeutic areas and are all in partnership with biotech and
pharmaceutical companies that complement our current customer
portfolio in our core business - this is again indicative of the
strength and success of our innovation drive and strategy to
broaden and diversify our product and customer base.
Syrina(R) , Lila(R) & Lapas(R) Update
Vapoursoft(R) powered Syrina(R) auto-injectors, Vapoursoft(R)
powered Lapas(R) auto-injectors, and our Lila Mix(TM) and Duo(TM)
technologies have continued to generate widespread interest as
innovative and novel drug delivery systems and devices, with
several biotech and pharmaceutical companies initiating feasibility
and development programmes for their injectable drug
portfolios.
This rapidly expanding Innovation funnel currently has an active
schedule of five early stage development programmes, six
feasibility programmes, and a further five programmes awaiting
initiation.
Launch of Bespak's Syrina(R) AR 2.25 Auto-injector
In October 2016 Bespak unveiled its Syrina(R) AR 2.25
auto--injector. This innovative auto-injector is the latest
addition to the VapourSoft(R) -powered Syrina(R) range and is
suitable for delivering volumes of up to 2.0ml using a standard
2.25ml pre-filled syringe. The Syrina(R) AR 2.25 provides patients
with a fully-automatic two-step, compact device for the
self-administration of viscous drug formulations.
Using Bespak's proven proprietary VapourSoft(R) compact energy
source, Syrina(R) AR 2.25 is able to deliver 2.0 ml of viscous drug
solutions smoothly and safely in less than 15 seconds. Designed
with a hidden needle, Syrina(R) AR 2.25 offers automatic needle
insertion and retraction, as well as drug delivery with a single
push-on-skin operation. Syrina(R) AR 2.25 has been tailored
specifically for higher viscosities while still enabling the safe
use of glass syringes.
Using VapourSoft(R) at its core allows a compact design and,
with quiet operation, provides a discrete solution for patients.
Syrina(R) AR 2.25 is clinical trial ready, enabling a fast track
implementation process once paired with a specific drug
formulation.
Aesica Business Review
Operations
H1 FY2017 Underlying(1) <DELTA>% Currency <DELTA>% H1 FY2016
------------- ---------- -------------- --------- --------- --------- ----------
Revenue GBP86.0m GBP0.4m 0.5% GBP6.5m 8.3% GBP79.1m
------------- ---------- -------------- --------- --------- --------- ----------
EBITDA(2) GBP10.0m GBP1.6m 21.4% GBP1.0m 12.8% GBP7.4m
------------- ---------- -------------- --------- --------- --------- ----------
EBITDA
margin
%(2) 11.6% 9.4%
------------- ---------- -------------- --------- --------- --------- ----------
EBIT(2) GBP6.7m GBP0.7m 14.1% GBP1.1m 21.8% GBP4.9m
------------- ---------- -------------- --------- --------- --------- ----------
EBIT margin
%(2) 7.8% 6.2%
------------- ---------- -------------- --------- --------- --------- ----------
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange
rates. (2) Before special items
Aesica revenue grew 0.5% to GBP86.0m, at constant exchange
rates. EBIT grew strongly, by 14.1% to GBP6.7m at constant exchange
rates, reflecting the continued improvement in its operating
performance, with operating margin increasing 160bps to 7.8%.
We are now routinely supplying commercial product using the
first semi-continuous processing line and technology installed at
the Queenborough site and are in discussion with a range of pharma
customers looking to access the equipment for development
activities.
Aesica has moved from validation to routine commercial supply of
S+flurbiprofen to a leading Japanese pharmaceutical company to
provide the active ingredient for an anti-inflammatory
formulation.
Business Development and Innovation
A changing regulatory requirement within the pharmaceutical
industry is for product to be uniquely identified to the individual
pack level. This process is known in the industry as serialisation.
Aesica has been a very early provider of serialisation services to
the industry for countries such as China and Latin America and is
well advanced in developing the service to take on customers for
the next wave of countries adopting serialisation including the
EU.
The business has identified a number of attractive business
development opportunities with pharma companies looking to
outsource oral products and has seen growth in demand for its
liquid formulation services at the Pianezza site. One continued
growth area is around the manufacture and supply of anaesthetic
product for both human and veterinary use.
The Aesica commercial team is focused on a growing number of
formulation development and manufacturing opportunities, including
a number of early leads for drug formulation and device
combinations, as well as packaging opportunities.
Other Financial
Special Items
Special items are those items which the Group considers to be
non-repetitive or are not a part of the underlying performance of
the business, and often where a material income statement cost or
credit is incurred in one year to deliver a future benefit. In H1
FY2017 special items amounted to GBP6.5m comprising amortisation of
acquired intangible assets (H1 FY2016: amortisation of acquired
intangible assets GBP6.5m and integration costs GBP4.0m).
Pensions
The IAS 19 pension valuation at 31 October 2016 was a total
deficit of GBP43.3m (30 April 2016: GBP27.2m). The bulk of the
increase in the deficit arises primarily from the significant
decline in bond yields following the EU referendum which has
increased the liabilities, in particular of the Bespak scheme.
Deficit recovery contributions of GBP1.5m per annum are being made
to the Bespak scheme. The next triennial actuarial valuation will
take place at 30 April 2017.
Tax
The effective tax rate on EBT before special items is 16.1% (H1
2016: 18.9%). The reduction in the rate from last year follows the
approval and launch of UCB's Cimzia(R) autoinjector (INJ570), where
historic development losses in the Medical House (ASI) Ltd. have
now been recognised as a tax asset.
Principal risks and uncertainties
The principal risks and uncertainties deemed relevant for the
remainder of the financial year are considered in note 14 to the
financial statements.
People
As announced in August, Richard Cotton (CFO) is leaving the
Group following these results to join Dechra Pharmaceuticals plc as
CFO. As announced on 25 November 2016, the Board has appointed Paul
Hayes to succeed Richard. Paul is currently CFO of The Vitec Group
plc, and is serving his notice there until the end of April 2017
when he will join Consort. In the meantime, the Group has appointed
David Tilston to act as Interim CFO until Paul joins. David is a
seasoned Interim CFO, with experience in both public and private
companies.
