CSRT.L Regulatory News (CSRT)

11 Jul 2007 07:00

Bespak PLC11 July 2007 Preliminary Results for the Year Ending 28 April 2007 A Year of Outstanding Growth Bespak plc (LSE: BPK), a leader in devices for inhaled drug delivery andanaesthesia, today announces its preliminary results for the 52 weeks ended 28April 2007. Highlights • Revenue up 44% to £126.5m (2006: £87.6m) • 25% organic revenue growth from Inhaled Drug Delivery with sales of £95.7m (2006: £76.5m) • Profit before tax and special items up 24% to £17.4m (2006: £14.0m), despite weakening US dollar • Profit before tax up 10% to £15.7m (2006: £14.3m) • Adjusted* earnings per share up 18% to 44.3p (2006: 37.4p) • Cash generated from operations up 84% to £32.7m (2006: £17.8m) • Final dividend maintained at 12.1p (2006: 12.1p) • Acquired 51% of Emergent Respiratory Products as part of 2-step acquisition • Proposed name change from Bespak plc to Consort Medical plc Commenting on the results, Mark Throdahl, Bespak plc Chief Executive, said: "Bespak has had another year of outstanding growth with the business continuingto perform well. Our expanding product portfolio is reducing our dependence onbig pharma development programmes, and we are confident in achieving our plan todouble the Company's profits within five years." * Adjusted for amortisation of intangibles and discontinued operations For further information, please contact: Bespak plcMark Throdahl, Chief Executive Tel: +44 (0) 1908 552600Jonathan Glenn, Group Finance Director MaitlandLiz MorleyBrian Hudspith Tel: +44 (0) 20 7379 5151 Summary In the financial year ending 28 April 2007, Bespak made good financial andstrategic progress toward its target of doubling profit before tax within fiveyears. During the year Bespak withdrew from the loss-making Consumer Dispensersbusiness and in April 2007 acquired a 51% stake in Emergent RespiratoryProducts, further focusing the Company on higher growth, higher margin marketsand adding another growth platform to the Anaesthesia business segment. Performance Revenue increased 44% to £126.5m (2006: £87.6m), of which 25% was organic growthachieved by Bespak's Inhaled Drug Delivery business segment. Growth in operatingprofit was 33%, and profit before tax and special items increased 24% to £17.4m(2006: £14.0m). Profit before tax was £15.7m (2006: £14.3m). Earnings per shareincreased 18% to 44.3p (2006: 37.4p), adjusted for amortisation of intangiblesand discontinued operations. This performance reflected record inhaler valve sales, the first full year ofthe King Systems acquisition, and strong sales of the inhaler for Pfizer'sExubera(R) powdered insulin. The Board has proposed a final dividend of 12.1p per share (2006: 12.1p), makinga full year dividend of 19.1p per share (2006: 19.1p). Operating cash flowincreased 84% to £32.7m (2006: £17.8m). Net debt at 28 April decreased to £18.2m(2006: £27.8m), reflecting a reduction in the borrowings that were necessary tofinance the King Systems acquisition. Outlook After a year of 24% profit growth in 2007, Bespak remains on target to double2005/06 profit before tax within five years. In setting this target, werecognise that profit growth will be irregular and do not expect steady, linearprogress toward our goal. Accordingly, the Board expects that progress in 2007/08 will be broadly flat as the sale of valves for ozone-depleting CFCformulations further declines in the US and Exubera(R) inhaler productiondeclines following launch stock manufacture. The Company continues to evaluateacquisition opportunities that will build on its anaesthesia platform. Operating Review In January of this year, we announced a goal to double 2006 pre-tax profitwithin five years. This will be achieved through a strategy of organic growthfrom multiple products, selective acquisitions, and the further development ofcompetencies in Six Sigma manufacturing, proprietary project managementtechniques, and a high-performance culture. In 2007 all the elements of this strategy contributed to our strong performance.Both business segments generated record financial results, savings from SixSigma increased substantially, our project management techniques contributed towinning five new multi-year Device Service programmes, and the Company continuedto make progress with its cultural transformation. Inhaled Drug Delivery Segment Bespak is the world's leading producer