Preliminary Results
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For immediate release |
22 March 2012 |
ALLIANCE PHARMA PLC
("Alliance" or "Alliance Pharma" or "the Group")
Preliminary results for the year ended 31 December 2011
Alliance Pharma plc (AIM: APH), the speciality pharmaceutical company, is pleased to announce its preliminary results for the year ended 31 December 2011.
Financial Highlights
· Sales of £46.0m (2010: £49.9m) with underlying* sales growth of 13%
· Pre-tax profit of £10.7m (2010: £12.9m)
· Adjusted basic EPS of 3.62p (2010: 5.07p)
· Free cash flow of £8.4m (2010: £12.3m)
· Proposed dividend:
o Final dividend up 25% to 0.50p per share (2010: 0.40p)
o Full year dividend up 32% to 0.75p per share (2010: 0.57p)
* excluding DeltacortrilTM
Operational Highlights
· Three acquisitions of products with combined sales of £4.7m
· Promoted products of HydromolTM and ImmuCystTM continue strong growth, achieving like for like sales growth of 25% and 12% respectively
· Sales of Deltacortril reduced to £4.7m (2010: £13.5m), as anticipated
Commenting on the results, Michael Gatenby, Alliance's Chairman, said: "The underlying growth of our business remains strong and cash generation remains healthy. We were particularly pleased with the sales growth of our promoted products coupled with the dependable sales of our core products. We successfully completed three acquisitions during the year and continue to seek and evaluate further acquisition opportunities."
For further information:
Alliance Pharma plc |
+ 44 (0) 1249 466966 |
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John Dawson, Chief Executive |
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Richard Wright, Finance Director |
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Buchanan |
+ 44 (0) 20 7466 5000 |
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Mark Court / Jessica Fontaine |
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Numis Securities |
+ 44 (0) 20 7260 1000 |
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Nominated Adviser: Michael Meade / Oliver Cardigan |
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Corporate Broking: David Poutney |
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Notes to editors:
About Alliance
Alliance, founded in 1998, is an AIM listed speciality pharmaceutical company based in Chippenham, Wiltshire, UK. The Company has a strong track record of acquiring the rights to established niche products and owns or licenses the rights to more than 50 pharmaceutical products and continues to explore opportunities to expand the range.
Alliance's products are prescribed in the treatment of a wide range of conditions and include products used in the treatment of dermatological conditions, in oncology, in childbirth, in the prevention of heart disease, in Parkinson's disease, in nutrition and in nasal infections. Alliance's sales are mainly prescription driven. Its products are distributed to hospitals directly and to pharmaceutical wholesalers, which service both hospital and retail pharmacies with their prescription requirements.
Alliance joined the AIM market of the London Stock Exchange in December 2003 and trades under the symbol APH.
Business Review
2011 continued our successful strategy with the completion of three acquisitions, which added 10 products, with annualised sales of £4.7m, to our portfolio. We have successfully completed acquisitions each year for the past six years at an average rate of two each year. Over those six years, Alliance's sales have grown at an average compound rate of 21% per annum, of which 14% per annum has come from acquisitions.
In 2011 we also produced strong organic growth through our promotional activities. Hydromol sales grew by 25% and our promoted oncology brands, ImmuCyst and GelclairTM, grew by 10% in aggregate.
These successes helped to reduce the impact of the expected decline in sales of Deltacortril / enteric coated prednisolone. Sales of Deltacortril declined by £8.8m to £4.7m, whereas sales for the rest of the portfolio grew by £4.8m to £41.3m.
As expected, last year's performance is below that of 2010, but 2010 benefited from exceptional Deltacortril sales of £13.5m, compared with £8.5m in 2009. The decline in Deltacortril sales should not obscure the broader picture of a business delivering otherwise strong growth. Total sales in 2011 were £46.0m, which is 47% higher than in 2009.
We move forward into 2012 with a much stronger portfolio. We have taken full advantage of the opportunistic Deltacortril acquisition, which cost us less than £1m, by re-investing the £13m cash it has generated into acquisitions. Without Deltacortril, we would not have been able to deliver the step-change in sales from the acquisition of the Cambridge Laboratories business for £16.4m in 2010. Nor could we have reduced our debt while growing the business. Over the past few years, the benefit from Deltacortril has enabled us to build a far bigger, stronger and more profitable business.
