RNS No 9637m
BESPAK PLC
7th July 1998
Announcement of Unaudited Preliminary Results
for the 52 weeks ended 1 May 1998
Financial Highlights
1998 1997
(Unaudited) (Audited)
Turnover #86.1m #77.7m Up 11%
Profit before tax #13.8m #11.0m Up 25%
Earnings per share 39.7p 29.5p Up 35%
Net cash #5.2m #6.3m
Dividends per share 13.7p 12.3p Up 11%
Operating Performance
. Strong financial performance - record turnover and profit
. Continuing growth in drug delivery and recovery in medical devices
. Operating margins improved from 14.0% to 15.6%
. #19 million capital investment primarily to support drug delivery device
programmes
. Excellent cash generation
Dividend
. Final dividend increased by 12% to 8.6 pence per share (1997 7.68
pence), giving a total increase of 11% to 13.7 pence (1997 12.3 pence)
Building for the Future
. Good prospects for new product pipeline in drug delivery
. Continuing investment programme in UK and USA
. Emerging growth opportunities in supplying major US medical device
companies
Bespak plc Chairman, Sir David Cooksey, commented today
This has been a successful year for the Group and we are continuing to
prepare for the future. We have a major investment programme in place to
support the opportunities available in our key markets of drug delivery and
medical devices. We believe Bespak is well placed to take advantage of these
opportunities and to achieve its long term growth plans.
Enquiries
Peter Chambre, Chief Executive
Robert J. Preece, Finance Director
Bespak plc
0171 638 9571
Bespak plc
1997/98 Preliminary Results
Overview
The past year has been successful for Bespak plc, with the Group achieving
record financial performance, resulting from increased turnover and
improvements in operating effectiveness. The Group also prepared for the
future by commencing a major programme of investment to install the capacity
required to support product expansions and its pipeline of new product
launches.
Operating Results
Group turnover rose by 11% in 1998 to #86.1 million, with growth being driven
primarily by the 20% increase in drug delivery products. Operating profits
grew by 23% to reach #13.4 million and profit before tax was #13.8 million,
an increase of 25% over last year. Group margins continued to increase during
the year, reaching 15.6% compared with 14% in 1997, resulting mainly from the
improvements achieved in the USA.
Earnings per share increased by 35% to 39.7 pence, reflecting strong growth
in the drug delivery business in the UK and the continuing progress at
Tenax, which serves the medical device industry in the USA. The Board is
recommending that the final dividend is increased by 12% to 8.6 pence, making
a total for the year of 13.7 pence (1997 12.3 pence).
Capital expenditure for the year was #19.2 million and, after investing at
this level, the Group ended the year with a net cash position of #5.2
million, demonstrating once again the cash-generative nature of our
businesses.
UK
In the UK, sales increased by 21% to #57.3 million and operating profits
improved by 19% to #11.4 million.
The principal business of Bespak in the UK is the development and supply of
drug delivery products to the global respiratory drugs industry, where sales
increased to #48.9 million, representing growth of 25%. Within this
business, sales of the range of metered-dose valves for asthma inhalers and
critical care fluid control valves grew by 13% to #26.4 million,
significantly ahead of the rate of market growth. Sales of drug delivery
device products increased by 42% to reach #22.5 million, driven primarily by
increasing sales of the Glaxo Wellcome Diskus (TM) dry powder inhaler.
In the personal care sector, sales of Bespak s pumps increased by 4% to reach
#8.4 million. This was accompanied by the anticipated improvements in margin
resulting from the establishment of stand-alone manufacturing facilities for
this business, completed during the year.
USA
In the USA, operating profits increased by 65% to #2.0 million resulting from
improvements at both the Group s businesses, especially the recovery achieved
at Tenax. Sales in the USA fell 6% to #28.8 million (3% at constant exchange
rates).
At Bespak Inc., profits were increased on total sales which declined by 3%
to #15.8 million. The business develops and manufactures drug delivery
devices for US-based pharmaceutical customers at its two manufacturing
operations in North Carolina. Sales of these manufactured products increased
slightly. Bespak Inc. also distributes Bespak s range of valves and provides
technical support to customers in the USA. Sales of distributed products
decreased by 7%, resulting from changes to stock levels at major customers
following the launch of generic respiratory drugs in the previous year.
Tenax is the Group company serving the medical device industry in the USA.