of inhaler valves by value. Valves arethe most technically complex element in a metered dose inhaler, and they arecritical to delivering consistent doses to patients. Bespak has completed thedevelopment of more dry powder inhaler programmes and now manufactures more ofthese devices than any other company. Fuelled by the increasing prevalence and improved diagnosis of asthma andchronic obstructive pulmonary disease, 2007 saw record sales of valves and drypowder inhalers. The transition in the US market to the ozone-friendlychlorofluorocarbon (CFC)-free inhaler formulations progressed faster thananticipated, and to date our customers have gained a majority share of the USCFC-free market for albuterol, which accounts for 50% of the US valve market.Sales of the Diskus(TM) device for Advair(R) were also strong, and Bespak wasawarded a significant expansion of its Diskus(TM) capacity for the new indicationof Advair(R) for chronic obstructive pulmonary disease. Advair(R) is the secondlargest prescription drug in the world. Sales also benefited from the first fullyear's production of the Exubera(R) inhaled insulin device, which significantlyexceeded our expectations in inventory build-up prior to launch. The Bespak Technologies division has developed a range of metering valves nowused on 30, or about two-thirds, of CFC-free inhaler formulations and has beenselected for trial in more than 50 other drug development programmes. As theseprogrammes roll out we are confident that our valve market share will grow fromthe low 40% range to around half of the world market. The Company has also taken an early leadership position in dose counters whichindicate the number of doses left in an inhaler. Dose counters are an emergingmarket with unit prices approximately twice that of valves and are now mandatoryon all new metered dose inhaler drugs approved in the US. Bespak's new dosecounter is under active evaluation by a number of pharmaceutical companies, andwe believe that we have more programmes than any of our competitors. It isexpected that successful conclusion of these trials will lead to launch of dosecounter products in the critical US market in Bespak's 2008/9 financial year.Bespak has two designs, one developed in-house and the other licensed through apartnership with Bang & Olufsen Medicom. The Device Services division provides a range of development, industrialisationand manufacturing services which enable customers to market their own patenteddesigns of dry powder inhalers and other speciality devices. The Group invoicesits customers for product development work during the clinical trial stages andsubsequently is specified in the drug filing as the manufacturer of the device.Given the significant investments made by both parties, Bespak typicallymanufactures the device for as long as the drug is marketed. Bespak's Device Services division has a portfolio of 15 drug deliveryprogrammes, of which five are new programmes won this year, five more arealready in development, and five are already marketed. Significantly, two of thefive new programmes are projects at two of the world's largest pharmaceuticalcompanies-one an early-stage and the other a late-stage opportunity. Inaddition, SOSEI Co. Ltd. awarded Bespak the development of a sublingual spraydevice for pain management, and Glide Pharma is working with the Company on itsGlide Solid Dose Injector technology. Following the ramp-up in inventory prior to Exubera's launch this year, we havereceived a reduced demand forecast. In June we embarked on a consultationprocess with employees involved in the production of the Exubera(R) inhaler.This is expected to produce a significant number of redundancies among the 160employees engaged in producing the device at our Milton Keynes facility. One-offcosts for this will be covered by the customer. Sales of Exubera(R) inhalersover the short- to medium-term are uncertain, and we continue to be in closecontact with the customer on future requirements. Due to our diversificationboth of the Device Services portfolio and of the Company, we are not dependenton Exubera(R) sales to attain our five-year growth goals. Bespak's Inhaled Drug Delivery segment has the potential to grow substantiallyover the next five years. This growth will require significant new manufacturingcapacity, and the Board is considering expansion plans for products currently