Financial performance
As anticipated, sales for the year were down 8% at £46.0m. Underlying sales, excluding Deltacortril, were up 13%. The reduction in Deltacortril was partially offset by good organic growth in other products, particularly from Hydromol and ImmuCyst, a full-year contribution from the Cambridge Laboratories products acquired in 2010 and initial sales of the products acquired in 2011.
Gross margin reduced from 60.9% in 2010 to 53.3%, due largely to a combination of the changing product mix as Deltacortril's relatively high-margin contribution diminished and there was a relatively high level of stock write-offs mainly associated with Deltacortril.
Operating costs showed little change in real terms. We continue to invest selectively in promotion where we see a good economic case. We are making cost reductions in 2012 across a number of areas. We have also been identifying opportunities to reduce costs in the supply chain and expect to see cost savings from retendering distribution contracts.
Operating profit was £12.3m, down £4.7m on 2010 but still well ahead of the £8.4m reported for 2009.
The reported pre-tax profit for the year was £10.7m (2010: £12.9m). There were no exceptional items (2010: £3.5m exceptional charges).
Net bank debt at the year-end was slightly higher at £18.4m (2010: £17.0m), as we drew modestly on our revolving credit facility to help finance the £8.6m spent on acquisitions during the year. This included a £2.1m final payment on the Cambridge Laboratories acquisition. However, financing costs were significantly reduced to £1.6m (2010: £2.4m) as a result of the refinancing agreed with our bank in November 2010.
The reduction in EBITDA over the year, combined with the modest increase in net debt, resulted in an increase in the debt/EBITDA ratio. This rose to 1.4 times, compared with 0.9 times a year ago, but the gearing remains comfortable and without further acquisitions is set to reduce again quickly.
Our future earnings will gain a small benefit from an agreement with HMRC under which the profits from our joint venture with our Chinese distributor will not be subject to UK tax.
Dividend
The underlying growth of the business remains strong, and 2011 cash generation was healthy, with free cash flow of £8.4m. The Board's decision to maintain its progressive dividend policy reflects its confidence in the Group's future performance. We propose to increase the final dividend to 0.50p per ordinary share (2010: 0.40p), making a total for the year of 0.75p (2010: 0.57p). At this level, the dividend would be covered 4.8 times by after-tax earnings (2010: 8.9 times).
Strategy
Our strategy remains unchanged. We aim to acquire or license established products with stable sales in niche areas, with the majority requiring little or no promotional support. While we actively manage the marketing of a number of our products, only Hydromol and the oncology portfolio are supported by their own field forces. We have the potential to gain additional efficiencies if we bring in additional products that can be promoted by our existing sales teams. We would also consider having field forces in other areas if the likely sales growth would justify it.
In a broadening of our strategy, we now have ambitions to increase our diversification and secure more of our business outside the UK, particularly in mainland Europe. At present some 19% of sales are made outside the UK, and we see scope for increasing this proportion significantly over the next few years.
Acquisitions
During the year we completed three deals involving a total of 10 products at a total cost of £6.5m.
In April we acquired the UK and Irish rights to two brands from Reckitt Benckiser, AnbesolTM and Ashton & ParsonsTM Infant Powders. Anbesol is a treatment for mouth ulcers and teething pains; Ashton & Parsons Infant Powders relieves pain and stomach upsets caused by teething.
As expected when we acquired it, we are experiencing some supply issues with Ashton & Parsons Infant Powders, although we are making progress on a long term solution. In the past few months we have also had some supply issues with Anbesol, mainly affecting the liquid form, which we are addressing.
In September we acquired the UK marketing rights to six products from Beacon Pharmaceuticals. The bulk of sales and margin will come from Rizuderm™ (isotretinoin). This is used to treat severe acne and fits well in our dermatology portfolio.
In December we acquired two more dermatology products from Ferndale Pharmaceuticals. Quinoderm™ is a well-established treatment for acne that complements Rizuderm, and Ceanel™ is a shampoo treatment for scalp psoriasis.
Products
In our promoted portfolio, sales of our dermatology brand Hydromol and the Cambridge Laboratories oncology products continued to grow well.
Hydromol sales rose by a further 25%. Hydromol's annual sales have grown four-fold from £0.9m when we acquired it in 2006 to £3.6m.
In oncology, sales of ImmuCyst and Gelclair together grew by 10%. In May 2011 we were pleased to renew our UK and Ireland distribution agreement for ImmuCyst with Sanofi for a further period of up to seven years. This triggered a deferred cash payment of £2.1m for the Cambridge Laboratories acquisition.
