Financial Review

Consort has grown EBIT and margins in both divisions and reduced the level of net debt while continuing to invest in the business.

Paul Hayes


bespak margin increased 10 basis points to


Consort has again delivered growth against the prior year with revenue and EBIT up in both divisions and margins benefiting from further operating leverage. The Group reduced Net debt whilst continuing to invest in the business to support its development opportunities.

Income Statement

Group revenue grew by £17.1m (6.2%) to £294.0m (FY2016: £276.9m), driven by underlying growth in Bespak and Aesica as well as the translation of our overseas revenues results at more favourable exchange rates. EBIT before special items increased by £3.0m (8.3%) to £40.0m (FY2016: £37.0m) due to underlying growth, improved productivity and the benefit from favourable exchange rates. Group EBIT margin increased to 13.6% (FY2016: 13.4%). Further analysis of Bespak and Aesica revenue, EBIT and margins is provided in the Business Reviews.

Finance costs were lower at £4.5m (FY2016: £4.7m) as a result of lower interest payable on borrowings. Increased EBIT and lower finance costs led to an increase in earnings before tax and special items of £3.3m (10.4%) to £35.6m (FY2016: £32.3m).

Earnings before tax and after special items increased by £10.6m to £21.9m (FY2016: £11.3m) as a result of profitable growth and a lower level of acquisition related costs. Earnings after tax before special items increased 13.3% to £31.8m (FY2016: £28.1m). Adjusted basic EPS increased by 13.1% to 65.1p (FY2016: 57.6p). Basic unadjusted EPS increased by 50.5% to 46.2p (FY2016: 30.7p).



Profit before Tax and Specials


Adjusted Earnings Per Share



The tax charge before special items was £3.8m (FY2016: £4.2m) resulting in an effective rate of 10.7% (FY2016: 13.0%). This included the benefit of prior year adjustments on final tax computations following the Aesica acquisition. There was a tax credit on special items of £4.5m (FY2016: £8.9m). The total tax credit was £0.7m (FY2016: £4.7m).

Following the introduction in 2013 of the Research and Development Expenditure Credit (RDEC), the Group has realised an R&D tax credit of £1.8m in the year (FY2016: £2.4m) that was recognised through EBIT in the period, benefiting both Bespak and Aesica.

Bespak continues to benefit from the progressive implementation of the UK's Patent Box regime on earnings from its patented products. The benefit in the year was £1.7m in its cash tax (FY2016: £1.2m).

The Group's effective tax rate (ETR) has decreased to 10.7% from 13.0%. This reflects a combination of factors, including the benefits of the Patent Box and some prior year tax adjustments including the utilisation of brought forward tax losses. The outlook for the ETR for FY2018 is expected to increase to c.16%, subject to the mix of Bespak sales (IP and non-IP protected), and the mix of Aesica sales between UK, Germany and Italy.

The Group's tax strategy continues to follow the commercial development of the business, whilst taking advantage of government tax incentive policies where available in the jurisdictions within which it operates. The Group continues to be rated low risk by HMRC.


The Board has reviewed the dividend and is proposing an increased final dividend of 13.21p (FY2016: 12.56p) making a total dividend for the year of 20.30p (FY2016: 19.31p). The dividend will be paid on 27 October 2017 to shareholders on the register at 22 September 2017, following our AGM on 6 September 2017. The shares will go ex-dividend on 21 September 2017. Dividend cover, based on earnings before special items, was 3.2 times (FY2016: 3.0 times).

Bespak Revenue by Product Type 2017

Bespak Revenue By Product Type 2017

Respiratory - MDI 50.6%

Respiratory - DPI 28.5

Other 20.9%

Bespak Revenue by Product Type 2016

Bespak Revenue By Product Type 2016

Respiratory - MDI 51.1%

Respiratory - DPI 31.2

Other 17.7%

Special items from Continuing Operations

Special items are those items which the Group considers to be non-repetitive or are not part of the underlying performance of the business. Often a material cost or credit is incurred in one year to deliver a future benefit. In FY2017 special items amounted to £13.7m (FY2016: £21.0m) and mainly comprise of charges associated with the acquisition of businesses with: £13.0m of amortisation of acquisition-related intangibles (FY2016: £13.1m); £0.2m of advisory and acquisition costs (FY2016: £1.4m); and £0.5m of reorganisation costs (FY2016: £6.5m).

Investment in Atlas Genetics Limited

On 23 January 2017, Consort subscribed £3.1m as part of a £28.4m series D equity issue by Atlas Genetics Limited. Atlas is a diagnostic company developing ultra-rapid point of care tests for a range of infectious diseases. Consort has now invested a total £9.4m in Atlas Genetics and holds an equity share of 15.2% (13.4% on a fully diluted basis).

Following the successful CE marking for the Chlamydia Trachomatis (CT) io® test cartridge, the funding is being used to finance the continued development of the combined Chlamydia and Gonorrhoea (CT/NG) assay and test cartridge. This is planned for regulatory approvals in the US and Europe around early 2018. The equity raise also provides financing to expand manufacturing capacity at Bespak. More information about Atlas Genetics is available via their website

The Group will continue to account for Atlas Genetics as an equity investment in the accounts of Consort.