indevelopment. Anaesthesia Segment Sales in 2007 were £31m, driven by growing demand for the Company's proprietaryairway management devices. These include three growth platforms: patentedbreathing circuits, which connect a patient to a mechanical ventilator;laryngeal tubes, which are placed in the patient's airway and are connected tothe breathing circuit; and the AIRTRAQ(R) disposable laryngoscope. Bespak entered the anaesthesia and respiratory care space with the acquisitionof King Systems in December 2005. The integration of King Systems was completedin 2007, and its management team was strengthened with the addition of newpersonnel in Sales Management and Finance. A new European general manager forKing Systems has been appointed. King Systems won two significant Group Purchasing Organisation contracts, withHealth Trust Purchasing and Ascension Health. Three important new products wereadded: the KING LTS-D(TM) laryngeal tube, ErgoMask(TM), and AIRTRAQ(R), theworld's first disposable optical laryngoscope. These products have considerablepotential not only in the hospital market, but also in emergency medicine. In April 2007 Bespak announced the two-step acquisition of Emergent RespiratoryProducts of Irvine, California, with an initial investment of $3m. Emergentsells specialty breathing machines and related devices used in the earlytreatment of patients experiencing breathing difficulty from conditions such ascongestive heart failure. Emergent is one of three suppliers of continuouspositive airway pressure products, a rapidly growing embryonic market in the US.Emergent's product is unique in that it features a valve that only delivers airto patients when they inhale, therefore preserving the limited supply of oxygenthat ambulances are able to carry. Emergent is highly complementary to King Systems. Bespak's initial investmentwill fund the expansion of Emergent's pre-hospital sales organisation and expandthe Company's access to the growing emergency medicine market, where KingSystems' existing airway management products have considerable potential. Acquisition Strategy Bespak's corporate development effort is focused on building our Anaesthesiabusiness, where King Systems already has leading share positions. This is afragmented global market with many opportunities. Our goal is to build thissegment to a size comparable to Inhaled Drug Delivery and generate synergieswith King Systems' existing marketing and supply-chain infrastructure. Proposed name change Last year's closure of the Consumer Dispensers division removed Bespak's lastassociation with the packaging industry. We are now focused on medical devicesfor inhaled drug delivery and anaesthesia. At the Annual General Meeting inSeptember a resolution will be proposed to change the Company's name to ConsortMedical plc. Financial Review Trading Revenue increased by 44% to £126.5m (2006: £87.6m), growth coming from both ofthe Group's business segments, including aerosol valves, Diskus(TM), and for thefirst time, full-scale production of the Exubera(R) device. Operating profit before special items increased by 33% to £19.5m (2006: £14.7m)which included a full year's contribution from the acquisition of King SystemsCorporation. Excluding the effect of the acquisition, operating profit beforespecial items increased by 15% on sales that increased by 25%. Profit before tax and special items (adjusted PBT) increased 24% to £17.4m(2006: £14.0m) In August 2006 we announced the closure of the Consumer Dispensers division andthis was completed during the year. Certain of the assets were sold and theclosure costs and asset write downs, net of the sale proceeds, were £2.1m. Thecash impact of the withdrawal was positive by £0.4m. During the year we impaired to zero our investment in Bull Rubber Ltd.Historically, Bull Rubber was a key rubber supplier for our CFC valves. With theconversion to CFC-free propellants the investment is no longer appropriate andit is planned to divest the shareholding in the near future. An impairmentcharge of £0.2m appears in the profit and loss account. After special items, profit before tax increased 10% to £15.7m (2006: £14.3m). The acquisition of King Systems Corporation was financed principally by debt,such that there is a net finance cost (including the pension scheme costs) of£1.8m (2006: £0.7m). The financing expense has been partly fixed