RNS Number:9762H
Isotron PLC
26 February 2003
DATE: Embargoed until 07:00am,
Wednesday, 26 February 2003
CONTACT: John Barker, Chief Executive
Paul Wynne, Finance Director
Isotron plc
Tel: 01793 567900
Alistair Mackinnon-Musson
Philip Dennis
Hudson Sandler
Tel: 020 7796 4133
ISOTRON PLC
Interim Results
Isotron doubled its size last year by acquiring Gammaster and has become a
multinational, market leading UK based company. Isotron, whose principal
business is contract sterilisation of medical products, is pleased to announce
its Interim results for the six months ended 31 December 2002. The Group
operates in four main market sectors: medical, biological, chemical and
laboratory services.
The key points are:
* Group turnover increased to #15.7m
* EPS increased by 6% to 11.6p before goodwill and exceptionals
* Interim dividend increased by 10% to 3.23p
* Opportunities identified to improve the efficiency of the acquired sites
* The Group's main medical market remains buoyant
* Laboratory business continues to make good progress
Commenting, John Barker, Chief Executive said:
"We are now seeing the benefit of Isotron's increased international presence
particularly in relation to the Far East. The Group's main medical market has
remained buoyant and, along with the Laboratory market, it should see further
gains. Management's focus is now on improving margins through price reviews and
productivity gains."
Note to Editors:
Please find attached:
i) Chairman's Statement
ii) Tables of figures
Chairman's Statement
Result
I am pleased to report steady progress in the first half year. Group turnover
rose to #15.7m (#8.2m) with #6.2m coming from the Gammaster acquisition.
Excluding this acquisition the Group generated turnover of #9.5m, a 17% increase
on the previous year, with volume growth in Malaysia being the main contributor.
Operating profit (before amortisation and exceptional costs) was #3.96m (#1.97m)
with the Gammaster acquired businesses being consolidated from 16 January 2002
onwards. The increase in interest payable reflects the cost of the borrowings
taken out to fund the acquisition.
Earnings per share (before amortisation and exceptional costs) at 11.6p, was 6%
higher than last year (10.9p).
The exceptional cost of #563k includes a provision for the closure of the
electron beam plant in Sweden of #404k, together with other integration costs.
Trading
The countries with the strongest results were Thailand, Malaysia and Ireland,
with much of the growth coming from the increased throughput of medical products
such as surgeons' gloves, stents, drapes and gowns. By the end of the first
half year, Thailand had nearly trebled its throughput and is scheduled to grow
further in the second half year. Profitability in Thailand was however below
expectations. This was mainly due to processing inefficiencies and action is now
being taken to improve profitability.
Following a detailed review, the Board considered that the electron beam in
Sweden was not economically viable in the long term and so it ceased operating
in December and was closed in January 2003. As a result, a trading loss of
#0.1m was reported in the period instead of an expected small profit. Most of
the exceptional costs relate to writing-off its assets.
The Laboratories made good progress with JMJ Laboratories increasing revenues
from drug abuse testing and the other laboratories in the UK and Ireland
securing new business in contract microbiology.
Nearly all businesses have succeeded in increasing selling prices to a large
part of their customer base. The expansion in revenue, particularly in the Far
East, has required significant investment in cobalt (#3.7m) but the net debt at
the half year of #16.7m is broadly in line with expectations.
Interim Dividend
The Directors are pleased to report that they have declared an interim dividend
of 3.23p per share, an increase of 10% on last year (2.94p). This will be paid
on 25 April 2003 to shareholders on the register at 21 March 2003.
Board of Isotron
The Board of Isotron announced in November 2002 that it had appointed Mr
Jonathan Azis to the Board as a non executive director. We are very pleased to
have the benefit of his skills and experience for the future development of the
company.
Outlook
The chemical and biological markets are expected to remain relatively flat, but
the medical and laboratory markets should see further progress. The processing
inefficiencies in Thailand are being addressed and should be resolved during the
second half of the year. The focus of management is on improving margins
through price reviews and through productivity gains.