In the Irish Republic, our enteric-coated low-dose aspirin Nu-SealsTM was impacted by a government-imposed price reduction at the start of 2011 and in the autumn a second competitor was launched. Despite these headwinds, sales rose 14% to £5.1m, partly because of the main competitor having supply issues. However, we remain cautious as the Irish government is looking for further ways to reduce its medicines bill, and sales may be impacted by further price reductions and a possible change in the law on generic substitution.
Our cyclical toxicology product reached the lowest point of its cycle in 2011, reducing to £1.5m sales from £3.2m in 2010. We have been awarded the tender for the next renewal cycle in 2012 and 2013. Sales will build through 2012 to the next peak in 2013.
As we reported last year, our agreement with Novartis under which we distribute nine brands comes to an end in December 2012. This will reduce gross margin by some £0.5m going forward, although we will receive some compensation.
Deltacortril sales were £4.7m over the year. However, the bulk of these sales were generated in the first half. Sales in the second half were £1.1m, and it looks likely that the run rate in future will be closer to the second half of 2011. The long-expected entry of a second generic competitor led to both a reduction in market share and some softening in prices. In addition, the overall market halved in size as clinical preferences shifted away from enteric-coated prednisolone to uncoated tablets.
Organisation
As the scale of the business continues to grow, we recognise the need for a commensurate increase in our in-house human resources capability to drive the efficiency, skills and development of the organisation. In November 2011 we were pleased to welcome Janice Timberlake as HR Director, replacing the outsourcing arrangements that we had previously been using.
Charity
We continue to donate some of our products regularly to International Health Partners, a charity that distributes medicines to doctors in the world's neediest areas. We also make a number of modest donations to local charities.
Outlook
Our aim this year is to ensure that Alliance's organic growth is sufficient to enable us to match or better our 2011 performance despite an expected further reduction in contribution from Deltacortril and the risk to Nu-Seals sales.
We expect the cost-saving measures that we are implementing, and the full-year contribution from the products acquired in 2011, will help us to achieve this goal.
In addition, we are actively seeking further acquisitions that will support growth in 2012. Having completed more than 20 deals in the past 13 years, we regard acquisitions as an integral part of the business model. With a strong financing position, including £13m of headroom in our revolving credit facility, we are now able to contemplate targets larger than any of those we have acquired so far. Market conditions remain favourable, and we are optimistic about the prospects for further attractive acquisitions in 2012.
Financial Review
Summary
As discussed in the Business Review, Alliance's financial performance has reflected the impact from the 2010 Deltacortril boost. Headline revenue was lower than 2010, but significantly up on 2009. The underlying business has performed strongly with operating profit at £12.3m. Alliance continues to be strongly cash generative with bank debt rising just £1.4m after investing £8.6m in acquisitions.
Revenue
Sales have been impacted by the slowdown in Deltacortril with total revenue being £46.0m (2010: £49.9m).
Underlying sales excluding Deltacortril and our cyclical toxicology product have increased by £6.5m or 20%, again showing the reliability of the sales from our core products. The Oncology portfolio continues to grow strongly with ImmuCyst's growth now at 12% with sales exceeding £4.0m. Our leading dermatology brand, Hydromol, continued to grow strongly, with year on year growth of 25%.
Profit and other key performance indicators
Gross profit was £24.5m (2010: £30.4m) and gross margins were 53.3% (2010: 60.9%). The reduction in gross margin rate was primarily due to the pricing and volume impact of Deltacortril.
Operating costs (excluding amortisation of intangibles and exceptional items) were £11.4m, up £0.5m or 4.7% compared with 2010, in line with inflation. As a percentage of sales this has risen from 21.8% to 24.8% because of the reduction in Deltacortril sales, which has minimal impact on our cost-base. Our greater strength in depth that we have developed in the support functions over the past few years will enable larger acquisitions to be managed more effectively.
Amortisation of distribution agreements, acquired as part of the Cambridge Laboratories acquisition, and which are subject to renewal, fell slightly from £0.8m to £0.7m as the ImmuCyst agreement with Sanofi was renewed during the year, extending the period over which it is being amortised.
The operating profit before exceptional items was £12.3m (2010: £18.7m), which remains very healthy at 27% of sales albeit below the 2010 high of 37%.
Finance costs and funding
Interest payable in the year fell from £2.4m in 2010 to £1.6m in 2011 as a result of new banking facilities agreed with Lloyds TSB Corporate Markets in November 2010. At current levels of LIBOR these facilities give us an effective interest rate of around 4%.