in the mediumterm with an interest rate swap. Earnings per share Earnings per share increased 18% to 44.3p (2006 37.4p), as adjusted foramortisation of intangibles and discontinued operations. Earnings per share onan unadjusted basis were 34.8p (2006 37.9p). Dividends The Board is recommending a maintained final dividend per share of 12.1p (2006: 12.1p), such that the total dividend for the year amounts to 19.1p (2006: 19.1p). This remains a sector-leading dividend yield. The final dividend willbe paid on 26 October 2007 to shareholders on the register on 5 October 2007.Dividend cover, based on earnings before special items, increased to 2.3 times(2006: 1.9 times). Goodwill and intangible assets Upon acquisition of King Systems Corporation, intangible assets were capitalisedand are now being amortised over their useful lives. Goodwill, being thedifference between purchase consideration and net assets (including intangibleassets), was required to be capitalised and not amortised. At the year end, thecarrying value of goodwill (£35.8m) and intangible assets (£12.0m) were reviewedand no impairment was required. Cash Flow Having assumed debt to finance the King Systems acquisition greater emphasis isnow being placed on efficient cash management. Cash generated from continuingoperations was particularly strong, increasing by 84% to £32.7m (2006: £17.8m). There was a cash outflow of £5.9m for the final deferred consideration paymentdue on the acquisition of King Systems Corporation, $3m (£1.6m) for the purchaseof 51% of Emergent Respiratory Products together with a cash outflow of £1.8mreflecting additional payments agreed with the Trustees to fund the deficit inthe defined benefit pension scheme. Notwithstanding these payments together withthe dividend of £5.4m there was a net cash inflow of £2.8m. Capital Expenditure Capital expenditure of £7.9m (2006:£4.5m) exceeded depreciation for thecontinuing business of (£6.7m) by £1.2m. Going forward, capital expenditure isexpected to be approximately two times depreciation as we invest in additionalvalve capacity, dose counter infrastructure and new facilities to accommodatethe growing customer base. Acquisitions On 13th April we announced the first step of a two-stage acquisition of EmergentRespiratory Products. We have acquired 51% of the share capital of Emergent andwill acquire the remaining 49% at a pre determined multiple of profits between2009 and 2011 at an estimated cost of $15m - $18m (subject to a maximum deferredconsideration of $35m). The Emergent business is highly complementary to that of King Systems and thestructure of the transaction allows for considerable financial upside withlimited risk or exposure. Emergent will be treated as an associate, as Bespak does not have ultimatecontrol of the business. Furthermore, as the results for the 18 days ofownership during the year are not material, no profit/loss has been taken in theperiod to 28 April 2007. Treasury At the year end, the Group had net debt of £18.2m (2006: £27.8m) and undrawncommitted facilities of £22.3m (2006: £25.5m). Transactions in foreign currencies are matched wherever possible and the netposition is hedged using forward contracts. A significant proportion ofoperating and intangible assets are denominated in US dollars, which are largelymatched by US dollar borrowings, thereby hedging the balance sheet exposure.Translation effects of exchange rate movements on the income statement are nothedged. The significant weakening of the US dollar during the year has had an impact onthe results of King Systems, however as there is not a full year comparative, aconstant exchange analysis has not been prepared. The average rate of exchange between sterling and the US dollar was 1.91 (2006:1.78), the year end rate of exchange was 2.0 (2006: 1.82). Pensions Bespak operates a defined benefit pension scheme in the UK that is closed to newemployees, who are eligible to join a defined contribution pension scheme. As at 28 April 2007, the deficit was £10.8m under IAS 19 (2006:£12.0m) and theCompany will continue to make additional annual contributions of £1.8m inagreement with the Trustees to settle the deficit. During the year an extensivereview of the defined benefit scheme was performed by the Company, and theCompany and the Trustees are currently in consultation over proposals that willaccelerate the settlement