Company Announcements
Half-year Report
Related Companies
BTG plc: interim results
Double-digit revenue growth drives strong first half performance
London, UK, 15 November 2016: BTG plc (LSE: BTG), a global specialist healthcare company, today announces its interim results for the half year ended 30 September 2016.
Louise Makin, BTG's CEO, commented: "The business has performed well during the first half, and the outlook for the full year is strong. We have the capabilities and financial strength to take advantage of the increasing opportunities we are seeing to expand our Interventional Medicine business. By accelerating our growth strategy through reinvestment of our cash flows to maximise the value of and expand the current portfolio, we can build leadership positions in selected areas of interventional medicine and thereby create sustainable value for shareholders."
Financial summary
· Double-digit revenue growth underpinned by 24% constant exchange rate (CER) growth in Interventional Medicine revenues
· Operating profit reflects planned investments
· Adjusted and IFRS earnings impacted by one-time costs
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H1 2016/17 (£m) |
H1 2015/16 (£m) |
Growth (%) |
Growth at CER2 (%) |
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Revenue Interventional Medicine revenue
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285.4 98.1 |
229.6 70.5 |
24% 39% |
10% 24% |
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Adjusted operating profit1 |
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78.8 |
62.9 |
25% |
4% |
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IFRS operating profit
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29.1 |
44.2 |
(34%) |
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Adjusted basic EPS1,3 |
13.9p |
14.7p |
(5%) |
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IFRS basic EPS3
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3.4p |
13.4p |
(75%) |
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Free cash flow1 Net cash flow from operating activities |
55.7 60.8 |
59.9 62.9 |
(7%) (3%) |
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1. Certain financial measures in this press release, including adjusted operating profit, adjusted basic EPS and free cash flow are not prepared in accordance with IFRS. All adjusted financial measures are explained on page 24, and are reconciled to the most directly comparable measure prepared in accordance with IFRS on pages 25 to 26.
2. CER growth is computed by restating 2016/17 results using 2015/16 foreign exchange rates for the relevant period.
3. Adjusted basic EPS and IFRS basic EPS in H1 2016/17 have been adversely impacted by £17m pre-tax losses on foreign exchange forward contracts. IFRS basic EPS in H1 2016/17 has been further adversely impacted by LC Bead® settlement costs of £28m.
Operating highlights
Interventional Medicine
Oncology
· Galil Medical acquired and integration on track; contributed 2% to revenue growth at CER
· TheraSphere® dosimetry software launched facilitating personalised treatment for liver cancer patients; βETA™ Radiation Safety Programme also launched, designed to reduce exposure risk when treating patients
· LC Bead LUMI™ launched in the US; DC Bead LUMI™ approved in Canada
· US government investigation into LC Bead® settled
Vascular
· 510k and CE Mark applications submitted for new EKOS® control unit; patient enrolment completed in OPTALYSE and ACCESS PTS studies
· Physician evaluations and customer reorder rates for Varithena® gradually increasing
Pulmonology
· US RENEW trial data published, providing firm foundation for patient selection and therapy development
· Processes continuing in Germany and France to determine national reimbursement
Specialty Pharmaceuticals
· Solid performances from CroFab®, DigiFab® and Voraxaze® resulting in increased cash contribution
· Vistogard® launched in the US
Licensing
· Licensing revenues reflect good performances from Zytiga® and Lemtrada™
For further information contact:
BTG FTI Consulting
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Andy Burrows, VP Corporate & Investor Relations |
Ben Atwell / Simon Conway |
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+44 (0)20 7575 1741; Mobile: +44 (0)7990 530 605 |
+44 (0)20 3727 1000 |
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Stuart Hunt, Investor Relations Manager |
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+44 (0)20 7575 1582; Mobile: +44 (0)7815 778 536 |
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Chris Sampson, Corporate Communications Director |
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+44 (0)20 7575 1595; Mobile: +44 (0)7773 251 178 |
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About BTG
BTG is a global specialist healthcare company bringing to market innovative products in specialist areas of medicine to better serve doctors and their patients. We have a portfolio of Interventional Medicine products to advance the treatment of cancer, severe emphysema, severe blood clots and varicose veins, and Specialty Pharmaceuticals that help patients overexposed to certain medications or toxins. Inspired by patient and physician needs, BTG is investing to expand its portfolio to address some of today's most complex healthcare challenges. To learn more about BTG, please visit: btgplc.com.
OPERATING REVIEW
Strategy
BTG creates value by acquiring, developing and commercialising differentiated medical products that meet the needs of patients, specialist physicians and payers. Over the past eight years, BTG has built a balanced portfolio of minimally invasive products that are used in the treatment of cancer, severe emphysema, severe blood clots and varicose veins, and specialty pharmaceuticals that are used in the emergency room to treat patients overexposed to certain medications or toxins.
The Group's strategy is to reinvest the strong cash flows from its established Specialty Pharmaceuticals business and legacy Licensing royalties into its Interventional Medicine business, where there are significant growth opportunities. Having built a strong commercial organisation and expanded the Group's geographic reach, investment is now focused on product innovation, clinical studies to explore new indications, and the acquisition of products and companies to expand the portfolio.
Through this strategy BTG intends to become the leading provider of interventional medicine therapies in its chosen market segments to create lasting value for shareholders.
Interventional Medicine
Interventional medicine is an expanding field, with a greater number of minimally invasive procedures being performed by a growing physician base each year. In the UK, for instance, there has been 21% growth in the number of procedures annually since 2012, according to the Royal College of Radiologists. The growth of minimally invasive procedures over traditional surgical techniques is being fuelled by the efficiency savings that can be made from reduced in-hospital stays and reduced occupancy of operating theatres.
The benefits to patients are significant. Minimally invasive techniques that avoid the use of general anaesthesia can result in reduced morbidity and mortality compared with conventional surgery. Localised treatments also offer the potential to improve efficacy, for example by allowing delivery of higher doses of radiation or chemotherapy to the tissue being targeted, at the same time reducing any unwanted impact on other parts of the body.
Patient need is great. Although there have been significant advances in treating many types of cancer, liver cancer has remained a high unmet need. Similarly, people who experience a severe blood clot often receive only conservative anticoagulant therapy to prevent further clots, but the original clot is not treated owing to poor efficacy or complications with localised thrombolysis or other interventions to remove the clot. Driven by this need, and enabled by advances in imaging and device technology, innovative companies like BTG are investing to develop minimally invasive therapies for these and other conditions.
A core part of BTG's strategy is to monitor the external environment of device technology innovation, research and development investment and commercial activity. This enables the business to map the emergence of differentiated or disruptive technologies, and new areas of interventional medicine with strong growth potential where BTG can see the opportunity to develop leading positions. BTG looks for areas where it can invest behind the technology and clinical data, and where there is a strong commercial proposition for physicians and payers to support the growth of the therapy area.
Following the acquisition of Biocompatibles and its embolic and chemoembolising bead products in 2011, BTG has successfully expanded its Interventional Medicine business through a combination of organic growth and additional acquisitions of leading interventional therapies and businesses. Today, the Group has a diversified, balanced portfolio of interventional products and direct sales forces in major geographies. BTG also has a strong brand with treating physicians, being recognised for providing differentiated therapies and for investing behind them. The Group is well placed to continue to invest in its pipeline and to take advantage of an increasing number of opportunities to further expand the portfolio.
The Group's aim is to build on its existing positions in the interventional oncology, vascular and pulmonology markets, where patient need is high and the opportunity exists to reach many more patients by investing in clinical data, new technologies and new products. BTG will also expand into new market segments as appropriate opportunities are identified.
BTG's current portfolio of interventional therapies targets the treatment of cancer, vascular disorders and severe emphysema. The products, which are at different stages in their lifecycle, are all supported by investment plans to maximise their value. A summary of progress during the period follows.
Interventional Oncology
In June 2016 BTG completed the acquisition of Galil Medical ("Galil"), a leader in cryoablation. In addition to diversifying BTG's oncology portfolio into kidney and prostate cancer, Galil provides a platform technology with a number of other approved and potential uses, including the treatment of lung and bone metastases if two ongoing studies are successful.
Galil's performance and clinical programmes continue on track post acquisition. Integration of support functions is complete and a commercial organisation plan is in place that will take advantage of BTG's existing commercial infrastructure to accelerate growth opportunities.
The US nationwide launch of LC Bead LUMI™, the innovative visible embolic bead, commenced midway through the period. This followed a targeted roll-out to opinion leaders earlier in the year. DC Bead LUMI™ was approved in Canada, and the regulatory application in the EU is progressing.
First patients were treated with the TheraSphere® irradiated glass microspheres in a number of territories in Asia including South Korea and Malaysia. In the EU, a CE mark for the Simplicit90Y™ dosimetry software was awarded. This software can optimise the planning of 90Y selective internal radiation therapy (SIRT) and facilitate personalised treatment for patients with liver cancer. The βETA™ Radiation Safety Programme was launched at the 2016 CIRSE (Cardiovascular and Interventional Radiological Society of Europe) International Conference in Barcelona. This new initiative is designed to reduce the risk of radiation exposure when performing SIRT with 90Y microspheres.
