"Exceptional demand" for Lifeline Scientific's(LSIC) organ transplantation products saw revenue in the first half driven up by more than a fifth. And despite the fact that in 2015 total sales were heavily weighted towards the second half, management can't see such high demand persisting for the remainder of this year and expects sales to "normalise in the second half".
For investors, however, the main interest in the second half will be whether or not shareholders approve the recently announced mergerwith Shanghai Genext Medical Technology, a private company that specialises in organ transplantation and associated medical equipment. This merger comes as the culmination of a year-long strategic review, during which management has been searching for alternative strategies to "enhance shareholder value". But the offer price, which represents a 51 per cent premium to the value of the company when management launched the strategic review, was not all that well received by shareholders, and Lifeline's share price fell heavily following the announcement.
Merger aside, so far 2016 has been an excellent year for the company. Growth has come from both the core US market and overseas, including a major stocking order in China. Demand for consumable products were up by almost a quarter, while strong cash inflows helped boost the group's net cash position.
Broker Panmure Gordon has placed forecasts under review following the announcement of the definitive merger agreement.
LIFELINE SCIENTIFIC (LSIC) | ||||
---|---|---|---|---|
ORD PRICE: | 295p | MARKET VALUE: | £58m | |
TOUCH: | 290-300p | 12-MONTH HIGH / LOW: | 320p | 180p |
DIVIDEND YIELD: | NIL | PE RATIO: | 5 | |
NET ASSET VALUE: | 192ȼ | NET CASH: | $7.5m |
Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
---|---|---|---|---|
2015 | 15.0 | 0.1 | 0.5 | nil |
2016 | 18.2 | 2.0 | 10.0 | nil |
% change | +21 | +1961 | +1900 | - |
£1 = $1.30. *Includes intangible assets of $5.8m, or 30ȼ a share. |