of the deficit and thereby reduce the exposure of theCompany to the Scheme going forward. International Financial Reporting Standards These results for the 52 weeks ended 28 April 2007 are prepared underInternational Accounting Standards and International Financial ReportingStandards (IFRS) as adopted by the European Union. There have been no newstandards during the year that have impacted the results of the Group. Tax The underlying tax charge on profit before tax and special items of 28% (2006:27%) has benefited from utilisation of prior year US losses. These losses havenow been fully utilized so the effective tax rate will increase next year. After the non-cash tax credit of £0.7m (2006: £0.3m) on the amortisation ofacquired intangible assets, the overall tax charge is 27% (2005: 25%). The taxcharge last year reflected the nil tax charge on the exceptional credit. About Bespak plc Bespak plc is a leader in medical devices for inhaled drug delivery andanaesthesia. The Group develops drug delivery systems for the pharmaceuticalindustry and disposable airway management products for critical care settings inhospitals. Bespak develops and manufactures metered dose inhaler valves, actuators,compliance aids, dry powder devices, disposable face masks, breathing circuitsand laryngeal tubes. The Group has facilities in King's Lynn and Milton Keynesin the UK, Indianapolis, Indiana and Kent, Ohio in the US, and a liaison officein Mumbai, India. Bespak is a public company quoted on the full list of theLondon Stock Exchange (LSE: BPK). For more information, please visitwww.bespak.com Consolidated Income StatementFor the 52 weeks ended 28 April 2007 2007 2007 2007 2006 2006 2006 Before Special Total Before Special Total special items special items items (note 3) items (note 3) Notes £000 £000 £000 £000 £000 £000 --------- ------- ------- --------- -------- ------Continuing operationsRevenue 2 126,480 - 126,480 87,560 - 87,560Operating expenses (106,955) (1,752) (108,707) (72,815) 242 (72,573) --------- ------- ------- --------- -------- ------Operating profit 2 19,525 (1,752) 17,773 14,745 242 14,987Finance income 601 - 601 825 - 825Finance expense (2,017) - (2,017) (1,030) - (1,030)Other finance costs 4 (433) - (433) (501) - (501)Share of post tax(losses)/profits ofassociate (27) - (27) 10 - 10Impairment ofinvestment in associate (242) - (242) - - - --------- ------- ------- --------- -------- -------Profit before tax 17,407 (1,752) 15,655 14,049 242 14,291Taxation 5 (4,907) 694 (4,213) (3,860) 290 (3,570) --------- ------- ------- --------- -------- ------- Profit for the financialperiod from continuingoperations 12,500 (1,058) 11,442 10,189 532 10,721Loss for the period fromdiscontinued operations 6 (150) (1,485) (1,635) (399) - (399) --------- ------- ------- --------- -------- -------Profit for the financialperiod 12,350 (2,543) 9,807 9,790 532 10,322 --------- ------- ------- --------- -------- ------- Basic earnings per ordinary shareContinuing operations 7 40.6p 39.4pDiscontinued operations 7 (5.8p) (1.5p) ------- -------Total 7 34.8p 37.9p ------- -------Diluted earnings per ordinary shareContinuingoperations 7 39.9p 38.8pDiscontinuedoperations 7 (5.7p) (1.5p) ------- -------Total 7 34.2p 37.3p ------- ------- Dividends £000 £000Final dividend paid of 12.1p per share(2006: 12.1p) 3,391 3,241Interim dividend paidof 7.0p per share (2006: 7.0p) 1,989 1,960 ------- ------- 5,380 5,201 ------- ------- Non-GAAP measure:Continuing operations £000 £000Adjusted profit before tax 17,407 14,049Adjusted profit after tax 12,500 10,189 Adjusted earnings per share 44.3p 37.4pAdjusted diluted earnings per share 43.6p 36.8p ------- ------- Consolidated Balance Sheet at 28 April 2007 2007 2006 Notes £000 £000 AssetsNon-current assetsProperty, plant and equipment 51,608 52,537Goodwill 35,792 39,259Other intangible assets 11,976 14,906Investment in associates 1,555 269Deferred taxation 552 - -------- ------- 101,483 106,971 -------- -------Current assetsInventories 10,453 9,571Trade and other receivables 19,526 19,289Current taxation receivable - 282Cash and cash equivalents 17,274 9,782 -------- ------- 47,253 38,924 -------- -------LiabilitiesCurrent liabilitiesBorrowings 9 (25,829) (23,106)Trade and other payables 8 (23,007) (15,080)Current taxation payable (2,085) (3,850)Provisions and otherliabilities (886) (6,147) -------- ------- (51,807) (48,183) -------- -------Net current liabilities (4,554) (9,259) Non-current liabilitiesBorrowings 9 (9,625) (14,449)Deferred taxation (5,048) (5,197)Defined benefitpension scheme deficit 10 (10,769) (12,002) -------- ------- (25,442) (31,648) -------- -------Net assets 71,487 66,064 -------- -------Shareholders' equityShare capital 2,845 2,802Share premium 30,205 28,837Retained earnings 39,841 34,693Other reserves (1,404) (268) -------- -------Total equity 11 71,487 66,064 -------- ------- The preliminary financial statements were approved by the Board on 11 July 2007 Consolidated Cash Flow StatementFor the 52 weeks ended 28 April 2007 2007 2006 Notes £000 £000 ------ ------ Cash flows from operating activitiesOperating profit from continuing operations 17,773 14,987Depreciation 6,381 6,423Amortisation 1,883 750Impairment credit - (438)Loss/(profit) on disposal of property, plant and equipment 33 (272)Share based payments 495 410Increase in inventories (1,317) (1,504)Increase in trade and other receivables (1,246) (692)Increase in trade and other payables 7,821 21Increase/(decrease) in provisions 1,047 (1,725)Increase in financial instruments (138) (149) ------ ------Cash generated from continuing operations 32,732 17,811Cash flows from discontinued operations 6 45 (13)Interest paid (2,166) (854)Tax paid (4,375) (3,554) ------ ------Net cash inflow from operating activities 26,236 13,390 ------ ------ Cash flows from investing activitiesPurchases of property, plant and equipment (7,347) (4,129)Purchases of intangible assets (203) (182)Proceeds from sale of property, plant and equipment 20 3,402Disposal of fixed asset investments - 83Interest received 583 815Dividend received from associate - 10Acquisition of subsidiary (net of cash acquired) (5,883) (45,772)Investment in associate (1,563) - ------ -------Net cash used in investing activities from continuing operations (14,393) (45,773)Net cash from/(used in) investing activities -discontinued operations 6 356 (205) ------- -------Net cash used in investing activities (14,037) (45,978) ------- ------- Cash flows from financing activitiesNet proceeds from issues of ordinary share capital 1,411 403Equity dividends paid to shareholders (5,380) (5,201)New bank loans raised - 20,121Repayment of amounts borrowed (3,671) (1,008)Payments to fund defined benefit pension scheme deficit 10 (1,775) (9,540) ------- -------Net cash (used)/generated in financing activities (9,415) 4,775 ------- ------- Net increase/(decrease) in cash and short-term borrowings 9 2,784 (27,813)Effects of exchange rate changes 1,634 932Cash and short-term borrowings at start of period (9,466) 17,415 ------- -------Cash and short-term borrowings at end of period 9 (5,048) (9,466) ------- ------- Cash and short-term borrowings consist of:Cash and cash equivalents 17,274 9,782Bank overdrafts and short-term loans (22,322) (19,248) ------- -------Cash and short-term borrowings at end of period 9 (5,048) (9,466) ------- ------- Consolidated Statement of Recognised Income and Expense For the 52 weeks ended 28 April2007 2007 2006 Notes £000 £000 --------- --------- Fair value movements on cash flow hedges (121) 152Deferred tax on fair value movements on cash flow hedges - (46)Current tax on fair value movements on cash flow hedges 36 -Exchange movements on translation of foreign subsidiaries (1,305) (331)Current tax on exchange movements 254 -Deferred tax on exchange movements - 99Deferred tax on share based payments 44 193Current tax on share based payments 256 -Actuarial losses on defined benefit pension scheme 10 (106) (5,040)Current tax on actuarial losses - 543Deferred tax on actuarial losses 32 970 --------- ---------Net loss recognised directly in equity (910) (3,460)Profit for the financial period 9,807 10,322 --------- ---------Total recognised income for the period 8,897 6,862 --------- --------- Notes to the accounts 1. Basis of preparation The preliminary announcement for the 52 weeks ended 28 April 2007 has beenprepared in accordance with International Accounting Standards and InternationalFinancial Reporting Standards (IFRS) as adopted by the European Union (EU) at 28April 2007. The financial information in this preliminary announcement does not constitutethe Company's statutory accounts for the 52 weeks ended 28 April 2007 or the 52weeks ended 29 April 2006, but is derived from those accounts. Statutoryaccounts for 2006 have been delivered to the Registrar of Companies and thosefor 2007 will be delivered after the Company's Annual General Meeting. Theauditors have reported on those accounts; their reports were unqualified and didnot contain statements under s237(2) or s237(3) Companies Act 1985. 