Recruitment continues into STOP-HCC and EPOCH, the randomised controlled clinical trials that are designed to support Premarket Approval (PMA) applications for TheraSphere® in the US. There is significant physician interest in exploring additional potential uses of the products beyond their current approved indications. During 2016, BTG approved support for 12 new Investigator Initiated Studies (IIS) of these products, taking the total number of IIS being supported by BTG to more than 40.
Interventional Vascular
EKOS continued to expand its presence in US hospitals, with 70% now using the products. EKOS's strong growth reflects this increased penetration, good momentum in expanding use in treating pulmonary embolism (PE) among both existing and new PE customers, and continued growth in the total number of interventional procedures for severe blood clots in the US. 510k and CE Mark applications were submitted in the US and EU, respectively, seeking clearance for a new control unit that allows treatment of bilateral PE. Patient enrolment into the OPTALYSE and ACCESS PTS studies is now complete and data are expected during 2017.
There was progress in activities to support EKOS's expansion in the EU, including implementation of commercial plans in key markets to support revenue growth, ongoing recruitment in to the CAVA study in the Netherlands and opening a UK site for OPTALYSE. Elsewhere, the first patient in Taiwan was treated and the products are now available in Hong Kong.
The number of physicians who have treated patients with Varithena®, the varicose veins treatment, grew from 335 to 447 during the period, and the number of reordering accounts grew from 90 to 160. This reflects increasing confidence by doctors that they will achieve appropriate reimbursement. Insurance coverage continues to increase; there are now approximately 165 million US lives covered by insurers who provide insurance coverage for Varithena®, with 95 million lives covered by insurers who also reimburse at an appropriate level. Work continues to further expand insurance coverage and payment for Varithena®.
Other developments include an extension of the post-activation shelf life of Varithena® from seven to 30 days, which is helpful for clinics in managing patient scheduling. Progress was made towards establishing new Current Procedure Terminology codes that will provide coding for the use of Varithena®, with implementation anticipated around the beginning of 2018. First sales in Canada are expected during H2 2016/17, and other geographic expansion opportunities are being evaluated. Assessment of the commercial opportunity for Varithena® in treating venous leg ulcers continues.
Interventional Pulmonology
Full data were published from RENEW, the trial designed to support PMA approval of the PneumRx® Coils in the US. This increased the total clinical database to more than 500 patients from around 100 patients when BTG acquired the business in January 2015. The primary and secondary trial endpoints were met. A sub-group analysis of the RENEW data showed that the severe emphysema patients in the trial who had a high degree of lung over inflation responded best to treatment. This provides a solid foundation for physicians to select appropriate patients for treatment, which is important for the scientific and commercial development of this therapy.
The remaining modules of the rolling PMA submission are being finalised and will incorporate new usability testing data, with completion of the rolling PMA submission expected in H2 2016/17.
In Germany, a reduction in sales reflects changes in utilisation as the clinical data and experience have increased. Utilisation should increase as patient selection criteria become established and as national coverage determinations are made in both Germany and France. These determinations are anticipated by the end of 2017. France would be a new market for BTG if reimbursement is achieved.
Specialty Pharmaceuticals
The Specialty Pharmaceuticals portfolio comprises unique, valuable therapies that are used in the emergency room to treat people with rare, potentially life-threatening toxicities.
Promotional activities continue to build brand equity in CroFab®, the US treatment for crotalid snake bites. The introduction and adoption of SnakeBite911™, BTG's first app, provides healthcare professionals and consumers with information about how to respond appropriately to a snakebite to help ensure a successful outcome when a bite needs to be treated.
BTG has established a separate oncology sales force following the US approval of Vistogard®, used for treating patients who have a symptomatic overdose of fluorouracil or capecitabine, or who are showing signs of early-onset, severe or life-threatening toxicity. One sales force now focuses on CroFab® and DigiFab®, the digoxin overdose therapy, while the oncology team focuses on Vistogard® and Voraxaze®, which is used to treat life-threatening methotrexate toxicity.
Increasing awareness of the signs and symptoms of toxicity remains a key goal of promotional activities supporting the products. There has been a good response in the overdose setting following the launch of Vistogard®, with promotion now concentrating on the early-onset setting. Of the 1,300 annual deaths in the US from fluorouracil toxicity, two-thirds result from early-onset toxicity. During the period the Centers for Medicare and Medicaid Services (CMS) approved a New Technology Add-On Payment (NTAP) for Vistogard®.
An educational campaign to highlight the symptoms of methotrexate toxicity was launched during the period, aimed at ensuring that more of the patients who are experiencing life-threatening methotrexate toxicity are identified and treated.
Licensing
The largest contributors to Licensing revenues are Zytiga® (abiraterone acetate), Johnson & Johnson's treatment for advanced prostate cancer, and Sanofi/Genzyme's Lemtrada™ (alemtuzumab), a treatment for multiple sclerosis. Both performed well during the period.
Generic abiraterone is not expected to be available in the US until around October 2018; in the EU, the ten-year data exclusivity period ends in September 2021. Royalties from Lemtrada™ are expected to cease during the second half of the 2017/18 financial year subsequent to expiry of a US patent in September 2017.
BTG is not seeking to add new royalty streams but is reinvesting the cash flows into the higher growth Interventional Medicine business. Over time, expiring royalty streams are expected to be replaced by revenue growth elsewhere in the portfolio.
FINANCIAL REVIEW
BTG has delivered a strong first half performance, reflecting the Group's continued financial maturity and execution of its strategy to achieve sustained profitable growth.
This review discusses both IFRS and adjusted metrics. See page 24 to 26 for further details on BTG's adjusted financial metrics.
Revenue
The business has delivered strong revenue growth in the first half, up 10% on a Constant Exchange Rate (CER) basis, driven by Interventional Medicine (up 24% at CER) and Specialty Pharmaceuticals (up 9% at CER). The first time inclusion of revenues from Galil Medical contributed 2% of CER growth.
Revenue growth was slightly held back by one-off Zytiga® back-royalties of £8.5m received in H1 2015/16. Excluding these one-off royalties, revenues were up 14% at CER.
At actual exchange rates, revenue increased by 24% to £285.4m (H1 2015/16: £229.6m), as first half revenues benefited from significant foreign exchange tailwinds from weaker sterling.
Revenues for the first halves of 2016/17 and 2015/16 are outlined in the following table:
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H1 2016/17 £m |
H1 £m |
Growth
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Growth at CER1 % |
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Interventional Medicine |
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Interventional Oncology |
TheraSphere® / Beads |
56.5 |
43.2 |
31 |
17 |
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GALIL™ |
6.7 |
- |
- |
- |
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Total Interventional Oncology |
63.2 |
43.2 |
46 |
30 |
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Interventional Vascular |
EKOS® |
28.4 |
20.6 |
38 |
22 |
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Varithena® |
1.7 |
0.4 |
nm |
nm |
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Total Interventional Vascular |
30.1 |
21.0 |
43 |
27 |
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Interventional Pulmonology |
PneumRx® Coil |
4.8 |
6.3 |
(24) |
(32) |
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Total Interventional Medicine |
98.1 |
70.5 |
39 |
24 |
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Specialty Pharmaceuticals |
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CroFab® |
62.1 |
52.6 |
18 |
5 |
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DigiFab® |
21.8 |
17.2 |
27 |
13 |
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Voraxaze® |
9.5 |
8.2 |
16 |
8 |
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Vistogard® /other |
1.7 |
0.2 |
nm |
nm |
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Total Specialty Pharmaceuticals |
95.1 |
78.2 |
22 |
9 |
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Licensing |
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Zytiga® |
65.8 |
61.2 |
8 |
(7) |
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Lemtrada™ |
17.0 |
8.2 |
107 |
80 |
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Other |
9.4 |
11.5 |
(18) |
(28) |
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Total Licensing |
92.2 |
80.9 |
14 |
(1) |
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Total revenue |
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285.4 |
229.6 |
24 |
10 |
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1. For the methodology applied to calculate CER growth, refer to page 24. nm - not meaningful |
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Interventional Medicine
Interventional Medicine revenues increased 39% to £98.1m (H1 2015/16: £70.5m), up 24% at CER. In the period, Interventional Medicine became the largest contributor to Group revenue for the first time. The portfolio comprises different products at varying stages of their lifecycle within Interventional Oncology, Interventional Vascular and Interventional Pulmonology franchises.
Interventional Oncology revenues increased 46% to £63.2m (H1 2015/16: £43.2m), up 30% at CER and boosted by the inclusion of sales from Galil Medical, which was acquired in June 2016. Excluding revenues from Galil, revenues from the Beads and TheraSphere® portfolio of products grew 17% at CER. On a pro-forma basis, including sales for the period prior to BTG's ownership, Galil revenues grew 27% compared to the same period last year.
Interventional Vascular revenues were £30.1m (H1 2015/16: £21.0m), up 27% at CER. Continued strong growth was driven by the EKOS® blood clot treatment device, up 22% at CER, as penetration into US hospitals and use in the treatment of pulmonary embolism both increased.
Sales of the varicose veins treatment Varithena® were £1.7m (H1 2015/16: £0.4m), higher than in the prior period due to a gradual increase in new customers and product reorder rates.