C G Clive, Chairman
26 February 2003
Independent review report by KPMG Audit Plc to Isotron Plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 4 to 9 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2002.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
26 February 2003
Group Profit and Loss Account
Half year ended Half year ended Year ended
31 December 31 December 30 June
2002 2001 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Turnover (2 & 3) 15,727 8,164 22,201
Operating costs (12,830) (6,193) (17,201)
Operating profit before amortisation and exceptional 3,957 1,971 5,675
items
Amortisation of goodwill (497) - (453)
Exceptional items (4) (563) - (222)
Operating profit 2,897 1,971 5,000
Net interest payable (636) (20) (582)
Other finance costs (6) - (7)
Profit on ordinary activities before taxation (2) 2,255 1,951 4,411
Taxation on profit on ordinary activities (5) (779) (557) (1,277)
Profit on ordinary activities after taxation 1,476 1,394 3,134
Minority interests - equity (35) - (34)
Profit for the period/year 1,441 1,394 3,100
Dividends paid and proposed (681) (619) (1,673)
Retained profit for the period/year 760 775 1,427
Earnings per ordinary share - basic and diluted (6) 6.8p 10.9p 18.7p
Earnings per ordinary share (before amortisation of
goodwill and exceptional items) (6) 11.6p 10.9p 22.4p
Statement of Total Recognised Gains and Losses
31 December 31 December 30 June
2002 2001 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Profit for the financial period/year 1,441 1,394 3,100
Exchange differences (395) (10) 291
Expected return on pension scheme assets - - (13)
Experience gains and losses arising on scheme - - 9
liabilities
Total recognised gains and losses relating to the 1,046 1,384 3,387
financial period/year
Prior period adjustment (7) - (1,938) (1,938)
1,046 (554) 1,449
Group Balance Sheet
As at As at As at
31 December 31 December 30 June
2002 2001 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Fixed assets
Intangible assets 18,949 - 19,446
Tangible assets 57,537 33,828 56,469
76,486 33,828 75,915
Current assets
Stocks 536 383 476
Debtors 6,002 3,570 5,957
Cash at bank and in hand 3,195 1,101 3,684
9,733 5,054 10,117
Creditors: amounts falling due within one year (10,399) (3,592) (11,088)
Net current (liabilities)/assets (666) 1,462 (971)
Total assets less current liabilities 75,820 35,290 74,944
Creditors: amounts falling due after one year (15,043) (2,469) (14,605)
Provisions for liabilities and charges (6,476) (2,727) (6,334)
Minority interests - equity (541) - (643)
Net assets before pension 53,760 30,094 53,362
Pension liability (186) - (153)
Net assets 53,574 30,094 53,209
Capital and reserves
Called up share capital 5,268 3,192 5,268
Share premium account 22,898 2,808 22,898
Profit and loss account 25,408 24,094 25,043
Equity shareholders' funds (8) 53,574 30,094 53,209
Group Cash Flow
Half year ended Half year ended Year ended
31 December 31 December 30 June
2002 2001 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Net cash inflow from operating activities 6,769 3,141 9,710
Servicing of finance and returns on investments
Interest received 20 71 97
Interest paid (852) (99) (299)
Net cash outflow from servicing of finance and
returns on investments (832) (28) (202)
Taxation
UK corporation tax (303) (416) (1,095)
Overseas tax paid (295) - (615)
Return of overpayment - - 17
Tax paid (598) (416) (1,693)
Capital expenditure
Payments for fixed assets (4,768) (4,387) (7,994)
Proceeds from the sale of fixed assets 19 15 19
Net cash outflow for capital expenditure (4,749) (4,372) (7,975)
Acquisitions
Purchase of subsidiary undertakings (60) - (29,554)
Cash at bank and in hand acquired with - - 2,393
subsidiaries
Overdraft acquired with subsidiaries - - (819)
Exceptionals due to integration of acquisition (275) - (100)
Net cash outflow from acquisitions (335) - (28,080)
Equity dividends paid (1,156) (638) (1,259)
Net cash outflow before use of liquid resources (901) (2,313) (29,499)
and financing
Management of liquid resources
(Increase)/decrease in short term deposits (58) 2,434 2,353
Financing
Issue of ordinary share capital - - 22,827
Share issue cost - - (661)
Cash inflow from increase in debts 1,054 - 5,653
Net cash inflow from financing 1,054 - 27,819
Increase in cash in the period/year 95 121 673
Liquid resources are defined as deposits repayable within three months.
Notes to the Interim Financial Statements
Half year ended 31 December 2002 - unaudited
1. Basis of presentation of accounts
The Group profit and loss account and balance sheet for the half years ended 31
December 2002 and 31 December 2001 have been prepared on a basis consistent with
accounting policies disclosed in the Group's Annual Report and Accounts 2002.
