Sinclair IS has spent much of the previous year bedding in a merger and divesting the company's non-core assets. That process looks to be largely complete, and investors now have a reasonable idea of how the expanded medicines company will work. But success or failure will depend on management's ability to marshal sales; even though the company recorded a small first-half underlying cash profit of £700,000, a lot more work still needs to be done.
Sinclair has been re-organised around a few leading brands such as burns treatment, Flammazine, and eczema treatment, Atopiclair. The uplift in revenues was mostly down to the merger with IS Pharma, but a greater marketing spend of £7.8m (£5.3m in 2010) boosted like-for-like (LFL) sales of Sinclair's own product portfolio by 9 per cent. De-stocking hit markets such as Italy and the UK, and Spain was the only European country to register significant sales gains - LFL sales up 41 per cent after Flammazine sales were switched to over the counter. Chief executive Chris Spooner acknowledged that the European market is "lacklustre", but said the acquisition of Advanced Bio-technologies was a step forward: "We have effectively swapped a declining product [the sale of Mysoline for £11m] for stable and robust international growth," he said.
Broker Jefferies forecasts pre-tax losses of £4.8m for 2012, giving a loss per share of 1.2p (loss of £11.7m and 5.1p in 2011).
SINCLAIR IS PHARMA (SPH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 22.5p | MARKET VALUE: | £90.2m | |
| TOUCH: | 22-23p | 12-MONTH HIGH: | 39p | LOW: 20p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 30p* | NET DEBT: | 10% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 14.1 | -4.02 | -1.9 | nil |
| 2011 | 23.4 | -5.56 | -1.4 | nil |
| % change | +67 | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of £127m, or 32p a share | ||||