Interventional Pulmonology revenues were £4.8m (H1 2015/16: £6.3m), down 32% at CER. Lower sales of the PneumRx® Coil treatment for severe emphysema reflect the impact of new data and clinical experience on patient selection and therapy utilisation. Sales for the full year are expected to be lower than in 2015/16.
Specialty Pharmaceuticals
Specialty Pharmaceuticals revenue was £95.1m (H1 2015/16: £78.2m), up 9% at CER. Growth was principally driven by single-digit price increases for the established products and volume growth for the newer products.
Sales of CroFab®, the snakebite antivenin, were up 5% at CER and the digoxin toxicity treatment DigiFab® grew by 13% at CER.
Voraxaze®, for treating high-dose methotrexate toxicity, delivered 8% CER growth. Revenues from Vistogard® grew to £1.7m during the period, following its US nationwide launch earlier in the year.
Licensing
Licensing revenues were £92.2m (H1 2015/16: £80.9m), down 1% on the prior period at CER. Excluding the prior period benefit of £8.5m from one-off Zytiga® back-royalties, revenues were 11% higher at CER due to a continued good performance from Zytiga® and Lemtrada™.
Royalties from Zytiga® (abiraterone acetate), were £65.8m (H1 2015/16: £61.2m). Royalties from Lemtrada™ grew strongly to £17.0m (H1 2015/16: £8.2m).
Gross profit
Adjusted gross profit in the first half was £197.4m (H1 2015/16: £160.8m). The adjusted gross margin was slightly lower than in the prior period at 69% (H1 2015/16: 70%). The Interventional Medicine gross margin of 71% (H1 2015/16: 70%) reflects the fixed manufacturing cost base for the early stage Varithena® and PneumRx® products, and is expected to increase over time as revenues from these products grow. The Specialty Pharmaceuticals gross margin was 89% (H1 2015/16: 88%) and the Licensing gross margin was 46% (H1 2015/16: 51%), the decline from the prior period reflecting increased revenues from lower margin royalty streams.
On an IFRS basis, gross profit was £196.7m (H1 2015/16: £159.3m). Gross profit in H1 2016/17 is stated after charges of £0.7m relating to the fair value uplift of inventory and PP&E acquired with Galil Medical. In H1 2015/16, IFRS gross profit is stated after charges of £1.5m relating to the fair value uplift of inventory acquired with PneumRx.
SG&A
Adjusted SG&A was £82.4m (H1 2015/16: £64.9m), up 27% at actual exchange rates. The increase is in part due to weaker sterling. On a CER basis Adjusted SG&A was up 17% and, for the first time, includes Galil's operating costs. Continuing to manage the Group's cost base effectively supports ongoing targeted investment to enhance commercial capabilities in the Interventional Medicine business.
On an IFRS basis, SG&A was £110.4m (H1 2015/16: £64.9m). SG&A in 2016/17 included a one-time charge of £28.0m ($36m) relating to the settlement with the US government in relation to the previously announced investigation into the historic marketing of LC Bead®.
Research and development
Research and development was £37.8m (H1 2015/16: £33.6m), up 13% at actual exchange rates. Costs this year were impacted by weaker sterling, and on a CER basis R&D expenditure was 2% higher.
The first half of 2016/17 has seen investment across Interventional Medicine, including the recently acquired Galil programmes for lung and bone metastases. Patient enrolment continues for the EPOCH and STOP-HCC TheraSphere® Phase III trials, designed to support PMA applications in the US. Investment is continuing to support the development of the PneumRx® Coil in the US, including the anticipated PMA application in the second half of the current financial year. Additional investments are supporting indication expansion and product innovation for Varithena®, and the 510k filing for the PT4.0 control unit for EKOS.
Operating profit
Adjusted operating profit was £78.8m (H1 2015/16: £62.9m), up 25% at actual exchange rates. On a CER basis, adjusted operating profit was up 4% as higher revenues were partially offset by higher SG&A costs, as we have increased commercial investment behind our Interventional Medicine business.
IFRS Operating Profit was £29.1m (H1 2015/16: £44.2m), down 34%. IFRS Operating Profit was down on last year as a result of the one-time charge of £28.0m on settlement of the US government investigation into the marketing of LC Bead®, and higher intangible asset amortisation of £19.9m (H1 2015/16: £17.2m), the increase due to the intangible assets acquired with Galil.
Financial expense/income
Adjusted net financial expense/income was a loss of £17.7m (H1 2015/16: gain £1.2m). In the first half of 2016/17, FX losses of £17.0m (H1 2015/16: gain of £1.7m) were recognised relating to foreign exchange forward contracts, following the significant weakening of sterling. These losses have offset the foreign exchange translation benefits realised at the operating profit level.
IFRS net financial expense was a loss of £18.0m (H1 2015/16: net financial income of £8.7m). IFRS net financial expense includes a charge of £0.3m relating to the change in fair value of contingent consideration liabilities (H1 2015/16: net credit of £7.5m). The net credit in the prior period relates to changes in the fair value of contingent consideration liabilities in respect of PneumRx and EKOS.
Taxation
Our effective tax rate on an adjusted basis was 13% (H1 2015/16: 12%). This effective rate is lower than the standard rate of UK corporate tax due to the patent box deduction on royalty income, the benefit of US R&D credits and the recognition of deferred tax assets for historic US losses and timing differences.
On an IFRS basis, the effective tax rate was negative 16% (H1 2015/16: positive 3%) because the Group has an overall tax credit. The tax credit arises from deferred tax credits on the amortisation of acquired intangible assets at rates above the UK tax rate, which are included in the IFRS but not the adjusted effective tax rate.
Earnings per share
Adjusted basic EPS was 13.9p (H1 2015/16: 14.7p), down 5% on the prior period due to lower adjusted profit after tax of £53.4m (H1 2015/16: £56.4m). Adjusted profit after tax was lower than in the first half of 2015/16 as higher adjusted operating profit was more than offset by foreign exchange losses relating to forward contracts. Excluding the effects of foreign exchange losses on forward contracts in the current period, adjusted basic EPS would have increased by 19%.
IFRS basic EPS was 3.4p (H1 2015/16: 13.4p), down 75% on the same period last year, due to the effect of foreign exchange losses on forward contracts and the settlement with the US government in respect of the investigation into the historic marketing of LC Bead®.
Balance sheet
BTG's consolidated balance sheets at 30 September 2016, 31 March 2016 and 30 September 2015 are presented on page 11 of this release.
Non-current assets
Non-current assets increased to £969.2m (31 March 2016: £851.3m), due to higher intangible assets of £679.9m (31 March 2016: £599.2m) and goodwill of £220.1m (31 March 2016: £187.9m). Intangible assets increased by £80.7m as a result of intangible assets acquired with Galil and foreign exchange translation benefits, offset by intangible asset amortisation.
The Group's defined benefit pension scheme net asset decreased slightly to £18.2m (31 March 2016: net asset of £19.3m), principally due to a reduction in the discount rate used to value the defined benefit obligation offset by actual returns on fund assets.
Current assets
Current assets increased to £319.1m (31 March 2016: £297.5m). Cash and cash equivalents were slightly higher at £144.0m (31 March 2016: £140.4m) as our first half free cash flow has been used to fund the acquisition of Galil Medical. Inventory increased to £52.1m (31 March 2016: £46.5m) and receivables increased to £121.4m (31 March 2016: £106.5m) as a result of underlying business growth.
Non-current liabilities
Non-current liabilities increased to £204.0m (31 March 2016: £176.1m), due to higher deferred tax liabilities due to the acquisition of Galil, and the effects of foreign exchange translation.
Current liabilities
Current liabilities increased to £158.3m (31 March 2016: £125.0m). Derivative financial instrument liabilities increased to £8.5m (31 March 2016: £3.0m) due to unrealised losses on forward foreign exchange contracts. Trade and other payables increased to £144.5m (31 March 2016: £114.8m), reflecting the underlying growth of the business and the recognition of a liability for the costs of settling the US government investigation into the historic marketing of LC Bead®.
Cash flow
The business continues to be highly cash generative, and in the first half it has delivered strong free cash flow. Compared to the same period last year, which included the benefit of one-off Zytiga® back-royalties, free cash flow was down 7% to £55.7m (H1 2015/16: £59.9m). Excluding the effect of these one-off receipts, free cash flow increased by 8%. On an IFRS basis, cash flow from operating activities was down 3% to £60.8m (2015/16: £62.9m).
Cash and cash equivalents were £144.0m at 30 September 2016 (31 March 2016: £140.4m), as the strong free cash flow was used to fund the acquisition of, and repayment of debt acquired with, Galil Medical.
BTG has a £100m multi-currency revolving credit facility (RCF), with an option to extend this RCF by a further £100m. The RCF has a three-year term, which expires in November 2018, with an option to extend for a further two years. The RCF currently remains undrawn.
SUMMARY AND OUTLOOK
BTG has performed well in the first half, with double-digit revenue growth, strong free cash flow and disciplined cost control. Through the acquisition of Galil Medical we have strengthened our portfolio, capabilities and leadership in Interventional Medicine, which is our fastest growing and highest revenue business. We have the resources and capabilities to capitalise on the expanding opportunities we see in Interventional Medicine, by reinvesting our strong cash flows into further commercial expansion, pipeline development and acquisitions. In this way we will deliver double-digit compound annual revenue growth, cement our leadership in our chosen Interventional Medicine markets and create significant value for shareholders.