The Board would like to thank Richard for his contribution,
commitment and hard work during a time of significant change and
growth at the Group, and to wish him well as he embarks on the next
stage of his career.
Outlook
Consort has continued to deliver strong underlying(1) growth in
earnings whilst adding further important contract wins that build
our pipeline momentum.
In particular, the recent landmark master development agreement
for Syrina(R) / VapourSoft(R) and the launch of UCB's Cimzia(R)
autoinjector further evidence our longer term growth prospects.
We continue to focus on the organic development of our business,
and will continue to consider further inorganic opportunities -
whether adding a competency or geographic opportunity - where they
present a compelling case for enhancing sustainable shareholder
value. With a robust financial position and a strong development
pipeline, the Board remains highly confident of Consort's future
prospects.
(1) Underlying - H1 FY2017 less H1 FY2016 at constant exchange
rates.
Statement of directors' responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of Consort Medical plc are listed in the Consort
Medical plc Annual Report for the year ended 30 April 2016. A list
of current directors is maintained on the Consort Medical plc
website: www.consortmedical.com.
By order of the Board
Richard Cotton
Chief Financial Officer
5 December 2016
Independent review report to Consort Medical plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 October 2016 which comprises the consolidated
Income Statement, consolidated Statement of Comprehensive Income,
consolidated Balance Sheet, consolidated Statement of Changes in
Shareholders' Equity, consolidated Cash Flow Statement and the
related explanatory notes. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
The annual financial statements of the group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
October 2016 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK
FCA.
Lynton Richmond
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
5 December 2016
Condensed Consolidated Income Statement
For the half year ended 31 October
2016
Unaudited Unaudited Audited
1 May 1 May 1 May
to 31 to 31 to 30
October October April
2016 2015 2016
Note GBP000 GBP000 GBP000
----------------------------------------- ----- ----------- ---------- -----------
Revenue 2 144,933 135,548 276,910
Operating expenses before
special items (126,042) (119,080) (239,935)
----------------------------------------- ----- ----------- ---------- -----------
Operating profit before special
items 18,891 16,468 36,975
Special items 3 (6,478) (10,493) (21,018)
----------------------------------------- ----- ----------- ---------- -----------
Operating profit 12,413 5,975 15,957
Finance income 72 14 11
Finance costs 4 (1,587) (1,719) (3,328)
Other finance costs 4 (732) (655) (1,399)
----------------------------------------- ----- ----------- ---------- -----------
Profit before tax and special
items 16,644 14,108 32,259
Special items 3 (6,478) (10,493) (21,018)
----------------------------------------- ----- ----------- ---------- -----------
Profit before tax 10,166 3,615 11,241
----------------------------------------- ----- ----------- ---------- -----------
Tax on profit before special
items 5 (2,672) (2,664) (4,181)
Special items - tax 3 2,333 4,985 8,908
Tax (charge) / credit 5 (339) 2,321 4,727
----------------------------------------- ----- ----------- ---------- -----------
Profit for the financial period
from continuing operations 9,827 5,936 15,968
Loss for the financial period
from discontinued operations 15 - (48) (999)
----------------------------------------- ----- ----------- ---------- -----------
Profit for the financial period 9,827 5,888 14,969
------------------------------------------------ ----------- ---------- -----------
Earnings per share, attributable to
the ordinary equity holders of the
parent
From continuing operations:
Basic earnings per ordinary
share 6 20.1p 12.2p 32.7p
Diluted earnings per
ordinary share 6 19.9p 12.0p 32.3p
From continuing and
discontinued operations:
Basic earnings per ordinary
share 6 20.1p 12.1p 30.7p
Diluted earnings per
ordinary share 6 19.9p 11.9p 30.3p
Non-GAAP measures
From continuing operations: GBP000 GBP000 GBP000
Profit before tax before
special items 16,644 14,108 32,259
Profit after tax before
special items 13,972 11,444 28,078
Adjusted basic earnings
per ordinary share 6 28.6p 23.5p 57.6p
Adjusted diluted earnings
per ordinary share 6 28.2p 23.2p 56.8p
Condensed Consolidated Statement of Comprehensive
Income
For the half year ended
31 October 2016
Unaudited Unaudited Audited
1 May 1 May 1 May
to 31 to 31 to 30
October October April
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------------------- ---------- ---------- --------
Profit for the period from
continuing operations 9,827 5,936 15,968
Loss for the period from discontinued
operations - (48) (999)
-------------------------------------------------- ---------- ---------- --------
Profit for the financial period 9,827 5,888 14,969
-------------------------------------------------- ---------- ---------- --------
Other comprehensive income
Items that may be reclassified
subsequently to profit and
loss:
Net gain on hedge of a net
investment (4,758) 243 (2,699)
Exchange movements on translation
of foreign subsidiaries 17,878 (119) 10,381
Current tax on exchange movements - 8 (11)
Items that will not be reclassified
subsequently to profit and
loss:
Actuarial losses on defined
benefit pension scheme (15,895) (319) (5,376)
Deferred tax on actuarial
losses 2,889 89 1,055
Impact of change in tax rates (439) 457 (588)
-------------------------------------------------- ---------- ---------- --------
Other comprehensive (loss)
/ income for the period (325) 359 2,762
-------------------------------------------------- ---------- ---------- --------
Total comprehensive income
for the period 9,502 6,247 17,731
-------------------------------------------------- ---------- ---------- --------
Attributable to equity holders
of the parent
From continuing operations 9,502 6,295 18,730
From discontinued operations - (48) (999)
Condensed Consolidated
Balance Sheet
at 31 October 2016
Restated*
Unaudited Unaudited Audited
31 October 31 October 30 April
2016 2015 2016
Note GBP000 GBP000 GBP000
---------------------------------- ----- ------------- ------------ -----------
Assets
Non-current assets
Property, plant and equipment 139,050 130,366 136,673
Goodwill 131,101 117,673 122,634
Other intangible assets 66,269 70,088 67,304
Investments 9 8,250 6,266 8,250
Trade and other receivables 8 - -
---------------------------------- ----- ------------- ------------ -----------
344,678 324,393 334,861
---------------------------------- ----- ------------- ------------ -----------