The facilities negotiated in 2010 included a term loan of £18m, a revolving credit facility (RCF) of £20m and a £6.0m working capital facility. The working capital facility has since been increased to £8.0m.
At the end of 2011 total bank loans stood at £19.5m (2010: £19.0m), with the term loan standing at £13.0m after repayments in the year of £4.0m, and the RCF at £6.5m after funding the three acquisitions during the year.
Cash at the year end stood at £1.1m (2010: £2.0m).
We continue to hedge a proportion of the bank debt with 41% hedged at the start of the year. The existing hedge expires in November 2012. With our net bank debt, excluding any increases from acquisitions, set to fall over the next few years we will continue to review our hedging strategy in light of market conditions.
The main financial covenants applying to the facilities are that leverage (the ratio of net bank debt to EBITDA) should not exceed 2.0 times, interest cover (the ratio of EBITDA to finance charges) should be no less than 3.0 times and operating cash flows must exceed debt service cash flows.
Net bank debt at the year end was £18.4m (2011: £17.0m) and the net bank debt to EBITDA ratio was 1.4, comfortably below the limit, demonstrating the strength of the business and additional borrowing capacity that could be used to fund acquisitions.
During the year £0.4m (2010: £2.6m) nominal value of Convertible Unsecured Loan Stock (CULS) converted resulting in £4.5m of CULS remaining at the year end. The CULS carry a fixed 8% coupon and can be converted at any time until November 2013 at 21p per share.
Earnings per share and dividends
Adjusted basic EPS reduced from 5.07p in 2010 to similar levels to that of 2009 at 3.62p, while basic EPS fell from 3.96p in 2010 to 3.62p, up significantly on the 2.37p of 2009. During 2011 the number of shares in issue increased from 236.1m to 240.1m. A total of 1.9m shares were issued on the conversion of £0.3m nominal of the CULS and a further 2.0m were issued on the exercise of employee share options.
Since the year end a further 0.5m shares have been issued on conversion of CULS. If there were no further changes to the share capital, the weighted average number of shares in issue in 2012 would be 240.5m.
As a result of the strong underlying performance of the business and strong cash generation an interim dividend of 0.25p was paid on 13 January 2012 and the Board is recommending a final dividend of 0.50p, which would make a total dividend for the year of 0.75p. The final dividend will be paid, subject to shareholder approval, on 12 July 2012 to shareholders on the register at 15 June 2012.
Cashflow
Cash generated from operations was £11.6m, down from £18.1m in 2010, reflecting the reduction in Deltacortril sales offset by growth of other products. Net bank debt has increased slightly from £17.0m to £18.4m although this was after £6.5m was drawn to fund acquisitions and a further £2.1m paid for the deferred consideration relating to the Cambridge Laboratories acquisition.
Corporation tax paid during the period was £1.5m (2011: £1.3m). The Group continues to benefit from tax relief on most of its intangible assets. Profits attributable to the joint venture into China are not subject to UK tax. The effective tax rate for 2011 was 19%.
Assets and working capital
Additions to intangibles totalled £6.7m, of which £6.5m was due to the three acquisitions in the year and £0.2m to development costs on a line extension to one of our products. The net book value of intangible assets stands at £66.1m at the year end (2010: £60.3m).
Working capital balances continue to be carefully managed and controlled. Inventory on hand at December 2011 represented 3.1 months, a slight increase on 2010 of 2.8 months, due to stock builds on products undergoing transfers to new contract manufacturing organisations.
The Group's net assets stood at £44.0m at December 2011, £8.0m higher than at December 2010.
Managing Capital
Our objective in managing the business' capital structure is to ensure that Alliance has the financial capacity, liquidity and flexibility to support the existing business and to fund acquisition opportunities as they arise.
The business is profitable and cash generative. In line with the bank covenants, the business is managed to ensure that it is sufficiently cash generative to meet debt servicing needs and dividend payments.
Smaller acquisitions are typically financed purely with bank debt, while larger acquisitions typically involve a combination of bank debt and additional equity. The mixture of debt and equity is varied, taking into account the desire to maximise the shareholder returns while keeping gearing at comfortable levels.
Risk Management
To reduce the risk arising from changes in interest rates, the Group uses interest rate swaps, where appropriate, and the Convertible Unsecured Loan Stock pays a fixed coupon. Around 40% of the net bank debt is currently subject to fixed interest rates.