We reiterate our guidance of strong revenue growth and reflect the effect of recent currency movements. The following guidance has been set on the basis of a USD:GBP exchange rate for the second half of 2016/17 of $1.25:£1.
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Revenue |
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£535m-£565m (previously £510m-£540m) |
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Adjusted SG&A1 |
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£175m-£185m (previously £165m-£175m) |
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R&D Losses on foreign exchange forward contracts |
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£80m-£90m (previously £90m-£100m) £25m full year charge |
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Adjusted effective tax rate (ETR) for 2016/17 |
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10%-14% |
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||
1. Adjusted SG&A guidance for 2016/17 excludes the charge of £28m ($36m) recorded in relation to the settlement of the US government investigation into the historic marketing of LC Bead®.
Following expiry of the majority of our existing foreign exchange forward contracts over the next six to twelve months, we expect the benefits of the fall in sterling versus the US dollar to be more fully reflected in our earnings.
A $0.05 strengthening of the $ from the assumed second half $1.25:£1 exchange rate on which our guidance is based would increase revenues, costs and the loss on foreign exchange forward contracts for the second half of 2016/17 as follows:
|
|
|
|
|
Revenue |
|
+£10m |
|
Adjusted SG&A |
|
+£2m |
|
R&D Foreign exchange forward contracts |
|
+£1m +£8m loss |
|
|
|
|
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2016
|
|
|
Six months ended Total |
Six months ended Total |
|
|
Note |
£m |
£m |
|
|
|
|
|
|
Revenue |
2 |
285.4 |
229.6 |
|
Cost of sales |
|
(88.7) |
(70.3) |
|
Gross profit |
2 |
196.7 |
159.3 |
|
Selling, general and administrative expenses |
|
(110.4) |
(64.9) |
|
Research and development |
|
(37.8) |
(33.6) |
|
Other operating income |
|
1.6 |
0.6 |
|
Amortisation of acquired intangible assets |
|
(19.9) |
(17.2) |
|
Acquisition and reorganisation costs |
|
(1.1) |
- |
|
Operating profit |
|
29.1 |
44.2 |
|
Financial income |
3 |
0.1 |
14.5 |
|
Financial expense |
3 |
(18.1) |
(5.8) |
|
Profit before tax |
|
11.1 |
52.9 |
|
Tax credit/(charge) |
4 |
1.8 |
(1.6) |
|
Profit after tax |
|
12.9 |
51.3 |
|
|
|
|
|
|
Basic earnings per share |
5 |
3.4p |
13.4p |
|
Diluted earnings per share |
5 |
3.3p |
13.2p |
All activities arose from continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2016
|
|
|
Six months ended 2016 |
Six months ended 2015 |
|
|
Note |
£m |
£m |
|
|
|
|
|
|
Profit for the period |
|
12.9 |
51.3 |
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
Foreign exchange translation differences |
|
61.5 |
(8.5) |
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
Actuarial (loss)/gain on defined benefit pension scheme |
7 |
(2.6) |
2.4 |
|
Deferred tax on defined benefit pension scheme asset |
|
0.9 |
(1.3) |
|
Other comprehensive income / (loss) for the period |
|
59.8 |
(7.4) |
|
Total comprehensive income for the period |
|
72.7 |
43.9 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2016
|
|
|
30 September |
31 March |
30 September 2015 |
|
|
|
Note |
£m |
£m |
£m |
|
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Goodwill |
6 |
220.1 |
187.9 |
181.3 |
|
|
Intangible assets |
6 |
679.9 |
599.2 |
592.2 |
|
|
Property, plant and equipment |
|
40.8 |
35.7 |
33.9 |
|
|
Other investments |
|
1.6 |
1.4 |
3.0 |
|
|
Deferred tax assets |
|
8.6 |
6.8 |
6.8 |
|
|
Employee benefits |
7 |
18.2 |
19.3 |
17.0 |
|
|
Derivative financial instruments |
|
- |
1.0 |
- |
|
|
|
|
969.2 |
851.3 |
834.2 |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Inventories |
|
52.1 |
46.5 |
39.6 |
|
|
Trade and other receivables |
|
121.4 |
106.5 |
94.0 |
|
|
Corporation tax receivable |
|
1.6 |
1.8 |
0.9 |
|
|
Derivative financial instruments |
|
- |
2.3 |
1.2 |
|
|
Cash and cash equivalents |
|
144.0 |
140.4 |
110.6 |
|
|
|
|
319.1 |
297.5 |
246.3 |
|
|
Total assets |
|
1,288.3 |
1,148.8 |
1,080.5 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
Share capital |
|
38.5 |
38.3 |
38.3 |
|
|
Share premium account |
|
435.2 |
434.8 |
434.3 |
|
|
Merger reserve |
|
317.8 |
317.8 |
317.8 |
|
|
Other reserves |
|
89.6 |
28.1 |
0.9 |
|
|
Retained earnings |
|
44.9 |
28.7 |
13.9 |
|
|
Total equity attributable to equity holders of the parent |
|
926.0 |
847.7 |
805.2 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
32.2 |
27.5 |
0.4 |
|
|
Deferred tax liabilities |
|
168.5 |
147.0 |
145.2 |
|
|
Derivative financial instruments |
|
1.8 |
- |
- |
|
|
Provisions |
|
1.5 |
1.6 |
1.5 |
|
|
|
|
204.0 |
176.1 |
147.1 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
144.5 |
114.8 |
121.8 |
|
|
Derivative financial instruments |
|
8.5 |
3.0 |
0.3 |
|
|
Corporation tax payable |
|
3.4 |
5.8 |
5.7 |
|
|
Provisions |
|
1.9 |
1.4 |
0.4 |
|
|
|
|
158.3 |
125.0 |
128.2 |
|
|
Total liabilities |
|
362.3 |
301.1 |
275.3 |
|
|
Total equity and liabilities |
|
1,288.3 |
1,148.8 |
1,080.5 |
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2016
|
|
|
Six months ended 30 September 2016 |
Six months ended 30 September 2015 |
|
|
Note |
£m |
£m |
|
Profit after tax for the period |
|
12.9 |
51.3 |
|
Tax (credit)/charge |
4 |
(1.8) |
1.6 |
|
Financial income |
3 |
(0.1) |
(14.5) |
|
Financial expense |
3 |
18.1 |
5.8 |
|
Operating profit |
|
29.1 |
44.2 |
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
Profit on disposal of property, plant and equipment and intangible assets |
|
(0.9) |
- |
|
Amortisation of intangible assets |
|
22.0 |
18.5 |
|
Depreciation on property, plant and equipment |
|
3.7 |
3.2 |
|
Share-based payments |
|
5.0 |
2.5 |
|
Pension scheme funding |
7 |
(1.4) |
(1.2) |
|
Fair value adjustments |
|
0.7 |
1.5 |
|
Cash flows from operations before movements in working capital |
|
58.2 |
68.7 |
|
|
|
|
|
|
Increase in inventories |
|
(2.2) |
(0.7) |
|
Increase in trade and other receivables |
|
(11.1) |
(1.9) |
|
Increase in trade and other payables |
|
22.8 |
2.0 |
|
Increase in provisions |
|
0.4 |
- |
|
Cash generated from operations |
|
68.1 |
68.1 |
|
|
|
|
|
|
Taxation paid |
|
(7.3) |
(5.2) |
|
Net cash inflow from operating activities |
|
60.8 |
62.9 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchases of intangible assets |
|
(0.2) |
(23.4) |
|
Purchases of property, plant and equipment |
|
(4.9) |
(2.6) |
|
Acquisition of businesses, net of cash acquired |
8 |
(36.4) |
- |
|
Net cash outflow from investing activities |
|
(41.5) |
(26.0) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Repayment of debt acquired with Galil |
|
(18.9) |
- |
|
Proceeds from issue of shares |
|
0.6 |
0.6 |
|
Other financing activities |
|
(1.1) |
(0.5) |
|
Net cash (outflow)/inflow from financing activities |
|
(19.4) |
0.1 |
|
|
|
|
|
|
(Decrease) / increase in cash and cash equivalents |
|
(0.1) |
37.0 |
|
Cash and cash equivalents at start of period |
|
140.4 |
73.8 |
|
Effect of exchange rate fluctuations on cash held |
|
3.7 |
(0.2) |
|
Cash and cash equivalents at end of period |
|
144.0 |
110.6 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2016
|
|
|
Share capital |
Share premium |
Merger reserve |
Other reserves |
Retained earnings |
Total equity |
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
At 1 April 2016 |
|
38.3 |
434.8 |
317.8 |
28.1 |
28.7 |
847.7 |
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
- |
- |
- |
- |
12.9 |
12.9 |
|
Other comprehensive income/(loss) |
|
- |
- |
- |
61.5 |
(1.7) |
59.8 |
|
Total comprehensive income for the period |
|
- |
- |
- |
61.5 |
11.2 |
72.7 |
|
|
|
|
|
|
|
|
|
|
Transactions with owners: |
|
|
|
|
|
|
|
|
Issue of ordinary shares |
|
0.2 |
0.4 |
- |
- |
- |
0.6 |
|
Share-based payments |
|
- |
- |
- |
- |
5.0 |
5.0 |
|
At 30 September 2016 |
|
38.5 |
435.2 |
317.8 |
89.6 |
44.9 |
926.0 |
|
|
|
Share capital |
Share premium |
Merger reserve |
Other reserves |
Retained earnings |
Total equity |
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
At 1 April 2015 |
|
38.2 |
433.8 |
317.8 |
9.4 |
(40.6) |
758.6 |
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
- |
- |
- |
- |
51.3 |
51.3 |
|
Other comprehensive (loss)/income |
|
- |
- |
- |
(8.5) |
1.1 |
(7.4) |
|
Total comprehensive (loss)/income for the period |
|
- |
- |
- |
(8.5) |
52.4 |
43.9 |
|
|
|
|
|
|
|
|
|
|
Transactions with owners: |
|
|
|
|
|
|
|
|
Issue of ordinary shares |
|
0.1 |
0.5 |
- |
- |
- |
0.6 |
|
Movement in shares held by the Trust |
|
- |
- |
- |
- |
(0.4) |
(0.4) |
|
Share-based payments |
|
- |
- |
- |
- |
2.5 |
2.5 |
|
At 30 September 2015 |
|
38.3 |
434.3 |
317.8 |
0.9 |
13.9 |
805.2 |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not contain all of the information which International Financial Reporting Standards ("IFRS") would require for a complete set of annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2016.