2. Segmental information(a) Revenue from continuing operations Revenue by business 2007 2006 £000 £000 --------- ---------Inhaled drug delivery 95,694 76,502Anaesthesia 31,047 11,118 --------- ---------Total revenues 126,741 87,620Intra-segment sales (261) (60) --------- ---------Revenue 126,480 87,560 --------- --------- Revenue by origin 2007 2006 £000 £000 --------- ---------United Kingdom 95,694 72,568United States of America 31,047 17,802 --------- ---------Total revenues 126,741 90,370Intra-segment sales (261) (2,810) --------- ---------Revenue 126,480 87,560 --------- --------- Revenue by destination 2007 2006 £000 £000 --------- ---------United Kingdom 23,614 21,272United States of America 72,592 41,948Europe 21,493 17,936Rest of the World 8,781 6,404 --------- ---------Revenue 126,480 87,560 --------- --------- (b) Operating profit from continuing operations 2007 2006 £000 £000 --------- ---------Inhaled drug delivery 14,572 13,125Reallocation of corporate costs (note 6) - (399) --------- ---------Inhaled drug delivery - revised segmental basis 14,572 12,726Special items - 901 --------- ---------Inhaled drug delivery after special items 14,572 13,627 --------- --------- Anaesthesia 4,953 2,019Special items (1,752) (659) --------- ---------Anaesthesia after special items 3,201 1,360 --------- --------- Operating profit before special items 19,525 15,144Reallocation of corporate costs (note 6) - (399) --------- ---------Revised segmental basis 19,525 14,745Special items (1,752) 242 --------- ---------Operating profit after special items 17,773 14,987 --------- --------- (c) Net assets Net assets by business segment 2007 2006 £000 £000 --------- --------- Continuing operationsInhaled drug delivery 49,600 55,218Anaesthesia 55,862 63,231Unallocated net liabilities (33,975) (54,310) --------- ---------Total continuing operations 71,487 64,139Discontinued operations - 1,925 --------- ---------Net assets 71,487 66,064 --------- --------- Exchange rates 2007 2006 --------- --------- Average rate of exchange - USD 1.91 1.78Closing rate of exchange - USD 2.00 1.82 3. Special items 2007 2006 £000 £000 --------- ---------Continuing operationsExceptional operating income - 901Amortisation of acquisition related intangibleassets (1,752) (659) --------- ---------Special items before tax (1,752) 242Taxation 694 290 --------- ---------Special items after tax (1,058) 532 --------- --------- Discontinued operationsImpairment charge (873) -Plant closure costs (1,249) - --------- ---------Exceptional operating expense (2,122) -Taxation 637 - --------- ---------Special items after tax (1,485) - --------- --------- Total special items after tax (2,543) 532 --------- --------- 4. Other finance costs 2007 2006 £000 £000 --------- ---------Expected return on defined benefit scheme assets 2,485 1,657Interest cost on defined benefit schemeliabilities (2,657) (2,041) --------- ---------Interest net of expected return on plan assets (172) (384)Unwinding of discount on deferred consideration (261) (117) --------- ---------Other finance costs (433) (501) --------- --------- 5. Taxation 2007 2006 £000 £000 --------- ---------UK corporation tax 4,023 3,780Overseas taxation 321 289Deferred taxation (131) (499) --------- --------- 4,213 3,570 --------- --------- 6. Discontinued operations 2007 2006 Notes £000 £000 --------- --------- Revenue 3,269 5,524Operating expenses (3,483) (6,087) --------- ---------Operating loss (a) (214) (563)Impairment provisions (b) (873) -Closure costs (c) (1,249) - --------- ---------Loss before tax (2,336) (563)Attributable taxation 701 164 --------- ---------Loss after tax from discontinued operations (1,635) (399) (a) The operating loss for the year ended 29 April 2006 as originally disclosed was £962,000. Certain corporate and other costs previously allocated to this business segment amounting to £399,000 have been reclassified into inhaled drug delivery in the segmental analysis for the continuing businesses.