Current assets
Inventories 34,977 31,767 30,725
Trade and other receivables 62,471 57,901 54,632
Current tax asset 6,245 3,079 9,284
Cash and cash equivalents 10 16,216 11,580 16,258
---------------------------------- ----- ------------- ------------ -----------
119,909 104,327 110,899
---------------------------------- ----- ------------- ------------ -----------
Total assets 464,587 428,720 445,760
---------------------------------- ----- ------------- ------------ -----------
Liabilities
Current liabilities
Borrowings 10 (122,977) (106,868) (113,209)
Trade and other payables (56,306) (73,884) (61,705)
Derivative financial instruments 9 (250) (30) (256)
Provisions for other liabilities (4,446) (8,222) (3,610)
---------------------------------- ----- ------------- ------------ -----------
(183,979) (189,004) (178,780)
---------------------------------- ----- ------------- ------------ -----------
Net current liabilities (64,070) (84,677) (67,881)
---------------------------------- ----- ------------- ------------ -----------
Non-current liabilities
Trade and other payables (9,453) - (9,475)
Deferred tax liabilities (16,529) (19,273) (18,571)
Defined benefit pension
scheme deficit 12 (43,294) (20,980) (27,157)
Provisions for other liabilities (361) - (2,626)
---------------------------------- ----- ------------- ------------ -----------
(69,637) (40,253) (57,829)
---------------------------------- ----- ------------- ------------ -----------
Total liabilities (253,616) (229,257) (236,609)
---------------------------------- ----- ------------- ------------ -----------
Net assets 210,971 199,463 209,151
---------------------------------- ----- ------------- ------------ -----------
Shareholders' equity
Share capital 16 4,921 4,913 4,913
Share premium 137,911 137,422 137,422
Retained earnings 55,636 65,218 67,367
Other reserves 12,503 (8,090) (551)
---------------------------------- ----- ------------- ------------ -----------
Total equity 210,971 199,463 209,151
---------------------------------- ----- ------------- ------------ -----------
*Restated (see note 17)
Condensed Consolidated Statement of Changes in Shareholders'
Equity
For the half year ended
31 October 2016
Share Share Retained Translation
capital premium earnings reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- --------- --------- ---------- ------------ ---------
Balance at 1 May 2015
(audited) 4,907 137,087 66,721 (8,222) 200,493
----------------------------- --------- --------- ---------- ------------ ---------
Profit for the financial
period - - 5,888 - 5,888
Exchange movements on
translation of foreign
subsidiaries - - - 124 124
Actuarial gains on defined
benefit scheme - - 319 - 319
Tax on amounts taken
directly to equity - - (546) 8 (538)
----------------------------- --------- --------- ---------- ------------ ---------
Total comprehensive income - - 5,661 132 5,793
----------------------------- --------- --------- ---------- ------------ ---------
Recognition of share-based
payments - - 853 - 853
Movement on tax arising
on share-based payments - - (211) - (211)
Proceeds from exercise
of employee options 6 335 - - 341
Consideration paid for
purchase of own shares
(held in trust) - - (2,084) - (2,084)
Equity dividends - - (5,722) - (5,722)
----------------------------- --------- --------- ---------- ------------ ---------
6 335 (7,164) - (6,823)
----------------------------- --------- --------- ---------- ------------ ---------
Balance at 31 October
2015 (unaudited) 4,913 137,422 65,218 (8,090) 199,463
----------------------------- --------- --------- ---------- ------------ ---------
Balance at 1 May 2015
(audited) 4,907 137,087 66,721 (8,222) 200,493
Profit for the financial
period - - 14,969 - 14,969
Exchange movements on
translation of foreign
subsidiaries - - - 7,682 7,682
Actuarial losses on defined
benefit scheme - - (5,376) - (5,376)
Tax on amounts taken
directly to equity - - 467 (11) 456
----------------------------- --------- --------- ---------- ------------ ---------
Total comprehensive loss - - 10,060 7,671 17,731
----------------------------- --------- --------- ---------- ------------ ---------
Recognition of share-based
payments - - 1,792 - 1,792
Movement on tax arising
on share-based payments - - 2 - 2
Proceeds from exercise
of employee options 6 335 - - 341
Consideration paid for
purchase of own shares
(held in trust) - - (2,209) - (2,209)
Equity dividends - - (8,999) - (8,999)
----------------------------- --------- --------- ---------- ------------ ---------
6 335 (9,414) - (9,073)
----------------------------- --------- --------- ---------- ------------ ---------
Balance at 1 May 2016
(audited) 4,913 137,422 67,367 (551) 209,151
----------------------------- --------- --------- ---------- ------------ ---------
Profit for the financial
period - - 9,827 - 9,827
Exchange movements on
translation of foreign
subsidiaries - - - 13,054 13,054
Actuarial losses on defined
benefit scheme - - (15,895) - (15,895)
Tax on amounts taken
directly to equity - - 2,450 - 2,450
----------------------------- --------- --------- ---------- ------------ ---------
Total comprehensive income - - (3,618) 13,054 9,436
----------------------------- --------- --------- ---------- ------------ ---------
Recognition of share-based
payments - - 979 - 979
Movement on tax arising
on share-based payments - - (51) - (51)
Proceeds from exercise
of employee options 8 489 - - 497
Consideration paid for
purchase of own shares
(held in trust) - - (2,899) - (2,899)
Equity dividends - - (6,142) - (6,142)
----------------------------- --------- --------- ---------- ------------ ---------
8 489 (8,113) - (7,616)
----------------------------- --------- --------- ---------- ------------ ---------
Balance at 31 October
2016 (unaudited) 4,921 137,911 55,636 12,503 210,971
----------------------------- --------- --------- ---------- ------------ ---------
Condensed Consolidated Cash Flow Statement
For the half year ended 31 October 2016
Unaudited Unaudited Audited
1 May to 1 May to 1 May
31 October 31 October to 30
2016 2015 April
2016
Note GBP000 GBP000 GBP000
--------------------------------- --- ----- ----------------------- ------------ ---------
Cash flows from operating
activities
Profit before taxation
from continuing operations 10,166 3,615 11,241
Loss before taxation from
discontinued operations - (48) (999)
Finance income (72) (14) (11)
Finance costs 4 1,587 1,719 3,328
Other finance costs 4 732 655 1,399
----------------------------------------- ----- ----------------------- ------------ ---------
Operating profit 12,413 5,927 14,958
Depreciation 6,058 4,888 10,306
Amortisation 6,677 6,624 13,473
Profit on disposal of
property, plant and equipment 2 10 696
Share-based payments 979 853 1,792
Change in fair value of
contingent consideration - 48 999
Pension charge in excess
