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Consort Medical breathing easy

RESULTS: Consort Medical looks operationally robust at the moment, but doubts persist over its e-cigarettes venture
December 5, 2013

The talk around Consort Medical (CSRT) of late has focused on the potential from developing electronic cigarettes (e-cigarettes) for Nicoventures, owned by British American Tobacco (BAT). The potential market for e-cigarettes has sent the company's shares soaring in response, but these results were notable for the fact that it was Consort's traditional business of supplying inhaler devices that delivered revenue growth of over 6 per cent as new products were launched.

IC TIP: Sell at 893p

Consort actually received the go-ahead from UK regulators to develop e-cigarettes in August, but there was no more detail on the Nicoventures deal. But the group did sign a new product agreement with a large pharmaceutical company - DEV610 will be used in a dry powder inhaler product and Consort will need to build a new addition to its factory in King's Lynn, Norfolk, in order to meet the expected demand after a potential launch in 2015.

The picture on profits, meanwhile, was complicated by one-off benefits - underlying pre-tax profit rose 12.4 per cent to £8.9m, reflecting lower finance charges as Consort turned last year's net debt position into a net cash pile. Broker Canaccord Genuity expects adjusted pre-tax profit for 2014 of £17.5m, giving EPS of 46.1p (from £19.6m and 48.2p in 2013).

CONSORT MEDICAL (CSRT)

ORD PRICE:893pMARKET VALUE:£262m
TOUCH:890-893p12-MONTH HIGH:915pLOW: 661p
DIVIDEND YIELD:2.2%PE RATIO:20
NET ASSET VALUE:367p*NET CASH:£33.6m

Half-year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201248.07.0318.67.00
201351.28.2925.77.35
% change+7+18+38+5

Ex-div: 15 Jan

Payment: 14 Feb

*Includes intangible assets of £21.3m, or 73p a share