The Group's main transactional currencies are Sterling and Euros, with the majority of income and expenditure in Sterling. The Euro-denominated income matches the Euro-denominated expenditure quite closely and so the Group has limited exposure to exchange rate movements.
Consolidated Income Statement
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Year ended 31 December 2011 |
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Year ended 31 December 2010 |
|
|
Note |
|
|
|
|
|
|
£ 000s |
|
£ 000s |
|
Revenue |
|
45,957 |
|
49,881 |
|
Cost of sales |
|
(21,469) |
|
(19,483) |
|
Gross profit |
|
24,488 |
|
30,398 |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
Administration and marketing expense |
|
(11,235) |
|
(10,769) |
|
Amortisation of intangible assets |
|
(735) |
|
(812) |
|
Share-based employee remuneration |
|
(179) |
|
(128) |
|
|
|
(12,149) |
|
(11,709) |
|
|
|
|
|
|
|
Operating profit before exceptional items |
|
12,339 |
|
18,689 |
|
Exceptional items |
6 |
- |
|
(1,715) |
|
Operating profit |
|
12,339 |
|
16,974 |
|
|
|
|
|
|
|
Finance costs |
|
|
|
|
|
Interest payable and similar charges |
2 |
(1,600) |
|
(2,410) |
|
Interest income |
2 |
2 |
|
7 |
|
Other finance charges |
2 |
(29) |
|
75 |
|
Exceptional finance costs |
6 |
- |
|
(1,774) |
|
|
|
(1,627) |
|
(4,102) |
|
|
|
|
|
|
|
Profit on ordinary activities before taxation |
|
10,712 |
|
12,872 |
|
Taxation |
3 |
(2,076) |
|
(3,918) |
|
Profit for the year attributable to equity shareholders |
|
8,636 |
|
8,954 |
|
Earnings per share |
|
|
|
|
|
Basic (pence) |
5 |
3.62 |
|
3.96 |
|
Diluted (pence) |
5 |
3.39 |
|
3.64 |
|
Adjusted basic (pence) |
5 |
3.62 |
|
5.07 |
|
Adjusted diluted (pence) |
5 |
3.39 |
|
4.63 |
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income
|
|
|
|
Year to |
Year to |
|
|
|
|
£ 000s |
£ 000s |
|
|
|
|
|
|
|
Profit for the period |
|
|
8,636 |
8,954 |
|
|
|
|
|
|
|
Interest rate swaps - cash flow hedge |
|
|
22 |
1,323 |
|
Deferred tax on interest rate swap |
|
|
(6) |
(371) |
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
8,652 |
9,906 |
|
|
|
|
|
|
Consolidated Balance Sheet
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|
|
31 December 2011 |
31 December 2011 |
31 December 2010 |
31 December 2010 |
|
|
Note |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
|
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Intangible assets |
6 |
66,130 |
|
60,287 |
|
|
Property, plant and equipment |
|
765 |
|
888 |
|
|
|
|
|
66,895 |
|
61,175 |
|
Current assets |
|
|
|
|
|
|
Inventories |
|
5,652 |
|
4,544 |
|
|
Trade and other receivables |
7 |
8,660 |
|
9,690 |
|
|
Cash and cash equivalents |
|
1,079 |
|
1,989 |
|
|
|
|
|
15,391 |
|
16,223 |
|
Total assets |
|
|
82,286 |
|
77,398 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Ordinary share capital |
|
2,401 |
|
2,361 |
|
|
Share premium account |
|
24,866 |
|
24,331 |
|
|
Share option reserve |
|
423 |
|
244 |
|
|
Reverse takeover reserve |
|
(329) |
|
(329) |
|
|
Other reserve |
|
(4) |
|
(20) |
|
|
Retained earnings |
|
16,771 |
|
9,494 |
|
|
Total equity |
|
|
44,128 |
|
36,081 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Long term financial liabilities |
|
15,225 |
|
15,000 |
|
|
Convertible debt |
|
4,460 |
|
4,822 |
|
|
Other liabilities |
|
40 |
|
60 |
|
|
Derivative financial instruments |
|
- |
|
13 |
|
|
Deferred tax liability |
|
4,064 |
|
3,803 |
|
|
Provisions for other liabilities |
|
510 |
|
641 |
|
|
|
|
|
24,299 |
|
24,339 |
|
Current liabilities |
|
|
|
|
|
|
Cash and cash equivalents |
|
1 |
|
- |
|
|
Financial liabilities |
|
4,250 |
|
4,001 |
|
|
Corporation tax |
|
1,046 |
|
721 |
|
|
Trade and other payables |
8 |
8,367 |
|
11,869 |
|
|
Derivative financial instruments |
|
6 |
|
15 |
|
|
Provisions for other liabilities |
|
189 |