of cash contributions 45 (183) 412
(Increase) / decrease
in inventories (2,539) (450) 1,503
(Increase) / decrease
in trade and other receivables (5,392) 1,643 5,388
(Decrease) / increase
in trade and other payables (8,156) (2,246) (3,057)
(Decrease) / increase
in provisions (22) 2,291 143
(Increase) / decrease
in financial instruments (6) (87) 139
----------------------------------------- ----- ----------------------- ------------ ---------
Cash generated from operations 10,059 19,318 46,752
Interest paid (1,996) (1,497) (2,791)
Tax paid 1,769 (1,331) (6,548)
---------------------------------- --- ----- ----------------------- ------------ ---------
Net cash inflow from operating
activities 9,832 16,490 37,413
Cash flows from investing
activities
Purchases of property,
plant and equipment (6,212) (8,311) (21,126)
Purchases of intangible
assets - - (357)
Proceeds from sale of
property, plant and equipment - 1,979 1,979
Net proceeds on disposal
of businesses - 1,549 1,548
Interest received 72 8 11
Purchase of equity
investment - - (1,984)
------------------------------------ ----- --------- -------------------------- -----------
Net cash outflow from
investing activities (6,140) (4,775) (19,929)
Cash flows from financing
activities
Proceeds from issues of
ordinary share capital 498 334 341
Purchase of own shares (2,899) (2,120) (2,209)
Equity dividends paid
to shareholders (6,142) (5,722) (8,999)
Defined benefit scheme (796) - (712)
Proceeds from new bank
funding 10,834 5,100 14,021
Repayment of amounts borrowed (6,021) (42,601) (48,316)
Net cash used in financing
activities (4,526) (45,009) (45,874)
Net decrease in cash and
cash equivalents (834) (33,294) (28,390)
Effects of exchange rate
changes 792 (327) (553)
Cash and cash equivalents
at start of period 10 16,258 45,201 45,201
----------------------------------------- ----- --------- -------------------------- -----------
Cash and cash equivalents
at end of period 10 16,216 11,580 16,258
----------------------------------------- ----- --------- -------------------------- -----------
Notes to the accounts
1. Basis of preparation
The Company is a public limited company incorporated and
domiciled in the UK. The address of its registered office is
Breakspear Park, Breakspear Way, Hemel Hempstead, Herts HP2 4TZ.
The Company is listed on the London Stock Exchange.
This condensed consolidated interim financial information was
approved for issue on 5 December 2016.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 30
April 2016 were approved by the Board of directors on 15 June 2016
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
This condensed consolidated interim financial information has
been reviewed by the Group's auditor, not audited - see Independent
Review Report.
This condensed consolidated interim financial information for
the six months ended 31 October 2016 has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority (previously the Financial Services
Authority) and with IAS 34, 'Interim financial reporting', as
adopted by the European Union. The condensed consolidated interim
financial information should be read in conjunction with the annual
financial statements for the year ended 30 April 2016, which have
been prepared in accordance with IFRSs as adopted by the European
Union.
Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 30 April 2016, as
described in those annual financial statements except where
disclosed otherwise in this note. Taxes on income in the interim
periods are accrued using the estimated tax rate that would be
applicable to expected total annual earnings. The Balance Sheet as
at 31 October 2015 has been retrospectively restated - see note 17
for further details.
Critical accounting estimates and judgments
The preparation of interim financial information requires
management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates. In preparing this condensed
consolidated interim financial information, the significant
judgments made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended 30 April 2016, with the exception of changes in
estimates required in determining the provision for income
taxes.
Going concern
The directors have, at the time of approving the interim
financial statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future as the Group has net debt of GBP106.8m at 31
October 2016 (H1 FY2016: GBP95.3m) and total banking facilities
(using period end exchange rates) of GBP171.2m of which GBP47.1m is
undrawn at 31 October 2016 and available up to September 2019. Thus
they continue to adopt the going concern basis of accounting in
preparing the interim financial statements.
Non-GAAP performance measures
The directors believe that the 'adjusted' profit and earnings
per share measures provide additional useful information for
shareholders on the underlying performance of the business. These
measures are consistent with how business performance is measured
internally. The adjusted profit before tax measure is not a
recognised profit measure under IFRS and may not be directly
comparable with 'adjusted' profit measures used by other
companies.
Notes to the accounts (continued)
1. Basis of preparation (continued)
Further details on the special items can be found in note 3.
New standards, amendments and interpretations
The following accounting standards and amendments are effective
for the year commencing 1 May 2016 but are not expected to have a
material impact on the Group:
-- Amendments to IFRS 10, IFRS 12 and IAS 28
-- Amendments to IFRS 11, IFRS 14, IAS 1, IAS 16 and IAS 38, IAS 16 and IAS 41, IAS 27
-- Amendments to IFRS 5, IFRS 7, IAS 19, IAS 34 - Annual Improvements
The following accounting standards relevant to the Group have
not been early adopted as the Group carries out an assessment of
their potential impact:
-- IFRS 9 Financial Instruments
-- IFRS15 Revenue from Contracts with Customers
-- IAS 7 - Disclosure Initiative
-- IAS 12 - Recognition of Deferred Tax Assets for Unrealised losses
-- IFRS 2 - Classification and Measurement of Share Based Payment Transactions
-- Applying IFRS 9 Financial Instruments with IFRS 4 Insurance
Contracts - Amendments to IFRS 4
-- IFRS 16 - Leases
2. Segmental information
The Group's operating segments are determined with reference to
the information which is supplied to the Executive Committee in
order for it to allocate the Group's resources and to monitor the
performance of the Group. Following the acquisition of Aesica
Holdco Limited ("Aesica") on 12 November 2014, that information
analyses the Group between two divisions, Bespak and Aesica. Prior
to this acquisition, the Group only had one operating segment. The
Executive Committee assesses the performance of the operating
segments based on a measure of adjusted operating profit which
excludes the impact of special items from the operating segments.