These condensed unaudited consolidated interim financial statements were approved by the Board of Directors on 14 November 2016.
Presentation of Income Statement
In the period ended 30 September 2016 the Group has changed the presentation of its consolidated income statement. Under the new presentation:
a) The consolidated income statement does not include a separate column to disclose acquisition adjustments and reorganisation costs arising on corporate acquisitions. The results for each period are now disclosed in a single column and a reconciliation between IFRS and adjusted earnings is included on page 25 and 26.
b) 'Foreign exchange gains', 'profit on disposal of property, plant and equipment and intangible assets' and 'other operating expenses' which were previously disclosed separately on the face of the consolidated income statement are now disclosed within 'other operating income/ (expenses)'.
Comparative financial information
The comparative figures for the financial year ended 31 March 2016 do not constitute the Group's statutory accounts for that financial year. Statutory accounts for the year ended 31 March 2016, prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs") and as issued by the International Accounting Standards Board, have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Accounting policies
The accounting policies applied by the Group in these condensed consolidated interim financial statements, other than in relation to realised foreign exchange gains and losses on the settlement of forward exchange contracts, are the same as those applied by the Group in its consolidated financial statements for the year ended 31 March 2016.
For the period ended 30 September 2016, the Group has revised its presentation of foreign exchange gains and losses on the settlement of forward exchange contracts, and for the current period these items are presented within 'financial expense' in the consolidated income statement. In the prior period, realised foreign exchange gains on the settlement of forward exchange contracts were presented in 'foreign exchanges gains and losses' above operating profit (see note 3 for further details).
No standard and interpretations recently adopted by the EU have a significant impact on the Group.
IFRS 15 'Revenue from Contracts with Customers' was issued by the IASB in May 2014, effective for accounting periods beginning on or after 1 January 2018. The Group is currently assessing the impact of IFRS 15 on the Group's consolidated financial statements.
IFRS 16 'Leases' was issued by the IASB in January 2016, effective for accounting periods beginning on or after 1 January 2019. The Group is currently assessing the impact of IFRS 16 on the Group's consolidated financial statements.
Going concern and liquidity
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 12 months. Accordingly, they continue to adopt the going concern basis in preparing these Interim Financial Statements.
This conclusion has been reached having considered the effect of liquidity risk on the Group's ability to operate effectively. Currently, liquidity risk is not considered a significant business risk to the Group given its level of net cash and cash equivalents and cash flow projections. The Group does not currently require significant levels of debt financing to operate its business. The key liquidity risks faced by the Group are considered to be the failure of banks where funds are deposited and the failure of key licensees, distribution partners, wholesalers or insurers.
In addition to the liquidity risk considered above, the directors have also considered the following factors when reaching the conclusion to continue to adopt the going concern basis:
· The Group's principal licensees are global industry leaders in their respective fields and the Group's royalty-generating intellectual property covers a portfolio of licensees;
· Many of the Group's sales are from products which are life-saving in nature, providing some protection against an uncertain economic outlook; and
· In November 2015, the Group signed a £100m multi-currency revolving credit facility providing access to funds for a period of three years to November 2018, with an option to extend for a further two years. This facility remains undrawn.
Seasonality of the business
Revenues from the Group's marketed products are dependent on both the timing of shipments of product to the Group's distributors and the underlying demand for the products. CroFab®, in particular, demonstrates seasonality since the main snakebite season in the US, when the product is in highest demand, runs from March to October.
2. Operating segments
The Group is aligned behind three reportable segments, being Interventional Medicine, Specialty Pharmaceuticals and Licensing.
In assessing performance and making resource allocation decisions, the Leadership Team (which is BTG's chief operating decision-making body) reviews contribution by each of its reportable segments. Contribution is defined as being gross profit less directly attributable selling, general and administrative costs (SG&A). The Licensing reportable segment includes SG&A relating to the Group's centrally managed support functions and corporate overheads, and in the period to 30 September 2016 also contains the charge of £28.0m relating to the Group's settlement with the US Government relating to the historic marketing of LC Bead®. These reportable segments reflect the management structure and stewardship of the business. No allocation of central overheads is made across the Specialty Pharmaceuticals or Interventional Medicine reportable segments. Research and development is managed on a global basis, with investment decisions being made by the Leadership Team as a whole. Research and Development is not managed by reference to the Group's reportable segments, though each programme within the pipeline would ultimately provide revenues for one of the reportable segments if successful.
|
|
Six months ended 30 September 2016 |
|
||
|
|
Interventional Medicine |
Specialty Pharmaceuticals |
Licensing |
Total |
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
Revenue |
98.1 |
95.1 |
92.2 |
285.4 |
|
Cost of Sales1 |
(28.4) |
(10.7) |
(49.6) |
(88.7) |
|
Gross Profit |
69.7 |
84.4 |
42.6 |
196.7 |
|
Selling, general and administrative expenses2 |
(53.4) |
(13.6) |
(43.4) |
(110.4) |
|
Contribution |
16.3 |
70.8 |
(0.8) |
86.3 |
|
|
|
|
|
|
|
Research and development |
|
|
|
(37.8) |
|
Other operating income |
|
|
|
1.6 |
|
Amortisation of acquired intangible assets |
|
|
|
(19.9) |
|
Acquisition and reorganisation costs |
|
|
|
(1.1) |
|
Operating profit |
|
|
|
29.1 |
|
Financial income |
|
|
|
0.1 |
|
Financial expense |
|
|
|
(18.1) |
|
Profit before tax |
|
|
|
11.1 |
|
Tax credit |
|
|
|
1.8 |
|
Profit after tax |
|
|
|
12.9 |
|
Unallocated assets |
|
|
|
1,288.3 |
1 2016 cost of sales includes a £0.7m release of a fair value adjustment to inventory and PP&E acquired with Galil Medical in June 2016 within the Interventional Medicine segment. The release represents the reversal of a fair value uplift applied to inventory purchased on acquisition which is recognised through the P&L when inventory is sold, and incremental depreciation related to acquired PP&E.
2 2016 selling, general and administrative expenses within Licensing includes a charge of £28.0m relating to the Group's settlement with the US government in relation to the Department of Justice investigation into the historic marketing of LC Bead®.
|
|
Six months ended 30 September 2015 |
|
||
|
|
Interventional Medicine |
Specialty Pharmaceuticals |
Licensing |
Total |
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
Revenue |
70.5 |
78.2 |
80.9 |
229.6 |
|
Cost of Sales1 |
(21.3) |
(9.0) |
(40.0) |
(70.3) |
|
Gross Profit |
49.2 |
69.2 |
40.9 |
159.3 |
|
Selling, general and administrative expenses |
(42.1) |
(11.6) |
(11.2) |
(64.9) |
|
Contribution |
7.1 |
57.6 |
29.7 |
94.4 |
|
|
|
|
|
|
|
Research and development |
|
|
|
(33.6) |
|
Other operating income |
|
|
|
0.6 |
|
Amortisation of acquired intangible assets |
|
|
|
(17.2) |
|
Operating profit |
|
|
|
44.2 |
|
Financial income |
|
|
|
14.5 |
|
Financial expense |
|
|
|
(5.8) |
|
Profit before tax |
|
|
|
52.9 |
|
Tax charge |
|
|
|
(1.6) |
|
Profit for the period |
|
|
|
51.3 |
|
Unallocated assets |
|
|
|
1,080.5 |
1 2015 Cost of Sales includes a £1.5m release of a fair value adjustment to inventory purchased on the acquisition of PneumRx, Inc. on 7 January 2015 within the Interventional Medicine segment. This release represents the reversal of a fair value uplift applied to inventory purchased on acquisition recognised through the income statement as the product is sold.
