Unexpected double-digit growth from licensing revenues helped BTG (BTG) beat broker expectations in the six months to September 2017. But licensing – royalty revenues from drugs owned by fellow pharmaceutical companies – is not what BTG is about any more. The group’s true growth prospects lie in the interventional medicine and specialist drugs divisions, both of which reported double-digit revenue growth at constant currencies.
But broker Numis is reluctant to up its expectations for the year to March 2018 and currently expects pre-tax profits of £154m and EPS of 29.9p (from £103m and 22.7p in FY2017). That’s because the exceptionally strong performance in the pharmaceuticals business is unlikely to be repeated in the second half. According to management, terrible US weather in the reported period led to strong demand for snakebite treatment CroFab in anticipation of increased snakebites, while digoxin antidote Digifab benefited from the replacement of a number of expired batches in US hospitals.
BTG continues to be highly cash generative, reporting a 35 per cent increase in free cash flow to £75.2m. Since the year-end, the group has used $65m (£50m) of its cash to buy US interventional vascular company Roxwood Medical. The new company’s products will be sold via BTG’s existing US salesforce, which increased to 60 people in the reported period, with an 80 per cent market penetration.
| BTG (BTG) | ||||
| ORD PRICE: | 699p | MARKET VALUE: | £2.7bn | |
| TOUCH: | 698-699p | 12-MONTH HIGH: | 779p | 529p |
| DIVIDEND YIELD: | na | PE RATIO: | 37 | |
| NET ASSET VALUE: | 246p* | NET CASH: | £227m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 285 | 11.1 | 3.4 | nil |
| 2017 | 341 | 47.2 | 13.8 | nil |
| % change | +20 | +325 | +306 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £830m, or 216p a share | ||||