Special items are analysed in note 3.
Consequently, the segment information provided to the Executive
Committee for both of these reportable segments for the period
ended 31 October 2016 is as follows:
Bespak Aesica Unallocated Total
For the six months ended 31 October 2016 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- --------- --------- ------------ ----------
Revenue from products and services 58,913 86,020 144,933
------------------------------------------------- --------- --------- ------------ ----------
Revenue by business segment 58,913 86,020 144,933
------------------------------------------------- --------- --------- ------------ ----------
Segment operating profit before special items 12,198 6,693 - 18,891
Amortisation of acquired intangible assets (414) (6,064) (6,478)
------------------------------------------------- --------- --------- ------------ ----------
Segment operating profit 11,784 629 12,413
------------------------------------------------- --------- --------- ------------ ----------
Finance income 72
Finance costs (1,587)
Other finance costs (732)
------------------------------------------------- --------- --------- ------------ ----------
Profit before tax 10,166
Taxation (339)
--------- --------- ------------ ----------
Profit for the financial year 9,827
------------------------------------------------- --------- --------- ------------ ----------
Segmental balance sheet
Total assets 117,263 316,418 30,906 464,587
Total liabilities (64,126) (73,365) (116,125) (253,616)
------------------------------------------------- --------- --------- ------------ ----------
Net assets 53,137 243,053 (85,219) 210,971
------------------------------------------------- --------- --------- ------------ ----------
Notes to the accounts (continued)
2. Segmental information (continued)
The Group's operating locations are based in the United Kingdom
and Europe, with the Group also making sales in the USA and the
rest of the world.
Revenue by destination Unaudited Unaudited Audited
from continuing operations 1 May to 1 May 1 May
31 October to 31 to 30
2016 October April
2015 2016
GBP000 GBP000 GBP000
----------------------------- ------------ ---------- --------
United Kingdom 20,794 19,861 30,426
United States of America 12,364 12,431 41,078
Europe 100,722 84,890 171,010
Rest of the world 11,053 18,366 34,396
------------------------------- ------------ ---------- --------
Revenue from continuing
operations 144,933 135,548 276,910
------------------------------- ------------ ---------- --------
Unaudited Unaudited Audited
1 May to 1 May 1 May
31 to 31 to 30
October October April
3. Special items 2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------- ---------- ---------- ---------
Acquisition-related
expenses - - (1,344)
Integration costs - (4,020) (6,534)
Amortisation of acquisition-related
intangible assets (6,478) (6,473) (13,140)
(6,478) (10,493) (21,018)
Special items before
taxation from continuing
operations (6,478) (10,493) (21,018)
Special tax item - recognition
of capital losses - 1,078 1,078
Special tax item - recognition
of capital allowances - - 955
Special tax item - other
prior year and lookback period
adjustments - - 534
Special tax item - deferred
tax credit as a result of
the corporate rate change 525 1,132 1,137
Tax on special items 1,808 2,774 5,204
--------------------------------------- ---------- ---------- ---------
Special items after
taxation from continuing
operations (4,145) (5,508) (12,110)
--------------------------------------- ---------- ---------- ---------
-- Acquisition-related expenses in the prior year to 30 April
2016 include advisory costs in respect of the Bespak pension scheme
and in evaluation of potential transactions.
-- Integration costs in the prior year are in relation to
restructuring activity following the completion of the integration
programme at Aesica; mainly employee and property or move related
in nature.
-- Amortisation of acquired intangible assets represents the
charge for other intangible assets within Aesica (acquired in 2014)
of GBP6.1m and GBP0.4m in relation to The Medical House acquired in
2009.
-- A special tax item of GBP1.1m was recognised in the prior
year as a result of the recognition of deferred tax on capital
losses.
-- A special tax item of GBP1.0m was recognised in the prior
year as a capital allowance review was carried out in the year
which resulted in assets being reclassified from non-qualifying to
qualifying.
Notes to the accounts (continued)
3. Special items (continued)
-- A special tax item of GBP0.5m was recognised in the prior
year as the impact of a number of prior year adjustments made.
-- A special tax item of GBP0.5m also arises in the current
period (H1 FY2016: GBP1.1m, FY2016: GBP1.1m) in respect of a
significant tax credit as the Group's deferred tax assets and
liabilities were revalued using the lower rate of UK Corporate Tax
of 17% from 1 April 2020 (reduced from 18%).
Special items from discontinued operations are described in note
15.
4. Finance costs
Unaudited Unaudited Audited
1 May to 1 May to 1 May
31 October 31 October to 30
2016 2015 April
2016
GBP000 GBP000 GBP000
----------------------------- ------------ ------------ --------
Interest on bank overdrafts
and loans including
amortised fees (1,587) (1,719) (3,328)
------------------------------- ------------ ------------ --------
Total finance costs (1,587) (1,719) (3,328)
Other finance costs
Net interest cost on
defined benefit scheme (427) (342) (667)
Foreign exchange losses (305) (313) (732)
------------------------------ ------------ ------------ --------
Total other finance
costs (732) (655) (1,399)
------------------------------- ------------ ------------ --------
5. Taxation
Unaudited Unaudited Audited
1 May to 1 May to 1 May
31 October 31 October to 30
2016 2015 April
2016
GBP000 GBP000 GBP000
-------------------------------- ------------ ------------ --------
Current income tax from
continuing operations
UK corporation tax 909 1,175 975
Adjustments in respect
of prior periods (206) - (1,953)
Foreign tax 1,448 653 1,130
Deferred taxation (1,812) (4,149) (4,879)
---------------------------------- ------------ ------------ --------
Income tax expense / (credit)
reported in the consolidated
income statement 339 (2,321) (4,727)
--------------------------------- ------------ ------------ --------
The tax charge from continuing
operations is analysed
between:
Tax on profit before
special items 2,672 2,664 4,181
Special tax item - recognition
of capital losses - (1,078) (1,078)
Special tax item - recognition
of capital allowances - - (955)
Special tax item - other
prior year adjustments - - (534)
Special tax item - deferred
tax credit as a result of
the corporate rate change (525) (1,133) (1,137)
Tax on special items (1,808) (2,774) (5,204)
Income tax expense / (credit)
reported in the consolidated
income statement 339 (2,321) (4,727)
--------------------------------- ------------ ------------ --------
Special tax items above are described further in note 3.