The comparative figures for the financial year ended 30 June 2002 are extracted
from the Company's statutory accounts for that financial year. Those accounts
have been reported on by the Company's auditors and delivered to the Registrar
of Companies. The report of the auditors was unqualified and did not contain a
statement under Section 237(2) or (3) of the Companies Act 1985. Copies of the
Annual Report and Accounts 2002 are available from the Company's registered
office by applying to the Company Secretary, Isotron plc, Moray Road, Elgin
Industrial Estate, Swindon SN2 8XS. The Company is registered in England Number
1771333.
2. Turnover
Turnover represents amounts invoiced in respect of services provided during the
period excluding value added tax. All turnover arises from the Group's
principal activity.
Segmental information
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Turnover by location of
customer
United Kingdom 7,083 6,475 13,005
Rest of Europe 6,808 1,487 7,735
Rest of World 1,836 202 1,461
15,727 8,164 22,201
Turnover by origin
United Kingdom 7,052 6,610 12,840
Rest of Europe 6,863 1,352 7,879
Rest of World 1,812 202 1,482
15,727 8,164 22,201
Turnover by market sector
Medical 9,575 5,145 13,503
Biological 3,762 1,370 4,928
Chemical 1,009 527 1,418
Laboratory Services 1,381 1,122 2,352
15,727 8,164 22,201
Profit/(loss) before
taxation
United Kingdom * 1,354 1,666 2,735
Rest of Europe *+ 1,123 381 2,061
Rest of World + 420 (76) 204
Operating profit 2,897 1,971 5,000
Net interest payable
(including other finance
costs) (642) (20) (589)
Profit before taxation 2,255 1,951 4,411
* After exceptional costs
+ After amortisation of goodwill
3. Turnover relating to acquisitions
Within turnover the amounts relating to the Gammaster business that was acquired
in January 2002 are detailed below. This information has been provided to add
comparability and is not a requirement of FRS 3 in the current period.
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Turnover 6,177 - 5,408
4. Exceptional items
Exceptional items relate to costs of #159k (#nil) associated with the
integration of the acquired Gammaster business, and #404k (#nil) relating to the
closure of the Swedish e-beam plant.
5. Tax charge
The tax charge in the period has been based on the estimated effective rate
applicable to each significant category of income for the full year.
6. Earnings per share
Earnings per share and fully diluted earnings per share are based on the profit
after taxation and 21.07 million ordinary shares. Earnings per share before
amortisation of goodwill and exceptional items is based on profit of #2,453k
(#1,394k) and 21.07 million (12.77 million) ordinary shares.
7. Prior period adjustment
The Group adopted FRS 19 "Deferred Tax" in the year ended 30 June 2002. The
comparatives for the period ended 31 December 2001 were restated to include a
charge of #1,938k. The cumulative effect of this restatement on previously
recognised gains and losses is noted in the Statement of Total Recognised Gains
and Losses.
8. Reconciliation of movements in shareholders' funds
As at As at As at
31 December 31 December 30 June
2002 2001 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Profit for the financial period/year 1,441 1,394 3,100
Dividends (681) (619) (1,673)
Retained profit for the financial period/
year 760 775 1,427
Exchange differences (395) (10) 291
New share capital - - 22,166
Actuarial losses recognised in STRGL
- - (4)
Prior period adjustment (7) - (1,938) -
Net addition to shareholders' funds 365 (1,173) 23,880
Opening shareholders' funds as previously
reported 53,209 31,267 31,267
Prior period adjustment (7) - - (1,938)
Closing shareholders' funds 53,574 30,094 53,209
9. Reconciliation of Net Cash Flow to Movement in Net Debt
Half year ended Half year ended Year ended
31 December 31 December 30 June
2002 2001 2002
unaudited unaudited audited (1)
#'000 #'000 #'000
Increase in cash 95 121 673
Cash outflow/(inflow) from short term
deposits 58 (2,434) (2,353)
Decrease in debt 1,717 - 8,057
Cash flow from new loans (2,770) - (22,606)
Deferred charges of loan issue costs (18) - -
Exchange difference 65 - (249)
Movement in net debt/cash in the period (853) (2,313) (16,478)
Net (debt)/cash at the beginning of the
period (15,807) 671 671
Net debt at period end (16,660) (1,642) (15,807)
- ends -
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END
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