|
372 |
|
|
|
|
|
13,859 |
|
16,978 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
38,158 |
|
41, 317 |
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
82,286 |
|
77,398 |
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
|
|
Ordinary share capital |
Share premium account |
Share option reserve |
Reverse takeover reserve |
Other reserve |
Retained earnings |
Total equity |
|
|
£ 000s |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
|
|
|
|
|
|
|
|
|
|
Balance 1 January 2011 |
2,361 |
24,331 |
244 |
(329) |
(20) |
9,494 |
36,081 |
|
|
|
|
|
|
|
|
|
|
Issue of shares |
40 |
535 |
- |
- |
- |
- |
575 |
|
Dividend paid |
- |
- |
- |
- |
- |
(1,359) |
(1,359) |
|
Share options charge |
- |
- |
179 |
- |
- |
- |
179 |
|
Transactions with owners |
40 |
535 |
179 |
- |
- |
(1,359) |
(605) |
|
Profit for the period |
- |
- |
- |
- |
- |
8,636 |
8,636 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Interest rate swaps - cash flow hedge |
- |
- |
- |
- |
22 |
- |
22 |
|
Deferred tax on interest rate swap |
- |
- |
- |
- |
(6) |
- |
(6) |
|
Total comprehensive income for the period |
- |
- |
- |
- |
16 |
8,636 |
8,652 |
|
Balance 31 December 2011 |
2,401 |
24,866 |
423 |
(329) |
(4) |
16,771 |
44,128 |
Consolidated Cash Flow Statement
|
|
|
|
|
|
|
|
Year ended 31 December 2011 |
Year ended |
|
|
Note |
£ 000s |
£ 000s |
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Cash generated from operations |
9 |
11,654 |
18,104 |
|
Tax paid |
|
(1,496) |
(1,290) |
|
Cash flows from operating activities |
|
10,158 |
16,814 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Interest received |
|
2 |
7 |
|
Payment of deferred consideration |
|
(2,120) |
(20) |
|
Development costs capitalised |
|
(203) |
- |
|
Net proceeds from sale of intangible assets |
|
102 |
- |
|
Purchase of property, plant and equipment |
|
(140) |
(934) |
|
Purchase of other intangible assets |
|
(6,475) |
(14,264) |
|
Net cash used in investing activities |
|
(8,834) |
(15,211) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Interest paid and similar charges |
|
(1,439) |
(1,919) |
|
Termination of interest rate swaps |
|
- |
(1,145) |
|
Proceeds from issue of shares |
|
- |
7,290 |
|
Loan issue costs |
|
(65) |
(480) |
|
Proceeds from exercise of share options |
|
182 |
196 |
|
Dividend paid |
|
(1,359) |
(668) |
|
Receipt from borrowings |
|
6,475 |
24,000 |
|
Repayment of borrowings |
|
(6,000) |
(27,278) |
|
Net cash used in financing activities |
|
(2,206) |
(4) |
|
|
|
|
|
|
Net movement in cash and cash equivalents |
|
(882) |
1,599 |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
1,989 |
421 |
|
Exchange losses on cash and cash equivalents |
|
(29) |
(31) |
|
Cash and cash equivalents at the end of the period |
|
1,078 |
1,989 |
1. Basis of preparation
The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 31 December 2011 or 31 December 2010. The auditors reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2011 have not yet been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2010 were delivered to the Registrar of Companies as published on the Group's website on 15 June 2011.
2. Finance costs
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
£ 000s |
£ 000s |
|
Interest payable and similar charges |
|
|
|
On loans and overdrafts |
(1,504) |
(1,918) |
|
Amortised finance issue costs |
(31) |
(207) |
|
Notional interest |
(65) |
(285) |
|
|
(1,600) |
(2,410) |
|
Interest income |
2 |
7 |
|
|
|
|
|
Other finance charges |
|
|
|
Foreign exchange movement on euro denominated debt |
(29) |
75 |
|
|
(29) |
75 |
|
Exceptional finance costs |
|
|
|
Termination of interest rate swaps and loan issue costs |
- |
(1,774) |
|
|
- |
(1,774) |
|
|
|
|
|
Finance costs - net |
(1,627) |
(4,102) |
3. Taxation
Analysis of charge in period.
