Half-year figures from speciality pharmaceutical outfit Clinigen (CLIN) were strong - but clearly not strong enough to allay concerns that the clinical-trial supplier’s shares were overheating. The group’s shares crashed 17 per cent in morning trading as management took the unusual step of declaring its recent profit margins unsustainable.
The clinical trial supply (CTS) division - responsible for more than 64 per cent of total sales - saw sales fall 13 per cent to £39.5m. Yet gross profit nonetheless rose from £5.8m to £6.5m as the margin rose nearly four percentage points to 16.5 per cent. Management said this was "unlikley to be sustained for the full year" and gave a long-term target range of 13-15 per cent.
Chief executive Peter George insisted he been "open and honest" about the "lumpy nature of the CTS business". He said the drop in CTS sales was solely the result of strong comparative figures last year, which included a large number of low-margin anti-viral study sales.
Mr George also addressed concerns that Clinigen remains over-reliant on CTS revenues, arguing that revenue distribution across all divisions is evening out. Sales from its global access programme division contributed 16.1 per cent of total sales, up from 4.6 per cent last year.
Brokerage Investec has advised investors to take profits, but still expects end-2014 pre-tax profits of £24.5m, giving EPS of 21.6p.
| CLINIGEN (CLIN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 543p | MARKET VALUE: | £449m | |
| TOUCH: | 539-547p | 12-MONTH HIGH: | 690p | LOW: 211p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 69p* | NET CASH: | £16.8m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 61.0 | 3.7 | 3.5 | 0.6 |
| 2013 | 61.8 | 9.6 | 8.7 | 1.0 |
| % change | +1 | +159 | +149 | +67 |
Ex-div: 5 Mar Payment: 28 Mar *Includes intangible assets of £37.9m, or 46p per share | ||||