Aesica margin up 60 basis points to


Balance sheet

The Group had Net debt of £92.6m at the year end (FY2016: £97.0m). At 30 April 2017 it had drawn £113.0m of its committed revolving credit facility, leaving undrawn facilities of £53.6m. In addition, it has a further £65m potentially available under its accordion facility as described below. Net assets at the year-end were £212.1m (FY2016: £209.1m) after continuing to invest across the business to drive growth and carefully manage working capital. The pension deficit increased to £44.6m (FY2016: £27.2m) while provisions at 30 April 2017 were £2.8m following settlement of prior year balances (30 April 2016: £6.2m).

Cash Flow, Financing and Liquidity

Cash generated from operations before special items decreased by £2.6m to £51.5m (FY2016: £54.1m). EBITDA before special items increased by £4.4m (9.1%) to £52.7m (FY2016: £48.3m). Working capital1 decreased by £0.5m to £13.5m (FY2016: £14.0m).

Capital expenditure of £18.1m was lower than the previous year (FY2016: £21.5m) with Bespak completing planned investments in facilities and production capacity to fulfil its development pipeline contracts and Aesica investing in enhancing its operations including investments in serialisation capabilities.

The Group has a £160m multi-currency revolving committed credit facility with Barclays, Lloyds, RBS and Santander which expires in September 2019. Margins are between 1.2% and 2.2% over LIBOR depending upon the ratio of Net debt to EBITDA prevailing at the time. A non-utilisation fee of the interest margin on the undrawn balance applies.

  1. Working capital is defined as total inventory, trade and other receivables, trade and other payables and derivatives.

The facility has two covenants: Net debt to EBITDA less than 3.0x and Interest Cover over EBITDA being greater than three times. The Group continues to operate within its covenants at 30 April 2017: Net debt to EBITDA was 1.7x, and Interest Cover was 17.0 times.

The Group also has a £65m "accordion" facility, by which further funding may be made available by the participating banks under the current terms to support significant investment or acquisition opportunities which may arise.

The Group maintains levels of Sterling cash sufficient to meet imminent obligations and to be a reserve in case of an adverse event. These funds are held with a range of reputable financial institutions approved by the Board.

The Company's articles of association ("Articles") impose a limit on the amount of borrowings that may be undertaken by the Company and its subsidiaries. Shareholders approved certain resolutions at an EGM on 27 April 2017 which amended the Articles by increasing the borrowing limit to three times adjusted capital and reserves (the definition of which was amended so as not to require the deduction of goodwill and intangibles).

Foreign Currency Exposure

The Group monitors its foreign currency exposures carefully and seeks to mitigate all material transactional exposures. Bespak currently has low exposure to movements in the Euro and US Dollar. Aesica has wider exposure to the Euro. Where appropriate we buy or sell forward foreign currency to protect transaction margin exposure.

As a result of the Group's German and Italian Euro denominated operations, foreign currency translation sensitivity for the Euro is such that a Eur 1c strengthening in the Euro:GBP exchange rate increases revenue by £0.8m and EBIT by £0.1m.


The IAS 19 pension valuation at 30 April 2017 was a total deficit of £44.6m (30 April 2016: £27.2m). The defined benefit pension obligations of the Group comprise both Bespak and Aesica schemes.

Customer dependency – FY2017

Customer Dependency Fy2017

Customer dependency – FY2016

Customer Dependency Fy2016

Top 5

Top 10


Bespak Scheme

In 2002, the Bespak Retirement Benefits Scheme (a defined benefit pension scheme) was closed to new members. From 31 March 2016 the Scheme was closed to further accrual via a deed of amendment between the Group and the Trust. Following the Scheme closure, all former active members became deferred members, and the provision of pension benefits was migrated to a defined contribution pension scheme which is also available to new employees.

As at 30 April 2017, the Bespak IAS 19 deficit was £40.6m compared with £23.4m as at 30 April 2016. The significant increase in the deficit was primarily due to a marked reduction in the discount rates which has increased the defined benefit obligation. The last triennial actuarial valuation was as at 30 April 2014 and in September 2015 an actuarial valuation of the deficit was agreed at £13.8m. The Company agreed to make deficit recovery contributions at the rate of £1.5m per annum until 2028. An updated actuarial valuation is due to take place as at 30 April 2017 and as discount rates have reduced since the last triennial valuation, it is expected that this in particular may have a material effect on the updated valuation.

Aesica Schemes

Aesica operates a number of different pension schemes, including defined benefit schemes in Italy and Germany. These are in a net IAS 19 deficit position of £4.0m at 30 April 2017 (30 April 2016: £3.8m).

Risk Management

The Group is exposed to a number of risks and considers effective risk management to be a high priority. We have an established framework for assessing these risks and processes and procedures to partly mitigate them. We are pleased to report that the Group incurred no material financial or business losses in the year.

Paul Hayes
Chief Financial Officer