|
|
Year ended |
Year ended 31 December 2010 |
|
|
£ 000s |
£ 000s |
|
United Kingdom corporation tax at 26.5% (2009: 28%) |
|
|
|
In respect of current period |
2,046 |
1,936 |
|
Adjustment in respect of prior periods |
(225) |
|
|
|
1,821 |
1,936 |
|
Deferred tax |
|
|
|
Origination and reversal of temporary differences |
255 |
1,982 |
|
Taxation |
2,076 |
3,918 |
4. Dividends
|
|
Year ended 31 December 2011 |
|
Year ended 31 December 2010 |
||
|
|
Pence/share |
£ 000s |
|
Pence/share |
£ 000s |
|
Amounts recognised as distributions to owners in the year |
|
|
|
|
|
|
Interim dividend for the prior financial year |
0.17 |
401 |
|
0.07 |
135 |
|
Final dividend for the prior financial year |
0.40 |
958 |
|
0.23 |
533 |
|
|
|
1,359 |
|
|
668 |
|
|
|
|
|
|
|
|
Interim dividend for the current financial year |
0.25 |
600 |
|
0.17 |
401 |
The proposed final dividend for the current financial year was approved by the Board of Directors on 21 March 2012 and is subject to the approval of shareholders at the Annual General Meeting. The proposed dividend has not been included as a liability as at 31 December 2012 in accordance with IAS 10 Events After the Balance Sheet Date. The interim dividend for the current financial year was paid on 13 January 2012. Subject to shareholder approval, the final dividend will be paid on 12 July 2012 to shareholders who are on the register of members on 15 June 2012.
5. Earnings per share (EPS)
Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.
A reconciliation of the weighted average number of ordinary shares used in the measures is given below:
|
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
For basic EPS calculation |
|
|
238,601,884 |
226,115,099 |
|
Employee share options |
|
|
2,751,890 |
4,502,951 |
|
Conversion of Convertible Unsecured Loan Stock (CULS) |
|
|
21,466,690 |
23,339,310 |
|
For diluted EPS calculation |
|
|
262,820,464 |
253,957,360 |
The adjusted basic EPS is intended to demonstrate recurring elements of the results of the Group before exceptional items. A reconciliation of the earnings used in the different measures is given below:
|
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
|
|
£ 000s |
£ 000s |
|
Earnings for basic EPS |
|
|
8,636 |
8,954 |
|
Exceptional items |
|
|
- |
3,489 |
|
Tax effect of exceptional items |
|
|
- |
(977) |
|
For adjusted EPS |
|
|
8,636 |
11,466 |
|
|
|
|
|
|
|
Earnings for basic EPS |
|
|
8,636 |
8,954 |
|
Interest saving on conversion of CULS |
|
|
361 |
392 |
|
Tax effect of interest saving on conversion of CULS |
|
|
(94) |
(110) |
|
Earnings for diluted EPS |
|
|
8,903 |
9,236 |
|
Earnings for adjusted EPS |
|
|
8,636 |
11,466 |
|
Interest saving on conversion of CULS |
|
|
361 |
392 |
|
Tax effect of interest saving on conversion of CULS |
|
|
(94) |
(110) |
|
Earnings for diluted adjusted EPS |
|
|
8,903 |
11,748 |
The resulting EPS measures are:
|
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
|
|
Pence |
Pence |
|
Basic EPS |
|
|
3.62 |
3.96 |
|
Diluted EPS |
|
|
3.39 |
3.64 |
|
Adjusted basic EPS |
|
|
3.62 |
5.07 |
|
Adjusted diluted EPS |
|
|
3.39 |
4.63 |
6. Exceptional items
|
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
|
|
£ 000s |
£ 000s |
|
Onerous contracts |
|
|
- |
1,266 |
|
Redundancy costs |
|
|
- |
449 |
|
|
|
|
- |
1,715 |
|
|
|
|
|
|
|
Termination of interest rate swaps and loan issue costs |
|
|
- |
1,774 |
|
|
|
|
- |
3,489 |
Leases and associated costs for offices in Newcastle and Dublin, acquired as part of the Cambridge Laboratories acquisition, were treated as onerous contracts. In the year ended 31 December 2010 an amount of £1.3m, discounted at a rate of 10%, representing payments due until the end of each contract was recognised. The Dublin property lease expired in 2011 and the Newcastle property lease will run until 2015. An amount of £0.4m had also been recognised in relation to redundancy costs associated with the acquisition.