Revenue analysis
An analysis of revenue, based on the geographical location of customers and the source of revenue is provided below:
|
Geographical analysis |
Six months 2016 |
Six months 2015 |
|
|
£m |
£m |
|
USA |
258.8 |
203.7 |
|
Europe |
19.2 |
19.5 |
|
Other regions |
7.4 |
6.4 |
|
|
285.4 |
229.6 |
|
Revenue from major products and services
|
Six months 2016 |
Six months 2015 |
|
|
£m |
£m |
|
Product sales |
193.2 |
148.7 |
|
Royalties |
92.2 |
80.9 |
|
|
285.4 |
229.6 |
Major customers
The Group's marketed products are sold both directly and through distribution agreements in the USA, Europe and Asia Pacific region. No individual customer generated income in excess of 10% of Group revenue (H1 15/16: No individual customer generated income in excess of 10% of Group revenue).
Products that utilise the Group's Intellectual Property Rights are sold by licensees. Royalty income is derived from over 40 licences. One licence individually generated royalty income in excess of 10% of Group revenue of £65.8m (H1 15/16: one licence individually generated £61.2m).
3. Financial income and expense
|
|
|
Six months |
Six months ended 2015 |
|
|
Note |
£m |
£m |
|
Interest receivable on money market and bank deposits |
|
0.1 |
0.1 |
|
Fair value movement on foreign exchange forward contracts |
|
- |
1.7 |
|
Fair value changes on contingent consideration liabilities |
9 |
- |
12.7 |
|
Financial income |
|
0.1 |
14.5 |
|
|
|
|
|
|
Fair value movement and realised losses on foreign exchange forward contracts |
|
17.0 |
- |
|
Fair value changes on contingent consideration liabilities |
9 |
0.3 |
5.2 |
|
Other financial expense |
|
0.8 |
0.6 |
|
Financial expense |
|
18.1 |
5.8 |
The change in fair value and realised losses on the Group's forward foreign exchange contracts of £17.0m for the period to 30 September 2016 is recorded within financial expense. The loss of £17.0m included realised losses of £6.5m on settlement of forward contracts and unrealised losses of £10.5m on remeasurement of the Group's outstanding forward contracts to their fair value.
For the period ended 30 September 2015, the Company recorded unrealised gains of £1.7m on the remeasurement of outstanding forward contracts to their fair value in 'financial income', and included realised foreign exchange gains of £2.5m on settlement of forward contracts in 'other operating income' above operating profit.
4. Tax
|
|
Six months 2016 |
Six months 2015 |
|
|
£m |
£m |
|
Current tax |
|
|
|
Current tax charge |
5.0 |
8.5 |
|
|
|
|
|
Deferred tax |
|
|
|
Decrease in net deferred tax liability |
(4.9) |
(5.0) |
|
Increase in net deferred tax asset |
(1.9) |
(1.9) |
|
Total tax (credit)/charge for the period |
(1.8) |
1.6 |
Tax for each six-month period has been provided on the basis of the anticipated tax charge for the full year. The current tax charge of £5.0m (H1 15/16: £8.5m) principally relates to US federal and state taxes.
The deferred tax credit of £6.8m (H1 15/16: £6.9m credit) principally reflects the release of deferred tax liabilities recognised on acquired intangible assets as these assets are amortised or impaired (£6.5m) and the initial recognition of deferred tax assets (£6.4m), offset by use of recognised tax losses (£8.9m). Previously unrecognised tax losses of £24.0m (gross) are expected to be recognised in the year, due to the expectation that there will be taxable profits in the future against which these losses can be utilised.
5. Earnings per share
The calculation of basic and diluted earnings per share is determined as follows:
|
|
Six months 2016 |
Six months 2015 |
|
Profit for the period (£m) |
12.9 |
51.3 |
|
Earnings per share (p) |
|
|
|
Basic |
3.4 |
13.4 |
|
Diluted |
3.3 |
13.2 |
|
|
|
|
|
Number of shares (m)
|
|
|
|
Weighted average number of shares - basic |
383.8 |
382.3 |
|
Effect of share options in issue |
5.7 |
5.9 |
|
Weighted average number of shares - diluted |
389.5 |
388.2 |
For the calculation of adjusted basic and diluted earnings per share see pages 25 and 26.
6. Goodwill and intangible assets
a) Goodwill
Goodwill at 30 September 2016 is £220.1m (31 March 2016: £187.9m; 30 September 2015: £181.3m). The movements in the period relate to goodwill recognised on the acquisition of Galil of £16.9m (see note 8), with the remainder of the movement being foreign exchange retranslation of goodwill denominated in foreign currencies.
b) Intangible assets
|
|
|
30 September 2016 |
31 March |
30 September 2015 |
|
Net book value |
|
£m |
£m |
£m |
|
Developed technology(i) |
|
535.2 |
463.3 |
461.6 |
|
Contractual relationships(i) |
|
- |
- |
0.2 |
|
In-process research and development(i) |
|
114.1 |
103.2 |
97.5 |
|
Computer software |
|
0.7 |
0.8 |
0.5 |
|
Patents |
|
3.6 |
3.5 |
3.1 |
|
Purchase of contractual rights |
|
26.3 |
28.4 |
29.3 |
|
|
|
679.9 |
599.2 |
592.2 |
(i) Developed technology, Contractual relationships and in-process research and development
Intangible assets comprising developed technology, contractual relationships and in-process research and development relate to those assets acquired through business combinations. Movements in these categories of intangible assets between 31 March 2016 and 30 September 2016 are predominately driven by intangible assets acquired with Galil (see Note 8) and foreign exchange retranslation of the assets denominated in foreign currencies, offset by amortisation charges.
7. Defined benefit pension fund
The Group has recognised a net defined benefit asset of £18.2m on the Group's balance sheet in accordance with IAS19 - Employee benefits in relation to the BTG Pension Fund (31 March 2016: asset of £19.3m; 30 September 2015: asset of £17.0m). The £1.1m decrease since 31 March 2016 relates principally to a decrease in the discount rate and increase in the inflation assumption used to value the obligation offset by higher than expected investment returns. Actuarial gains/losses are recognised in the condensed consolidated statement of comprehensive income.
In July 2014, the Group finalised the triennial actuarial valuation of the BTG Pension Fund as at 31 March 2013. The valuation showed a deficit of £9.8m and the Group committed to deficit repair payments of £6.0m in aggregate over the three years ending 31 March 2017. In the period to 30 September 2016, deficit repair payments of £1.2m (H1 14/15: £1.2m) have been made. The current triennial valuation of the BTG Pension Fund as at 31 March 2016 is in progress.
8. Business Combinations
Galil Medical acquisition
On 15 June 2016 BTG completed the acquisition of 100% of Galil Medical for an aggregate consideration of $84.5m, subject to adjustment for cash and debt assumed at acquisition. Contingent consideration of up to $25.5m may also be payable in future periods based upon the achievement of regulatory and sales based milestones.
The total equity consideration for the acquisition of Galil Medical was £39.3m ($55.4m), representing up-front cash consideration of £37.7m ($53.2m) and the fair value of contingent consideration of £1.6m ($2.2m). The remainder of the aggregate consideration has been used to settle debt and other obligations assumed on acquisition.
Galil Medical's results of operations have been consolidated from 15 June 2016, and the fair value of acquired assets and liabilities has been determined as of that date. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date.
In the US, Galil Medical's products are indicated for the treatment and palliative care of kidney and other cancers, in addition to a number of other uses, including in urology. Galil Medical is also conducting two clinical studies that could lead to US regulatory clearance for use in lung metastases and bone metastases. The acquisition complements BTG's Interventional Medicine platform, building on the Group's Interventional Oncology business area.
Intangible assets of £47.7m relate to developed cryoablation technology. An estimated useful life of 15 years has been assigned to this developed technology, and associated amortisation expense will be recorded on a straight-line basis. Goodwill arising of £16.9m, which is not deductible for tax purposes, has been assigned to the Interventional Medicine operating segment. Goodwill represents future developments to the cryoablation technology and the value of Galil's workforce which have not been reflected as separate intangible assets, together with the recognition for accounting purposes of a deferred tax liability of £17.0m relating to recognised developed technology.
|
|
|
Book Value |
Fair Value Adjustment |
Fair Value |
|
|
|
£m |
£m |
£m |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible assets |
|
0.4 |
47.3 |
47.7 |
|
Goodwill |
|
- |
16.9 |
16.9 |
|
Property, plant and equipment |
|
0.4 |
0.6 |
1.0 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
2.6 |
0.8 |
3.4 |
|
Trade and other receivables |
|
3.7 |
- |
3.7 |
|
Cash and cash equivalents |
|
1.3 |
- |
1.3 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Net deferred tax liabilities |
|
- |
(6.7) |
(6.7) |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(9.1) |
- |
(9.1) |
|
Debt obligations
|
|
(18.9) |
- |
(18.9) |
|
Book value and fair value of assets and liabilities acquired |
|
(19.6) |
58.9 |
39.3 |
|
|
|
|
|
|
|
Cash consideration |
|
|
|
37.7 |
|
Fair value of contingent consideration |
|
|
|
1.6 |
|
Total equity consideration |
|
|
|
39.3 |
During the period ended 30 September 2016, Galil Medical contributed revenues of £6.7m and an operating loss (including intangible asset amortisation of £1.1m) of £3.1m in the period since acquisition. If the acquisition had taken place on 1 April 2016, the Group's revenue and profit before tax would have been £288.4m and £9.7m, respectively.