Notes to the accounts (continued)
6. Earnings per share
Unaudited Unaudited Audited
1 May 1 May 1 May
to 31 to 31 to 30
October October April
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------- ---------- ---------- --------
The calculation of earnings per ordinary
share is
based on the following:
Continuing operations (basic
and diluted)
Profit for the period - attributable
to ordinary shareholders 9,827 5,936 15,968
Add back: Special items after
taxation 4,145 5,508 12,110
-------------------------------------- ---------- ---------- --------
Adjusted earnings 13,972 11,444 28,078
-------------------------------------- ---------- ---------- --------
Discontinued operations (basic
and diluted)
Loss / (Profit) for the period
- attributable to ordinary
shareholders - (48) (999)
Add back: Special items after
taxation - 48 999
-------------------------------------- ---------- ---------- --------
Adjusted earnings - - -
-------------------------------------- ---------- ---------- --------
Total (basic and diluted)
Profit for the period - attributable
to ordinary shareholders 9,827 5,888 14,969
Add back: Special items after
taxation 4,145 5,556 13,109
-------------------------------------- ---------- ---------- --------
Adjusted earnings 13,972 11,444 28,078
-------------------------------------- ---------- ---------- --------
Number of shares
Weighted average number of ordinary
shares in issue for basic earnings 49,154,593 49,090,720 49,110,569
Weighted average number of shares
owned by Employee Share Ownership
Trust (300,759) (374,130) (338,024)
---------------------------------------- ----------- ----------- -----------
Average number of ordinary shares
for in issue for basic earnings 48,853,834 48,716,590 48,772,545
Dilutive impact of share options
outstanding 622,701 571,474 631,856
---------------------------------------- ----------- ----------- -----------
Diluted weighted average number
of ordinary shares in issue 49,476,535 49,288,064 49,404,401
Pence Pence Pence
---------------------------------------- ----------- ----------- -----------
Continuing operations
---------------------------------------- ----------- ----------- -----------
Adjusted basic earnings per share 28.6 23.5 57.6
Unadjusted basic earnings per share 20.1 12.2 32.7
Adjusted diluted earnings per share 28.2 23.2 56.8
Unadjusted diluted earnings per
share 19.9 12.0 32.3
Continuing and discontinued operations
---------------------------------------- ----------- ----------- -----------
Unadjusted basic earnings per share 20.1 12.1 30.7
Unadjusted diluted earnings per
share 19.9 11.9 30.3
Notes to the accounts (continued)
7. Dividends
Unaudited Unaudited Audited
1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016
GBP000 GBP000 GBP000
--------------------------------- -------------------------- -------------------------- ------------------------
Final dividend for the year ended
30 April 2016 of 12.56p per
share (2016: final dividend
for 2015 of 11.68p per share) 6,142 5,722 5,703
Interim dividend paid in 2016:
6.75p per share - - 3,296
---------------------------------- -------------------------- -------------------------- ------------------------
6,142 5,722 8,999
--------------------------------- -------------------------- -------------------------- ------------------------
The directors are proposing an interim dividend for the year
ending 30 April 2017 of 7.09p per share which will absorb an
estimated GBP3.5 million of shareholders' equity. It will be paid
on 17 February 2017 to shareholders who are on the register on 20
January 2017.
8. Capital expenditure
In the period there were additions to property, plant and
equipment of GBP5.7 million (H1 FY2016: GBP9.3 million). Capital
commitments contracted for but not provided for by the Group
amounted to GBP5.4 million (H1 FY2016: GBP6.5 million).
9. Financial assets and liabilities
The following table sets out the classification of the Group's
financial assets and liabilities. Receivables and payables have
been included to the extent that they are classified as financial
assets and liabilities in accordance with IAS 32, Financial
Instruments: Presentation. Provisions have been included where
there is a contractual obligation to settle in cash.
Unaudited Unaudited Audited
31 October 31 October 30 April
2016 2015 2016
Financial assets GBP000 GBP000 GBP000
------------------------------------ ------------ ------------ ----------
Cash and cash equivalents* 16,216 11,580 16,258
-------------------------------------- ------------ ------------ ----------
Trade receivables 46,765 45,665 45,186
Other receivables 8,688 7,130 3,659
------------------------------------- ------------ ------------ ----------
Total loans and receivables
* 55,453 52,795 48,845
Available for sale financial
asset - contingent consideration - 950 -
Equity investments 8,250 6,266 8,250
------------------------------------- ------------ ------------ ----------
Total available-for-sale financial
assets 8,250 7,216 8,250
------------------------------------- ------------ ------------ ----------
Unaudited Unaudited Audited
31 October 31 October 30 April
2016 2015 2016
Financial liabilities GBP000 GBP000 GBP000
--------------------------------- ------------ ------------ ----------
Trade payables (26,017) (25,641) (27,225)
Other creditors and accruals (21,101) (28,309) (26,978)
Interest bearing loans and
borrowings (124,118) (108,401) (114,547)
Total amortised cost * (171,236) (162,351) (168,750)
Currency exchange contracts (250) (30) (256)
---------------------------------- ------------ ------------ ----------
Total fair value through profit
and loss financial liabilities (250) (30) (256)
---------------------------------- ------------ ------------ ----------
* The directors consider that the carrying value of amounts of
these financial assets and liabilities recorded at amortised cost
in the financial statements are approximately equal to their fair
values.