(b) An impairment provision was made against the carrying value of the fixed assets in the consumer dispenser business. The assets were either scrapped or sold during the year.(c) Closure costs comprise employee severance and other costs associated with the closure. Cash flows from discontinued operations 2007 2006 £000 £000 --------- ---------Loss before taxation (2,336) (563)Depreciation 282 649Impairment provisions 873 -Decrease/(increase) in inventories 267 (2)Decrease/(increase) in trade and other receivables 959 (97) --------- ---------Net cash flows from operating activities 45 (13)Investing activities - proceeds from sale/(purchase) of property, plant and equipment 356 (205) --------- ---------Cash flows from discontinued operations 401 (218) --------- --------- 7. Earnings per share 2007 2006 £000 £000The calculation of earnings per ordinary share is based on the following: Profit for the financial period 9,807 10,322 --------- --------- Profit for the period from continuing operations 11,442 10,721Add back: Special items after tax 1,058 (532) --------- ---------Adjusted profit for the financial period 12,500 10,189 --------- ---------Loss for the period from discontinued operations (1,635) (399) --------- --------- Number NumberWeighted average number of ordinary shares in issue 28,188,943 27,242,663Shares owned by Employee Share Ownership Trusts - (8,071) --------- ---------Average number of ordinary shares in issue for basic earnings 28,188,943 27,234,592Dilutive impact of share options outstanding 455,465 422,960 --------- ---------Diluted average number of ordinary shares in issue 28,644,408 27,657,552 --------- --------- Pence PenceBasic earnings per ordinary shareContinuing operations 40.6p 39.4pDiscontinued operations (5.8p) (1.5p) --------- ---------Total 34.8p 37.9p --------- --------- Adjusted earnings per ordinary shareContinuing operations 44.3p 37.4p --------- --------- Diluted earnings per ordinary shareContinuing operations 39.9p 38.8pDiscontinued operations (5.7p) (1.5p) --------- ---------Total 34.2p 37.3p --------- --------- Adjusted diluted earnings per shareContinuing operations 43.6p 36.8p --------- --------- 8. Trade and other payables 2007 2006 £000 £000 --------- ---------Amounts falling due within one year:Trade payables 9,915 7,137Amounts payable to associated companies - trading 157 158Other taxation and social security 606 692Other creditors 5,764 3,461Accruals and deferred income 6,565 3,632 --------- --------- 23,007 15,080 --------- --------- 9. Reconciliation of net cash flow to movement in net debt Cash and cash Current Non-current Net debt equivalents borrowings borrowings £000 £000 £000 £000 ---------- --------- --------- --------- At 30 April 2006 9,782 (23,106) (14,449) (27,773)Cash flow for the period 7,611 (4,827) - 2,784Loan repayments included incash flow for the period - 3,671 - 3,671Re-classify from non-current to current borrowings - (3,671) 3,671 -Effect of exchange ratechanges (119) 2,104 1,153 3,138 ---------- --------- --------- ---------At 28 April 2007 17,274 (25,829) (9,625) (18,180) ---------- --------- --------- --------- Net debt at 28 April 2007comprises:Cash and short-termborrowings 17,274 (22,322) - (5,048)Bank term loan - (3,500) (9,625) (13,125)Finance lease obligations - (7) - (7) ---------- --------- --------- ---------At 28 April 2007 17,274 (25,829) (9,625) (18,180) ---------- --------- --------- --------- 10. Defined benefit pension scheme deficit 2007 2006 £000 £000 --------- --------- Pension deficit at start of period 12,002 15,703Current service costs 2,110 1,537Expected return on plan assets (2,485) (1,657)Interest cost 2,657 2,041Actuarial losses 106 5,040Regular employer contributions (1,846) (1,122)Employer payments to fund deficit (1,775) (9,540) --------- ---------Pension deficit at end of period 10,769 12,002 --------- --------- 11. Consolidated statement of changes in shareholders' equity 2007 2006 £000 £000 --------- --------- Total equity at start of period 66,064 57,998Total recognised income and expense for the period 8,897 6,862Recognition of share-based payments 495 410Proceeds for sale of shares for employee options 1,411 314Proceeds from release of own shares held - 88Equity dividends paid (5,380) (5,201)Issue of share capital - 5,593 --------- ---------Total equity at end of period 71,487 66,064 --------- --------- This information is provided by RNS The company news service from the London Stock Exchange