9. Financial risk management
Financial instruments are classified into Level 1, Level 2 and Level 3 financial instruments. The different levels are defined as follows:
Level 1 - quoted prices in active markets for identical assets and liabilities
Level 2 - observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 - unobservable inputs
The Group's Level 1 and Level 2 financial instruments comprise cash, short- and medium-term deposits, foreign currency forward contracts, and various items such as trade receivables and payables which arise directly from operations. In addition, a number of equity investments, both quoted and unquoted, are held in technology based companies along with borrowings including obligations under finance leases.
The carrying amount of the Group's Level 1 and Level 2 financial instruments is a reasonable approximation of their fair value. There have been no transfers between the levels of financial instruments in the period.
The Group's Level 3 financial instruments predominantly represent:
· the contingent consideration payable on achievement of revenue targets and product approval by PneumRx following the acquisition of PneumRx, Inc. in January 2015; and
· the contingent consideration payable on achievement of revenue targets and product approval by Galil following the acquisition of Galil in June 2016.
The movement in the Level 3 financial liabilities is shown below:
|
|
2016 |
2015 |
|
|
£m |
£m |
|
At 1 April |
(27.2) |
(32.7) |
|
Acquisitions |
(1.6) |
- |
|
Change in fair value |
(0.3) |
7.5 |
|
Foreign exchange retranslation |
(2.7) |
0.7 |
|
At 30 September |
(31.8) |
(24.5) |
In the period to 30 September 2016, the Group recognised a contingent consideration liability of £1.6m as a result of the acquisition of Galil Medical (see note 8), and recognised a fair value charge of £0.3m within 'Financial expense' related to a regulatory contingent milestone for the acquisition of PneumRx.
In the period to 30 September 2015, the Group recognised a fair value credit of £12.7m related to the contingent milestones for the acquisition of PneumRx within 'Financial income' and £5.2m charge related to the contingent milestones for the acquisition of EKOS within 'Financial expense'.
10. Related parties
Giles Kerr, a non-executive director of BTG plc, is also the Director of Finance for Oxford University and a director of Isis Innovations Limited, a wholly-owned subsidiary of Oxford University. Wholly-owned subsidiaries of BTG plc entered into revenue sharing agreements with these organisations prior to Giles Kerr joining the BTG Board. The BTG Group has licensed the intellectual property covered by these agreements to third party companies that are developing and/or selling the licensed products. Under these licence agreements, BTG is entitled to receive milestone payments and/or a royalty on sales of the products made by the third party licensees. Payments made by BTG to Oxford University and Isis Innovations Limited under the relevant licence agreements were £9,000 in the period ended 30 September 2016 (H1 15/16: £15,700) and there were no amounts outstanding and payable at 30 September 2016 (H1 15/16: £nil).
Under the various revenue sharing agreements, the BTG Group pays a share of any income it receives to Oxford University and Isis Innovations, depending on the specific technology that generated the income. As the revenue sharing agreements do not permit these organisations to have any input over the commercialisation of the licensed products or the amount payable under the relevant revenue sharing agreement, Giles Kerr is not able to influence the amounts received in his position outside BTG. Because he has no influence over any aspect of these agreements in his role outside the BTG Group, the Company considers that his independence in relation to the BTG Group is not compromised.
Within the BTG Group, to avoid any possible conflict of interest, it has been agreed that Giles Kerr will not participate in any discussions concerning the relevant agreements either within the Board meetings of BTG plc or in any other discussions or meetings with the executives of BTG plc and its subsidiaries. The Board has considered, and is satisfied with this safeguard through separation of duties.
11. Post balance sheet event
In October 2016, BTG announced its Biocompatibles, Inc. subsidiary reached a settlement with the US government in relation to the Department of Justice's investigation of the historic marketing of LC Bead®. The investigation focused on the period pre-dating BTG's acquisition of Biocompatibles in January 2011. Biocompatibles has agreed to settle all allegations and consequently will pay a total penalty of $36m. BTG is not required to enter into a Corporate Integrity Agreement as part of the settlement. In the period to 30 September 2016, the Group has recognised a charge of £28.0m within 'selling, general & administrative expenses', and the associated liability within 'trade and other payables', in connection with this settlement. This liability will be settled in H2 2016/17.
12. Principal risks and uncertainties
We have considered the principal risks and uncertainties faced by the Group for the remaining six months of the year and do not consider them to have changed from those set out on pages 30 to 32 of the BTG plc Annual Report and Accounts 2016, available from the Group's website at www.btgplc.com. These include but are not limited to: market access, securing adequate reimbursement for BTG's products, obtaining/ maintaining product regulatory approvals, IP/Legal challenges, competition and healthcare law compliance.
Responsibility statement of the directors in respect of the interim financial report
The directors confirm that this set of interim condensed financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union and that the interim management report includes fair review of the information required by DRT 4.2.7R and DRT 4.2.8R, namely:
· An indication of important events that have occurred during the period and their impact on the condensed statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
· Related party transactions that have taken place in the first six months of the current fiscal year and that have materially affected the financial position or performance of the entity during the period; and any changes in related party transactions described in the last annual report that could do so.
The directors of BTG plc were listed in the BTG plc Annual Report for the year ended 31 March 2016. Mr Graham Hetherington was appointed as a director of the company with effect from 1 August 2016. There have been no further changes in the period.
The Board
The Board of Directors that served during the six-month period to 30 September 2016 and their respective responsibilities can be found on the company website, www.btgplc.com.
By order of the Board
|
Dr Louise Makin |
Chief Executive Officer |
|
Rolf Soderstrom |
Chief Financial Officer |
14 November 2016
Independent Review Report to BTG plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 which comprises the Group's condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of cash flows and the condensed statement of changes in equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA'). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Richard Broadbelt
For and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
14 November 2016
Shareholder information
Financial calendar
|
Announcement of annual results for year ending 31 March 2017 |
May 2017 |
Capita share dealing services
A quick and easy share dealing service is available from Capita Share Dealing Services, to either buy or sell more shares. An online and telephone dealing facility is available providing shareholders with an easy-to-access and simple-to-use service. For further information on this service, or to buy and sell shares, please contact: www.capitadeal.com (online dealing) or +44 (0) 371 664 0445 (telephone dealing) - calls are charged at the standard geographic rate and will vary by provider, lines are open 8am - 4.30pm Monday - Friday. Full terms, conditions and risks apply and are available on request or by visiting www.capitadeal.com.
This is not a recommendation to buy or sell shares. The price of shares can go down as well as up, and you are not guaranteed to get back the amount that you originally invested.
Shareholder change of address
The Company offers the facility, in conjunction with Capita Asset Services, our Registrars, to conduct a number of routine matters via the web including the ability to notify any change of address. If you are a shareholder and are either unable or would prefer not to use this facility, please do not send the notification to the Company's registered office. Please write direct to Capita Asset Services, at their address shown below, where the register is held.
Relating to beneficial owners of shares with 'information rights'
Please note that beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company's registrar, Capita Registrars, or to the Company directly.
Addresses for correspondence
|
Registered office and head office |
Registrars |
|
BTG plc 5 Fleet Place London EC4M 7RD Tel: +44 (0)20 7575 0000 Fax: +44 (0)20 7575 0010 Email: info@btgplc.com
Website: www.btgplc.com
Registered number 2670500
|
Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR2 4TU
Tel (callers from the UK) 0871 664 0300 (please note that calls cost 10p per minute, plus network extras, lines are open 9.00am - 5.30pm Monday - Friday) Tel (callers outside UK) +44 208 639 3399 |
Cautionary statement regarding forward-looking statements
This Interim Report and Accounts may contain certain projections and other forward-looking statements with respect to the financial condition, results of operations and businesses of BTG plc ("BTG"). These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Although BTG currently believes that the assumptions underlying these forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and therefore there can be no assurance that any results contemplated in the forward-looking statements will actually be achieved. Nothing contained in this Interim report should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. BTG undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances. This Interim Report and Accounts does not constitute an invitation or inducement to any person to subscribe for or otherwise acquire securities in BTG.
BTG and the BTG roundel logo are registered trademarks of BTG International Ltd. CroFab and DigiFab are registered trademarks of BTG International Inc. DC Bead,
DC Bead LUMI, LC Bead, LC Bead LUMI are trademarks of Biocompatibles UK Ltd. EKOS and EkoSonic are registered trademarks of EKOS Corporation. GALIL is a trademark of Galil Medical Ltd. Lemtrada is a trademark of Genzyme Corporation. PneumRx is a registered trademark of PneumRx, Inc. TheraSphere is a registered trademark of Theragenics Corporation used under license by Biocompatibles UK Ltd. Varithena is a registered trademark of Provensis Ltd. Vistogard is a registered trademark of Wellstat Therapeutics Corporation. Voraxaze is a registered trademark of Protherics Medicines Development Ltd. Zytiga is a trademark of Johnson & Johnson. Biocompatibles UK Ltd, EKOS Corporation, Galil Medical Ltd, PneumRx, Inc., Protherics Medicines Development Ltd, and Provensis Ltd are all BTG International group companies.
Appendices -reconciliation of IFRS to adjusted financial information
Information on adjusted financial information
This press release includes financial information prepared in accordance with International Financial Reporting Standards and the Group's accounting policies, as well as financial information presented on an adjusted basis.
