The latest figures from drug and medical devices group Consort Medical (CSRT) need some explanation. Most of the hit to reported profit is the result of the November 2014 Aesica acquisition, which was partly financed by a £95m five-for-eight rights issue and involved writing off £6.5m of intangible assets. But so far it looks as if the transformative deal has worked. Aesica contributed £79.1m of the £136m Consort recorded in first-half sales. And on an adjusted basis (ignoring acquisition-related expenses and amortisation charges) pre-tax profit grew 46 per cent to £14.1m.
When Consort bought Aesica to compliment and bolster its existing manufacturing division Bespak, the market voiced concerns about the acquired company's low margins. However, chief executive Jon Glenn says Aesica's margins are "on the move", thanks to an ongoing reorganisation as well as a formal restructuring in Germany. In the period under review, Aesica's margins rose 100 basis points to 6.2 per cent. Meanwhile, Bespak grew its revenue by 5 per cent to £56.5m, cash profit by 13 per cent to £11.5m and margins 140 basis points to 20.4 per cent.
Analysts at Investec expect pre-tax profit of £31.4m for the year ending 30 April 2016, giving EPS of 51.7p, compared with £22.7m and 47p in FY2015.
| CONSORT MEDICAL (CSRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 992p | MARKET VALUE: | £487m | |
| TOUCH: | 991-994p | 12-MONTH HIGH: | 1,010p | LOW: 702p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 174 | |
| NET ASSET VALUE: | 406p* | NET DEBT: | 48% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 (restated) | 53.6 | 7.3 | 21.9 | 6.4 |
| 2015 | 136 | 3.6 | 12.2 | nil |
| % change | +153 | -51 | -44 | - |
Ex-div: 14 Jan Payment: 12 Feb *Includes intangible assets of £190m, or 386p a share | ||||
