Consort Medical’s (CSRT) reorganisation of Aesica – the drugs manufacturing business it acquired in 2015 – is a slow burner. That’s why, once again, restructuring and impairment charges hampered the reported numbers. But strip out £20.9m of one-off costs and adjusted operating profit climbed 5.3 per cent at constant currencies.
Reinvigorating Aesica – which, according to chief executive Jon Glenn, was “good but not world class” before Consort bought it – should be worth the wait. The business is on track to reach operating margins of 10 per cent by 2020 (up from 8.8 per cent in these numbers and 5.2 per cent at the time of the acquisition) thanks to a big improvement in capacity utilisation. Once Aesica’s capabilities are up to scratch there should also be plenty of cross-selling opportunities with Consort’s devices business, Bespak, which counts most of the world’s blue-chip pharmaceutical companies as its clients. There are currently just two service contracts that make use of both of the group’s areas of expertise.
At Bespak, revenue contribution shifted back towards lower-margin commercial contracts as many service partnerships moved into sales. Broker Panmure Gordon has noted that the services pipeline now looks a little thin, with just 11 products, but the depth of the commercial portfolio means it has retained its FY2019 pre-tax profit forecast of £40.7m and EPS of 67.4p (from £38.2m and 64.5p in 2018).
| CONSORT MEDICAL (CSRT) | ||||
| ORD PRICE: | 1,184p | MARKET VALUE: | £584m | |
| TOUCH: | 1170-1184p | 12-MONTH HIGH: | 1,240p | LOW: 1,008p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 500p* | NET DEBT: | 39% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 100 | 16.1 | 41.5 | 18.1 |
| 2015 | 185 | 5.5 | 15.4 | 18.1 |
| 2016 | 277 | 11.3 | 32.7 | 19.3 |
| 2017 | 294 | 21.9 | 46.2 | 20.3 |
| 2018 | 311 | 17.3 | 32.9 | 21.0 |
| % change | +6 | -21 | -29 | +3 |
| Ex-div: | 27 Sep | |||
| Payment: | 26 Oct | |||
| *Includes intangible assets of £177m, or 359p a share | ||||