Financial information on an adjusted basis excludes certain cash and non-cash items which management believe are not reflective of the underlying financial performance of the business and is consistent with how management reviews the business for the purpose of making operating decisions.
Metrics presented on an adjusted basis includes Constant Exchange Rate (CER) growth, Adjusted Gross Profit, Adjusted SG&A, Contribution, Adjusted Operating Profit, Adjusted Net Financial Income / Expense, Adjusted Effective Tax Rate, Adjusted Basic EPS and Free cash flow. A reconciliation between IFRS and adjusted financial information is included on page 25 and 26 to this release.
These metrics are further discussed below;
· CER growth: CER growth is calculated by restating 2016/17 performance using 2015/16 exchange rates for the relevant period. CER growth allows management to focus on underlying performance without the impact of foreign exchange, which it cannot control.
· Adjusted Operating Profit: Adjusted operating profit reflects the IFRS operating profit of the Group excluding the impact of certain adjustments, which have been separately outlined below. Adjusted operating profit allows management to assess operational performance without the impact of certain items which are not reflective of underlying financial performance.
· Adjusted Basic EPS: Adjusted Basic EPS reflects Basic EPS excluding the after tax impact of certain adjustments, which have been outlined below. Adjusted Basic EPS allows management to assess EPS without the impact of certain items which are not reflective of underlying financial performance.
· Free Cash Flow: Reflects the cash generated from operating activities after recurring capital expenditure, being a measure of cash flow available for discretionary investing or financing activities. The reconciliation of free cash flow to net cash flows from operating activities is show on page 26.
· Contribution: Contribution is defined as gross profit less SG&A, which broadly reflects the cash generated by the Group's reportable segments before investment in R&D or other investing or financing activities. Management use this metric to assess performance for each of its reportable segments and reviews the metric both including and excluding the impact of certain adjustments outlined below.
Adjusted gross profit, Adjusted SG&A, Adjusted Finance Income / Expense and Adjusted effective tax rate are stated after excluding the effect of those items outlined below.
Management apply a consistent policy in determining its adjusted financial measures. In determining this policy, outlined below, management assess the nature and materiality of individual or groups of items, and have deemed it appropriate to adjust for those items including their tax effect, which (i) occur outside the normal course of business and (ii) relate to corporate acquisitions. These adjustments allow better comparability with historic performance and identify year on year trends in the underlying performance of the business.
Items excluded from adjusted financial measures in 2015/16, 2016/17 and from our guidance for the full year 2016/17 are:
(a) Acquisition related adjustments
· The release of the fair value uplift of acquired inventory or PP&E
· Amortisation and impairment charges relating to acquired intangible assets or goodwill
· Fair value adjustments to contingent consideration liabilities
· Transaction costs incurred in relation to corporate acquisitions
· Reorganisation costs, including acquisition related redundancy programmes, property costs, and asset impairments.
(b) Net costs relating to the settlement of litigation, disputes and government investigations.
Reconciliation between IFRS and Adjusted financial information - Consolidated Income Statement
For the period ended 30 September 2016
|
|
|
IFRS Total |
Release of the fair value uplift on acquired inventory and PPE1 |
Amortisation of acquired intangible assets2 |
Acquisition costs3 |
Fair value adjustments to contingent consideration liabilities4 |
Litigation and other5 |
Adjusted Total |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
285.4 |
- |
- |
- |
- |
- |
285.4 |
|
|
Cost of sales |
|
(88.7) |
0.7 |
- |
- |
- |
- |
(88.0) |
|
|
Gross profit |
|
196.7 |
0.7 |
- |
- |
- |
- |
197.4 |
|
|
Selling, general and administrative expenses |
|
(110.4) |
- |
- |
- |
- |
28.0 |
(82.4) |
|
|
Research and development |
|
(37.8) |
- |
- |
- |
- |
- |
(37.8) |
|
|
Other operating income |
|
1.6 |
- |
- |
- |
- |
- |
1.6 |
|
|
Amortisation of acquired intangible assets |
|
(19.9) |
- |
19.9 |
- |
- |
- |
- |
|
|
Acquisition and reorganisation costs |
|
(1.1) |
- |
- |
1.1 |
- |
- |
- |
|
|
Operating profit |
|
29.1 |
0.7 |
19.9 |
1.1 |
- |
28.0 |
78.8 |
|
|
Financial income |
|
0.1 |
- |
- |
- |
- |
- |
0.1 |
|
|
Financial expense |
|
(18.1) |
- |
- |
- |
0.3 |
- |
(17.8) |
|
|
Profit before tax |
|
11.1 |
0.7 |
19.9 |
1.1 |
0.3 |
28.0 |
61.1 |
|
|
Tax credit/(charge) |
|
1.8 |
(0.3) |
(6.4) |
- |
- |
(2.8) |
(7.7) |
|
|
Profit after tax |
|
12.9 |
0.4 |
13.5 |
1.1 |
0.3 |
25.2 |
53.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares - basic |
|
383.8 |
|
|
|
|
|
383.8 |
|
|
Weighted average number of shares - diluted |
|
389.5 |
|
|
|
|
|
389.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
3.4p |
0.1p |
3.5p |
0.2p |
0.1p |
6.6p |
13.9p |
|
|
Diluted earnings per share |
|
3.3p |
0.1p |
3.5p |
0.2p |
0.1p |
6.5p |
13.7p |
|
|
|
|
|
|
|
|
|
|
|
|
1. The release of the fair value uplift relating to inventory and PP&E acquired with Galil Medical in June 2016 of £0.7m.
2. Amortisation charges relating to intangible assets acquired through corporate acquisitions of £19.9m.
3. Acquisitions costs are directly attributable costs related to the acquisition of Galil Medical in June 2016, including costs incurred with professional advisers in relation to the corporate acquisition of £1.1m.
4. Fair value adjustments to contingent consideration includes the change in fair value of contingent consideration liabilities relating to the PneumRx acquisition of £0.3m.
5. Settlement with the US government in relation to the Department of Justice's investigation of the historic marketing of LC Bead® of £28.0m.
For the period ended 30 September 2015
|
|
|
|
|||
|
|
IFRS Total |
Release of the fair value uplift on acquired inventory1 |
Amortisation of acquired intangible assets2 |
Fair value adjustments on contingent consideration3 |
Adjusted Total |
|
|
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
Revenue |
229.6 |
- |
- |
- |
229.6 |
|
Cost of sales |
(70.3) |
1.5 |
- |
- |
(68.8) |
|
Gross profit |
159.3 |
1.5 |
- |
- |
160.8 |
|
Selling, general and administrative expenses |
(64.9) |
- |
- |
- |
(64.9) |
|
Research and development |
(33.6) |
- |
- |
- |
(33.6) |
|
Other operating income |
0.6 |
- |
- |
- |
0.6 |
|
Amortisation of acquired intangible assets |
(17.2) |
- |
17.2 |
- |
- |
|
Operating profit |
44.2 |
1.5 |
17.2 |
- |
62.9 |
|
Financial income |
14.5 |
- |
- |
(12.7) |
1.8 |
|
Financial expense |
(5.8) |
- |
- |
5.2 |
(0.6) |
|
Profit before tax |
52.9 |
1.5 |
17.2 |
(7.5) |
64.1 |
|
Tax charge |
(1.6) |
(0.6) |
(5.5) |
- |
(7.7) |
|
Profit after tax |
51.3 |
0.9 |
11.7 |
(7.5) |
56.4 |
|
|
|
|
|
|
|
|
Weighted average number of shares - basic |
382.3 |
|
|
|
382.3 |
|
Weighted average number of shares - diluted |
388.2 |
|
|
|
388.2 |
|
|
|
|
|
|
|
|
Basic earnings per share |
13.4p |
0.2p |
3.1p |
(2.0)p |
14.7p |
|
Diluted earnings per share |
13.2p |
0.2p |
3.0p |
(1.9)p |
14.5p |
|
|
|
|
|
|
|
1. The release of the fair value uplift relating to inventory acquired with PneumRx in January 2015 of £1.5m.
2. Amortisation charges relating to intangible assets acquired through corporate acquisitions of £17.2m.
3. Fair value adjustments to contingent consideration; includes the change in fair value of contingent consideration liabilities relating to the PneumRx acquisition (credit of £12.7m) and EKOS acquisition (charge of £5.2m).
Reconciliation between IFRS and Adjusted financial information - Free Cash Flow
For the period ended 30 September 2016
|
Net cash inflow from operating activities
|
Purchase of intangible assets |
Purchase of property, plant and equipment |
Free cash Flow
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
60.8 |
(0.2) |
(4.9) |
55.7 |
|
|
|
|
|
For the period ended 30 September 2015
|
Net cash inflow from operating activities
|
Purchase of intangible assets1 |
Purchase of property, plant and equipment |
Free cash Flow
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
62.9 |
(0.4) |
(2.6) |
59.9 |
|
|
|
|
|
1. Purchase of intangible assets for the period ended 30 September 2015 excludes the purchase of the residual financial interest of the originator of Varithena® foam sclerotherapy technology for a one-off cash payment of £23.0m, as this does not represent recurring capital expenditure for the Group.
This information is provided by RNS
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