Notes to the accounts (continued)
9. Financial assets and liabilities (continued)
All financial liabilities have a contractual maturity date that
is less than 12 months from the balance sheet date. The equity
investments in Atlas Genetics Limited and Precision Ocular Limited
are unquoted investments and therefore held at cost, less any
provision for impairment as their fair value cannot be measured
reliably in the absence of an active market.
Interest bearing loans and borrowings includes a borrowing of
GBP37.4m at 31 October 2016 (H1 FY2016: GBP27.3m) which has been
designated as a hedge of the net investments in the two
subsidiaries in Germany and Italy, Aesica Pharmaceuticals GmbH. and
Aesica Pharmaceuticals S.r.l. This borrowing is being used to hedge
the Group's exposure to the euro exchange risk on these
investments. Gains or losses on the retranslation of this borrowing
are transferred to OCI to offset any gains or losses on translation
of the net investments in the subsidiaries.
Financial assets at fair value
Level Level
Level 1 2 3 Total
GBP000 GBP000 GBP000 GBP000
--------------------------------------------------------------- --------- -------- ------- -------
At 31 October 2016
Available for sale financial asset - contingent consideration - - - -
At 31 October 2015
Available for sale financial asset - contingent consideration - - 950 950
At 30 April 2016
Available for sale financial asset - contingent consideration - - - -
--------------------------------------------------------------- --------- -------- ------- -------
Financial liabilities at
fair value
Level Level Level
1 2 3 Total
GBP000 GBP000 GBP000 GBP000
----------------------------- -------- ------- ------- -------
At 31 October 2016
Currency exchange contracts - (250) - (250)
At 31 October 2015
Currency exchange contracts - (30) - (30)
At 30 April 2016
Currency exchange contracts - (256) - (256)
----------------------------- -------- ------- ------- -------
Under the terms of the disposal of King Systems, completed on 15
February 2013, the purchaser, Ambu A/S, was due to pay amounts of
consideration contingent upon the performance of King following
disposal. The financial asset at 31 October 2015 related to the
final payment for the sales of King Vision products for the year
ending 30 April 2016. King Vision sales by Ambu in FY2016 were
insufficient to trigger a further contingent consideration payment
to Consort Medical, therefore the remaining contingent
consideration was reduced to nil at 30 April 2016.
Notes to the accounts (continued)
10. Analysis of net debt
Unaudited Unaudited Audited
31 October 31 October 30 April
2016 2015 2016
GBP000 GBP000 GBP000
---------------------------- ------ --------------- ------------- -------------
Current assets:
Cash and cash equivalents 16,216 11,580 16,258
---------------------------- ------ --------------- ------------- -------------
16,216 11,580 16,258
------------------------------------ --------------- ------------- -------------
Group borrowings:
Interest-bearing loans
and borrowings (124,118) (108,401) (114,547)
Unamortised facility fees 1,141 1,533 1,338
Net borrowings (122,977) (106,868) (113,209)
------------------------------------- --------------- ------------- -------------
Net debt (106,761) (95,288) (96,951)
------------------------------------- --------------- ------------- -------------
In September 2014, the Group cancelled its $56m multicurrency
revolving facility and GBP40m multicurrency revolving facility and
signed a new GBP160m multicurrency revolving facility. The Group
also has a GBP65m "accordion" facility by which further facilities
may be made available by Barclays, Lloyds, RBS and Santander under
the current terms to support significant investment or acquisition
opportunities which may arise. The revolving credit facilities
expire in September 2019. Whilst the multi-year revolving committed
credit facility does not expire for nearly three years, the debt
within this is disclosed as less than one year on the balance
sheet, as it is drawn for one-month periods, and then redrawn as
appropriate to minimise the amount of debt drawn relative to the
Group's needs to minimise the interest payable. The undrawn
facilities are unsecured. The bank loans and overdrafts are subject
to cross-guarantees between Group undertakings. Interest on the
multicurrency revolving credit facility is charged at LIBOR plus a
margin of between 1.65% and 1.90%, depending upon the ratio of net
debt to EBITDA (earnings before interest, tax, depreciation and
amortisation), and on UK overdrafts at 1.75% above UK base
rate.
11. Reconciliation of net cash flow
to movement in net debt
Unaudited Unaudited Audited
1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April
2016
GBP000 GBP000 GBP000
----------------------------------- -------------------------- -------------------------- -------------------
Net debt at the beginning of the
period (96,951) (99,213) (99,213)
Net (increase) / decrease in cash
and short-term borrowings (5,069) 4,198 5,590
Effects of exchange rate changes (4,536) 283 (2,698)
Amortisation of facility fees (197) (198) (393)
Other non-cash movements (8) (358) (237)
------------------------------------- -------------------------- -------------------------- -------------------
Net debt at the end of the period (106,761) (95,288) (96,951)
------------------------------------- -------------------------- -------------------------- -------------------
Notes to the accounts (continued)
12. Defined benefit pension
scheme deficit
Unaudited Unaudited Audited
1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016
GBP000 GBP000 GBP000
------------------------------ -------------------------- -------------------------- ------------------------
Pension deficit at start of the
period 27,157 21,147 21,147
Current service cost 44 790 1,479
Interest income (1,556) (1,685) (3,371)
Interest cost 1,985 2,026 4,038
Return on scheme assets
excluding interest (10,475) 4,768 5,728
Effect of demographic
adjustments - - (568)
Loss / (gain) from changes in
financial assumptions 26,370 (5,087) 216
Employer contributions (797) (983) (1,776)
Payments from plans - - (6)
Foreign exchange 566 4 270
-------------------------------- -------------------------- -------------------------- ------------------------
Pension deficit at end of the
period 43,294 20,980 27,157
-------------------------------- -------------------------- -------------------------- ------------------------
13. Related party transactions
The Group's significant related parties are its subsidiaries as
disclosed in the Consort Medical plc annual report for the year
ended 30 April 2016. There were no material related party
transactions in the period.
14. Principal risks and uncertainties
The principal risks and uncertainties which could impact the
Group's long-term performance remain those detailed on pages 26 to
28 of the Group's 2016 Annual Report & Accounts, a copy of
which is available on the Group's website www.consortmedical.com.
