26 Jul 2012 09:00
26 July 2012
Posting of Annual Report and AGM Notice
Consort Medical plc (LSE: CSRT) announces that it has published its Annual Report and Accounts 2012 and Notice of the 2012 Annual General Meeting. The Annual General Meeting will be held at 2.00 p.m on Thursday 30 August 2012 at its Registered Office, Breakspear Park, Breakspear Way, Hemel Hempstead, Hertfordshire HP2 4TZ.
Copies of the following documents will shortly be available to view on the Company's website at www.consortmedical.com
·; Annual Report and Accounts 2012
·; Notice of 2012 Annual General Meeting.
In accordance with Listing Rule 9.6.1, a copy of each of these documents has been uploaded to the National Storage Mechanism and will be available for viewing shortly at www.hemscott.com/nsm.do
Hard copies have also been sent to those shareholders who have elected to continue to receive paper communications.
The audited Preliminary Results for the year ended 30 April 2012 were announced on 14 June 2012.
The information contained in Appendix 1 (Principal Risks and Uncertainties) and Appendix 2 (Statement of Directors' Responsibilities), which is extracted from the Annual Report and Accounts, is also included in this announcement for the sole purpose of complying with Rule 6.3.5 of the Disclosure and Transparency Rules of the UK Financial Services Authority. Page numbers and cross-references in the extracted information refer to page numbers and cross-references in the Annual Report and Accounts.
John Slater
Company Secretary
01442 867920
Appendix 1
Principal risks and uncertainties
The Group has identified the following factors as principal risks to the successful operation of the business and has identified the steps it takes to manage those risks:
Product quality failure. The Group operates in highly regulated markets with strict quality requirements. Any quality failure involving the Group's products could lead to loss of reputation, reduction in revenues, recall costs or sanction by the regulators. The Group has rigorous quality assurance processes. Incoming raw materials are analysed, production processes are controlled, with automated checks by vision systems and metrology and Bespak products are sampled for testing prior to release.
Reliance upon key customers. The Bespak division has a degree of reliance on a number of key customers, which is to a degree inevitable due to its strong market share in respiratory devices. The Group has significant Intellectual Property and there are significant barriers to entry. Regulation often restricts customers' ability to transfer business and there is seldom loss of business once approved on a customer programme. Our strategy of diversification has opened up a broader range of products and customers.
Increasing cost pressures and commoditisation of markets. The Group has experienced no significant evidence of commoditisation of its core products. Nevertheless, cost pressure in both divisions is addressed by the introduction of new products with intellectual property and cost reduction programmes.
Supply chain delay or interruption. The Divisions are often committed to long-term supply from a small number of suppliers by regulatory filings. The Group works in partnership with key suppliers to manage the risks of delays or interruptions to supply. For key supplies we also maintain safety inventories or have other mitigation strategies.
Delay to the transformation programme. King Systems is in the final year of an extensive automation programme that will result in the closure of a manufacturing site. The programme is monitored by the Director of Group Operations and is reviewed by both Board and Executive Committee. The H&M facility will not close until we are confident of security of supply.
Regulatory risk. The operations of the Group are subject to various regulatory requirements which confer a degree of protection as well as an element of risk, in particular to delivering growth. A strong compliance regime is in place, and regular reviews and audits take place, not only by regulatory bodies such as the FDA but also by customers. Bespak is ISO13485 accredited and operates SAP in all its main processes.
Misallocation of capital. The Group is in a strong financial position which could be jeopardised by poor use of capital for Mergers & Acquisitions (M&A) or investment. The Board reviews and approves all material investments, which are subject to extensive risk assessment and due diligence. Major capital programmes are, where possible, underwritten by customer contracts.
Development risk. The Group is developing a range of products at any time, any of which may fail in clinical trials or may not become commercially successful. The Group follows rigorous processes for the development of new products and, where possible, is developing the technology as a platform for multiple programmes to reduce the exposure to any individual trial. Development and industrialisation of medical devices is considered a core competence of the Group.
Employee recruitment and retention. The failure to recruit or the unexpected departure of key employees could put at risk the business operations. The Group employment policies and remuneration and benefits packages are designed to attract and retain staff. There is also investment in staff training and development.
Credit risk. The Group has implemented policies that require appropriate credit checks on potential customers before sales over a certain limit are agreed. Credit limits and outstanding receivables are reviewed monthly and action taken if a new risk is identified. The Group has an excellent record on collection of receivables. The Group monitors the levels of cash held with financial institutions and the credit rating of those institutions in order to manage credit risk on cash balances.
Interest rate risk. The Group is subject to interest rate risk on its revolving bank facility, the terms of which are reviewed by the Board on a regular basis. The Group's policy is to convert a large portion of its floating rate debt into fixed rate using interest rate swaps. At the end of the financial year over 90% of the Group's debt was at a fixed rate of interest. Consequently the impact of any foreseeable rise in interest rates on existing borrowing would not be material.
Currency risk. The Group is a sterling denominated Group that receives some of its income and incurs some of its costs in US dollars and, to a much smaller extent, Euros. It has hedging agreements in place to minimise the impact of currency fluctuation. It also has significant assets denominated in US dollars that are hedged by borrowings in the same currency to manage translational exposure.
Liquidity risk. The Group has strong cash flows and good earnings visibility ensures that its margins are sufficient to exceed normal operating costs and its major operating subsidiaries are cash-generative. Current borrowing levels and financial covenants can be supported comfortably by forecast profit and cash flows. Facilities are in place until 2016.
Pension risk. The Group works closely with the Pension Trustees to ensure that the Defined Benefit Scheme is well funded and that the assets are invested appropriately to meet future liabilities as they fall due. The Scheme was closed to new members in 2002 and was in surplus at the last actuarial valuation in 2011.
Appendix 2
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report, the Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:
·; select suitable accounting policies and then apply them consistently;
·; make judgements and accounting estimates that are reasonable and prudent;
·; state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and
·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the directors, confirm that, to the best of their knowledge:
·; the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
·; the Directors' Report and divisional Operating Reviews include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.