During 2010, the Group restructured its debt, extinguishing its then current loans and swaps and replacing them with new. In accordance with IAS 39 the extinguishment method of accounting was used, as opposed to the substantial modification method, as the new terms of the debt restructure were deemed to be substantially different from the old. As a result £1.8m was recognised in the income statement being consideration paid for the termination of the swaps and release of unamortised finance costs in relation to the previous loans in existence. As required by IAS39 as the new borrowings were with the same lender, these expenses were recognised through the income statement.
7. Intangible assets
|
|
Goodwill on consolidation |
Purchased Goodwill |
Technical know-how, trademarks and distribution rights |
Development costs |
Total |
|
The Group |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
|
Cost |
|
|
|
|
|
|
At 1 January 2011 |
1,144 |
600 |
59,355 |
- |
61,099 |
|
Additions |
- |
- |
6,475 |
203 |
6,678 |
|
Disposals |
- |
- |
(100) |
- |
(100) |
|
At 31 December 2011 |
1,144 |
600 |
65,730 |
203 |
67,677 |
|
Amortisation and impairment |
|
|
|
|
|
|
At 1 January 2011 |
- |
- |
812 |
- |
812 |
|
Amortisation for the year |
- |
- |
735 |
- |
735 |
|
At 31 December 2011 |
- |
- |
1,547 |
- |
1,547 |
|
Net book amount |
|
|
|
|
|
|
At 31 December 2011 |
1,144 |
600 |
64,183 |
203 |
66,130 |
|
At 1 January 2011 |
1,144 |
600 |
58,543 |
- |
60,287 |
|
|
Goodwill on consolidation |
Purchased Goodwill |
Technical know-how, trade marks and distribution rights |
Total |
|
The Group |
£ 000s |
£ 000s |
£ 000s |
£ 000s |
|
Cost |
|
|
|
|
|
At 1 January 2010 |
1,144 |
- |
43,791 |
44,935 |
|
Additions |
- |
600 |
15,564 |
16,164 |
|
At 31 December 2010 |
1,144 |
600 |
59,355 |
61,099 |
|
Amortisation and impairment |
|
|
|
|
|
At 1 January 2010 |
- |
- |
- |
- |
|
Amortisation for the year |
- |
- |
812 |
812 |
|
At 31 December 2010 |
- |
- |
812 |
812 |
|
Net book amount |
|
|
|
|
|
At 31 December 2010 |
1,144 |
600 |
58,543 |
60,287 |
|
At 1 January 2010 |
1,144 |
- |
43,791 |
44,935 |
8. Trade and other receivables
|
|
|
|
|
|
|
|
31 December 2011 |
31 December 2010 |
|
|
|
£ 000s |
£ 000s |
|
Trade receivables |
|
8,152 |
9,139 |
|
Other receivables |
|
147 |
55 |
|
Prepayments and accrued income |
|
331 |
439 |
|
Amounts owed by joint venture |
|
30 |
57 |
|
|
|
8,660 |
9,690 |
9. Trade and other payables - current
|
|
|
|
|
|
|
|
|
|
31 December 2011 |
31 December 2010 |
|
|
|
|
£ 000s |
£ 000s |
|
Trade payables |
|
|
1,194 |
3,799 |
|
Other taxes and social security costs |
|
|
864 |
1,109 |
|
Accruals and deferred income |
|
|
6,168 |
4,841 |
|
Other payables |
|
|
141 |
2,120 |
|
|
|
|
8,367 |
11,869 |
10. Cash generated from operations
|
|
|
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
£ 000s |
£ 000s |
|
Result for the period before tax |
10,712 |
12,872 |
|
Interest paid |
1,504 |
1,919 |
|
Interest income |
(2) |
(7) |
|
Other finance costs |
124 |
2,190 |
|
Profit on disposal of intangibles |
(50) |
- |
|
Depreciation of property, plant and equipment |
263 |
178 |
|
Amortisation of intangibles |
735 |
812 |
|
Change in inventories |
(1,109) |
(1,571) |
|
Change in trade and other receivables |
1,078 |
(2,040) |
|
Change in trade and other payables |
(1,780) |
3,623 |
|
Share options charges |
179 |
128 |
|
Cash flows from operating activities |
11,654 |
18,104 |
This information is provided by RNS
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