Following successful completion of the major restructuring programme in 1997,
Tenax was consistently profitable during the last financial year and its
performance improved further in the second half. Overall sales fell by 9% to
#13 million, reflecting the decision to focus on a smaller number of major
medical device customers. Improvements in operating effectiveness have been
accompanied by a significant strengthening of the Company s quality processes
resulting in increased levels of satisfaction among its customers.
Building for the Future
Drug Delivery
Bespak is the world s leading supplier of drug delivery products to the
global respiratory drugs industry and is well positioned to benefit from the
underlying growth in respiratory disease and the changes taking place in the
market for the delivery of respiratory drugs in the future. To support these
opportunities, a three year investment programme commenced during the last
financial year to install the manufacturing capacity required to supply our
major pharmaceutical customers new product launch plans in Europe and the
USA.
In the metered-dose inhaler market, the pharmaceutical industry has committed
to change from the use of chlorofluorocarbon (CFC) propellants to new
hydrofluoralkanes (HFA), with completion of the phase-out of CFCs by 2005.
Bespak is entering the final stages of programmes with its major customers
for the development of new HFA valves. The original timetable was to
complete the transition by the end of the year 2000 in the developed markets
of the world. However, it is now clear that the introduction of the
regulations requiring the switch to HFAs in the USA will be delayed. The
Group anticipates that, as a result of the switchover, it will gain long-term
market share in this growing market, from winning new customers and new
product contracts. However, the period of transition will be accompanied by
some loss of market share, resulting from the HFA product launch plans of our
major customers and the potential impact of the delay in the HFA introduction
in the USA. During the last period, the first products utilising Bespak HFA
valves have been launched. Other customers are planning to submit new
products for regulatory approval during the remainder of 1998 and 1999.
Also, the first cleanroom manufacturing capacity has been installed at Bespak
s facility in King s Lynn, which will be followed over the next two years by
further capacity additions.
The drug delivery devices sector will be the area of greatest potential for
long-term growth. Bespak is well positioned in the emerging market for dry
powder inhalers. The capacity committed during 1997 to support the growth of
Glaxo Wellcome s Diskus (TM) comes on stream in 1998. This expansion is at
both King s Lynn and at Bespak s new facility at Milton Keynes. This second
site is an important part of the Group s growth plans in the drug delivery
devices market.
Progress has also been made on programmes for dry powder inhalers with other
customers. The Medeva Clickhaler dry powder inhaler, which was introduced at
the end of 1997, is now entering the capacity scale-up phase and the Rhone-
Poulenc Rorer Ultrahaler (TM) remains on track for launch and is planned to
commence final clinical trials later this year.
In the USA, the drug delivery device programmes are developing
satisfactorily, to the point where a substantial expansion of the facility at
Cary, North Carolina is underway to provide world class facilities. The
first major product planned for this new facility will be for Rhone-Poulenc
Rorer, with manufacturing due to commence in 1999.
In the long-term, the market for drug delivery will continue to expand, as
the pharmaceutical industry seeks new delivery technologies to differentiate
their drugs. Bespak is well placed to take advantage of this growing but
competitive market and, in addition to the investment being made in the
medium-term to support the current new product programmes, the Group is
planning to raise its level of investment in new drug delivery technologies
and devices.
Medical Devices
In medical devices, Tenax is beginning to generate opportunities for medium-
term growth. While the industry that Tenax serves is projected to continue
expanding, it is also consolidating, which is likely to bring with it
increased pressure from customers and rationalisation of supply chain
companies. It is already becoming clear that our customers are requiring
higher levels of quality and service. In addition, they are beginning to seek
suppliers who can provide a broader range of skills and technologies. As a
first stage in the upgrading of Tenax s services to meet these requirements,
new cleanroom assembly facilities are currently being installed.
Outlook
Our expectations are for further progress during the forthcoming year. In
the UK, the continuing sales growth in drug delivery devices will be
partially offset by lower valve sales, resulting from the beginning of the
HFA transition. In the USA, the investment now being made in the future
expansion and development of Bespak Inc. is likely to restrict profit growth
during this year, particularly in the first half. At Tenax, continued
progress during this year is expected as the company further strengthens its
performance for customers.
Bespak plc is well placed to achieve long-term growth in the key markets of
drug delivery and medical devices. There is a good pipeline of opportunities
and the Group s investment programme will continue to put in place the
capacity and capabilities necessary to meet the increasing demands of our
customers.
