Consort Medical’s (CSRT) chief executive Jonathan Glenn always said that mergers would be necessary if the company hoped to compete with the big medical device manufacturers. A string of operational challenges provided the catalyst for a proposal that has rendered the London-listed company as a target rather than a buyer. These half-year results indicate that the take-out proposed by Swedish peer Recipharm in November is the best outcome for the company’s investors.
The revenue and profit decline reported in the six months to October reflects the fact that the group’s Aesica drugs manufacturing division was forced to halt operations in July following an explosion at its manufacturing facility in Cramlington. Aesica revenue dropped 11 per cent and the division moved into an adjusted operating loss position as a result.
The pause in operations resulted in an order backlog, which saw receivables increase by £6.8m since April, while inventories were also up by £4.4m. The shift in working capital, combined with a steep decline in operating profits means the company reported a net cash outflow from operating activities, compared with a £19.5m inflow last year. Management says the Recipharm offer forced it to cancel its dividend, but surely the company wouldn’t have been able to justify a half-year payout anyway.
| CONSORT MEDICAL (CSRT) | ||||
| ORD PRICE: | 1,045p | MARKET VALUE: | £516m | |
| TOUCH: | 1,035-1,050p | 12-MONTH HIGH: | 1,075p | 700p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 131 | |
| NET ASSET VALUE: | 463p* | NET DEBT: | 49% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 153 | 9.6 | 15.6 | 7.60 |
| 2019 | 146 | 1.2 | 2.3 | nil |
| % change | -4 | -88 | -85 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £162m, or 329p a share | ||||