The risks are summarised below:
-- Reliance upon key customers / products
-- Major operational incident
-- Growth risk
-- Acquisition risk
-- Legal risk
-- Political / Socio-economic risk
-- Development risk
-- Product quality failure
-- Corporate Social Responsibility
-- Regulatory risk
-- IT / Cyber risk
-- Human Resources risk
-- Financial risks including currency risk, interest rate risk, liquidity and leverage risk
-- Pension risk
In the period the Group has recognised two additional principal
risks:
-- Impact of Brexit - The vote to leave the EU has resulted in
some uncertainty, including currency volatility and a significant
weakening of sterling. Whilst the weakening of sterling has had a
beneficial translation impact on the Group's sterling results, it
continues to monitor the impact of Brexit on its principal risks
and any direct or indirect resultant complexities this may
bring.
-- Distributable reserves - Following the Brexit vote and
subsequent changes in UK monetary policy, corporate bond yields
have fallen sharply, leading to substantial increases in the Bespak
pension deficit. The Group continues to monitor the impact of this
on its ability to pay dividends in future periods.
Notes to the accounts (continued)
15. Discontinued operations
The results arising from King Systems are classified as
discontinued operations and special items and have been included in
the consolidated income statement as follows:
Unaudited Unaudited Audited
1 May to 31 October 2016 1 May to 31 October 2015 1 May to 30 April 2016
GBP000 GBP000 GBP000
----------------------------- --------------------------- -------------------------- ------------------------
Loss on disposal: movement in
fair value of contingent
consideration - (48) (999)
------------------------------- --------------------------- -------------------------- ------------------------
Loss before tax on
discontinued operations - (48) (999)
------------------------------- ------------------------- -------------------------- ------------------------
Net loss on discontinued
operations attributable to
the owners of the Company - (48) (999)
------------------------------- ------------------------- -------------------------- ------------------------
16. Share capital
Share capital as at 31 October 2016 amounted to GBP4.9 million
(April 2016: GBP4.9 million). During the period, the Group issued
75,590 shares as part of exercises under the Consort Savings
Related Share Option Scheme for total consideration of GBP0.5
million.
The Group purchases its own shares using an Employee Share
Ownership Trust (ESOT) to satisfy entitlements under the Group's
long-term incentive plan. The cost of the shares held by the ESOT
is deducted from retained earnings. The Group purchased 276,244
shares for a consideration of GBP2.9 million during the period (H1
FY2016: GBP2.1 million, FY2016: GBP2.2 million). As at 31 October
2016, the ESOT held a total of 300,375 ordinary shares (30 April
2016: 301,521 shares) at a cost of GBP2.8 million (30 April 2016:
GBP2.5 million) and market value of GBP2.3 million (30 April 2016:
GBP2.3 million).
17. Acquisition of subsidiary
On 12 November 2014, the Group acquired 100 per cent of the
issued share capital of Aesica Holdco Limited, obtaining control of
Aesica Holdco Limited ('Aesica'). The goodwill balance as at 31
October 2016 in relation to Aesica is GBP115.3m (FY 2016:
GBP106.8m).
During the year ended 30 April 2016, the Group completed the
initial accounting for the acquisition as disclosed in the 2016
annual report and accounts. Therefore, as set out in the table
below, the 31 October 2015 comparative information has been
adjusted retrospectively to amend the provisional fair values of
the identifiable assets acquired and liabilities assumed as at the
date of acquisition. The financial statements for the year ended 30
April 2016 included the same restatement to its 30 April 2015
comparatives.
Notes to the accounts (continued)
17. Acquisition of subsidiary (continued)
The fair values of the identifiable assets acquired and
liabilities assumed as at the date of acquisition were as set out
in the table below:
Provisional fair values as Restatement Restated
previously reported Fair value recognised on
acquisition
GBP000 GBP000 GBP000
---------------------------------- --------------------------------- ------------ ---------------------------------
Assets
Property, plant and equipment 71,312 (5,713) 65,599
Cash and cash equivalents 6,221 - 6,221
Trade receivables 33,307 (1,288) 32,019
Inventory 26,930 41 26,971
Identified intangible assets 82,299 - 82,299
Other intangible assets 410 - 410
Current tax 1,765 (1,578) 187
Other receivables 3,550 (38) 3,512
---------------------------------- --------------------------------- ------------ ---------------------------------
Total identified assets 225,794 (8,576) 217,218
Liabilities
Trade and other payables (24,377) - (24,377)
Accruals, deferred income ,
provisions and other payables (46,079) (1,022) (47,101)
Deferred tax liability (29,812) 4,029 (25,783)
---------------------------------- --------------------------------- ------------ ---------------------------------
Total identified liabilities (100,268) 3,007 (97,261)
Net identified assets 125,526 (5,569) 119,957
Goodwill 101,103 5,569 106,672
---------------------------------- --------------------------------- ------------ ---------------------------------
Total consideration 226,629 - 226,629
---------------------------------- --------------------------------- ------------ ---------------------------------
The significant adjustments made to fair values were as
follows:
-- Property, plant and equipment - decrease of GBP5.7m as a
result of concluding a detailed review and valuation exercise
-- Trade receivables - decrease of GBP1.3m to increase
provisions against old debtor balances and credit notes
-- Accruals, deferred income, provisions and other payables -
decrease of GBP1.0m mainly as a result of new information obtained
which reflects circumstances in existence at the acquisition
date
-- Current tax - decrease of GBP1.6m to record additional provisions
-- Deferred tax - increase of GBP2.1m on the non-tax related
opening balance sheet adjustments above
-- Deferred tax - since 31 October 2015, a deferred tax asset of
GBP1.9m has been recognised as the amount of spend treated as
qualifying for capital allowances has been reduced by customer
contributions in Aesica which were received pre-acquisition. The
impact of this change has been to decrease goodwill by the same
amount.
The directors have not restated the income statement for the
year ended 30 April 2015 for the effect of this restatement as it
was not material.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LFFLIFSLEIIR
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