Consolidated Profit and Loss Account (Unaudited)
For the 52 weeks ended 1 May 1998
Notes 1998 1997
#000 #000
Turnover 2 86,067 77,749
Operating expenses (72,657) (66,841)
------ ------
Net operating income 2 13,410 10,908
Net interest receivable 415 124
------ ------
Profit on ordinary activities before 13,825 11,032
taxation
Taxation (3,735) (3,584)
------ ------
Profit on ordinary activities after 10,090 7,448
taxation
Dividends 3 (3,497) (3,114)
------ ------
Retained profit for the year 6,593 4,334
====== ======
Earnings per share 4 39.7p 29.5p
====== ======
All amounts relate to continuing operations.
There is no difference between the profit on ordinary
activities before taxation and the retained profit for the
year stated above, and their historical cost equivalents.
Consolidated Balance Sheet (Unaudited)
At 1 May 1998
1998 1997
#000 #000
Fixed assets
Intangible assets 366 361
Tangible assets 44,501 31,088
Investments 1,200 784
------ ------
46,067 32,233
------ ------
Current assets
Stocks 4,241 5,798
Debtors 14,736 12,218
Short-term deposits 9,000 12,500
Cash at bank and in hand 6,464 3,489
------ ------
34,441 34,005
Creditors
- amounts falling due within one year (29,333) (21,735)
------ ------
Net current assets 5,108 12,270
------ ------
Total assets less current liabilities 51,175 44,503
Creditors
- amounts falling due after more than (2,879) (4,317)
one year
Provisions for liabilities and charges (4,962) (4,993)
------ ------
Net assets 43,334 35,193
====== ======
Capital and reserves
Called up share capital 2,565 2,526
Share premium account 15,923 14,342
Special reserve 308 308
Profit and loss account 24,538 18,017
------ ------
Equity shareholders funds 43,334 35,193
====== ======
Consolidated Cash Flow Statement (Unaudited)
For the 52 weeks ended 1 May 1998
Notes 1998 1997
#000 #000
Cash inflow from operating activities
Net cash inflow from operating activities 5 21,811 20,719
Outflow related to Innovata Biomed contract (111) (2,826)
------ ------
Net cash inflow from operating activities 21,700 17,893
------ ------
Returns on investment and servicing of finance
Interest received 1,042 714
Interest paid (622) (655)
------ ------
420 59
------ ------
Taxation
UK corporation tax (2,929) (2,891)
Overseas tax (29) 71
------ ------
(2,958) (2,820)
------ ------
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (159) (125)
Payments to acquire tangible fixed assets (18,151) (6,782)
Receipts from sales of tangible 111 161
fixed assets
Payment for investment (168) -
Investment in ESOT (335) -
------ ------
(18,702) (6,746)
------ ------
Equity dividends paid (3,242) (2,884)
------ ------
Net cash (outflow)/inflow before 6 (2,782) 5,502
management of liquid resources and
financing
Management of liquid resources
Movement in fixed deposits 6 3,500 (2,965)
Financing
Issue of shares 6 1,620 23
Repayment of borrowings 6 (1,532) (1,550)
------ ------
88 (1,527)
------ ------
Increase in cash and cash equivalents 6 806 1,010
------ ------
Statement of Total Recognised Gains and Losses
for the 52 weeks ended 1 May 1998
1998 1997
#000 #000
Profit on ordinary activities after taxation 10,090 7,448
Exchange movements on foreign currency net (72) (172)
investments
Total recognised gains and losses for the ------ ------
financial year 10,018 7,276
------ ------
Reconciliation of Movements in Equity Shareholders Funds
for the 52 weeks ended 1 May 1998
1998 1997
#000 #000
Equity shareholders funds 35,193 31,008
brought forward
Profit on ordinary activities 10,090 7,448
after taxation
Dividends (3,497) (3,114)
Exchange movements on foreign (72) (172)
currency net investments
Issue of ordinary share capital 1,620 23
------ ------
Equity shareholders funds 43,334 35,193
carried forward ====== ======
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Preparation of the Preliminary Announcement
(i) Basis of preparation
The profit and loss account covers the 52 weeks (1997 52 weeks)
to 1 May 1998. The balance sheets have been drawn up at 1 May
1998 and 2 May 1997 respectively. The results of overseas
subsidiaries have been translated into sterling at the average
rates of exchange ruling during the financial year.
(ii) Abridged accounts
The foregoing financial information, which has been prepared on
the basis of the accounting policies set out in Bespak plc s
accounts for the 52 weeks to 2 May 1997, does not amount to full
accounts within the meaning of section 240 of the Companies Act
1985 (as amended).
The abridged comparative figures for the 52 weeks to 2 May 1997
are from the accounts of Bespak plc for the 52 weeks ended 2 May
1997. These accounts have been reported on by the Company s
auditors and delivered to the Registrar of Companies. The report
of the auditors was unqualified and did not contain a statement
under section 237(2) or (3) of the Companies Act.
2. Segment information
The geographical analysis of turnover, net operating income and net assets is
as follows
Geographical area (turnover by destination)
1998 1997
#000 #000
United Kingdom 39,723 30,709
United States of 28,589 30,564
America
Europe 13,697 12,604
Rest of the World 4,058 3,872
------ ------
86,067 77,749
====== ======
Average rate of exchange #1 Sterling: US $ 1.65 1.59
Turnover by origin United Kingdom United Total
States of
America
1998 1997 1998 1997 1998 1997
#000 #000 #000 #000 #000 #000
Total sales 63,019 53,560 28,757 30,565 91,776 84,125
Inter-segment sales (5,708) (6,369) (1) (7) (5,709) (6,376)
------ ------ ------ ------ ------ ------
External sales 57,311 47,191 28,756 30,558 86,067 77,749
====== ====== ====== ====== ====== ======
Net operating income
Net operating income by 11,452 9,652 1,958 1,186 13,410 10,838
segment ====== ====== ====== ======
Income from associates - 70
------ ------
13,410 10,908
====== ======
NOTES TO THE PRELIMINARY ANNOUNCEMENT
2. Segment information continued
Net assets United Kingdom United Total
States of
America
1998 1997 1998 1997 1998 1997
#000 #000 #000 #000 #000 #000
Operating assets by 36,138 26,359 10,945 10,870 47,083 37,229
segment ====== ====== ====== ======
Unallocated net assets/(liabilities)
Investments 1,200 784
Provisions for liabilities and charges (4,962) (4,993)
Tax and dividends (5,202) (4,083)
Net funds 5,215 6,256
------ ------
43,334 35,193
====== ======
Closing rate of exchange #1 Sterling: US $ 1.67 1.62
3. Dividends 1998 1997
#000 #000
Interim dividend of 5.1p per share paid on
23 February 1998 (1997 - 4.62p) 1,294 1,167
Proposed final dividend of 8.6p per share
payable on 6 October 1998 (1997 - 7.68p) 2,203 1,947
------ ------
3,497 3,114
====== ======
The record date for the proposed final dividend is close of business on
17 July 1998.
4. Earnings per share
The earnings per share as shown in the profit and loss account are
calculated by reference to the net profit after taxation and the
weighted average number of shares in issue during the year (1998 -
25,397,960 1997 - 25,257,713). Figures for fully diluted earnings
per share based on outstanding share options are not provided as
the effect on earnings per share is not material. The number of
shares in issue at 1 May 1998 was 25,653,117 (1997 - 25,262,161).
NOTES TO THE PRELIMINARY ANNOUNCEMENT
5. Net cash inflow from operating activities
Reconciliation of net operating income to net cash inflow from
operating activities
1998 1997
#000 #000
Net operating income 13,410 10,908
Depreciation 5,513 5,161
Profit on sale of tangible fixed assets (77) (34)
Decrease in stocks 1,505 2,174
(Increase)/decrease in debtors (3,318) 2,649
Increase/(decrease) in creditors 4,587 (111)
Increase in deferred compensation provision 168 -
Income from interests in associated undertakings - (70)
Dividends received from associated undertakings 23 42
------ ------
Net cash inflow from operating activities 21,811 20,719
====== ======
6. Reconciliation of net funds
The table below provides an analysis of net funds and a
reconciliation of net cashflow to movement in net funds.
At Cash Inception Exchange At
3 May flow of movements 1 May
1997 #000 leasing #000 1998
#000 contracts #000
#000
Cash at bank and in hand 3,489 2,976 - (1) 6,464
Overdrafts (3,932) (2,170) - 32 (6,070)
------ ------ ------ ------ ------
Cash and cash equivalents (443) 806 - 31 394
Loans and leasing (5,801) 1,532 (58) 148 (4,179)
obligations
Short-term deposits 12,500 (3,500) - - 9,000
------ ------ ------ ------ ------
Net funds 6,256 (1,162) (58) 179 5,215
------ ------ ------ ------
Financing items included in
cash flow movements
Issue of shares (1,620)
------
Net cash inflow before management (2,782)
of liquid resources and financing ------
END
FR SSIESMUAUFFW
Bespak (LSE:BPK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bespak (LSE:BPK)
Historical Stock Chart
From Jul 2023 to Jul 2024
