Isotron plc Interim Results 2004/5

1
Isotron plcInterim Results 2004/5

• John Barker CEO
• Paul Wynne CFO
• 24 February 2005

2
Highlights of H1 2004/05

• Revenue Growth 10
• EBIT Growth 16
• Pre-tax Profit Growth 21
• Net debt down to 9.1m
• Strong underlying Medical and Chemical Revenues
• Benefit of one off business
• Rapid growth in Asia
• Strong cashflow ? lower net debt

3
Like for like EPS growth (post Gammaster)
H2 2002/3 27 H1 2003/4 30 H2 2003/4 10 H1
2004/5 21
4
2004/5 Revenue
By Region
By Market
5
Revenue Growth by Market
m 2004/5 m 2003/4 m
Medical Medical 12.14 11.01 10 1.13
Biological Biological 3.97 3.97 - -
Chemical Chemical 1.41 1.07 32 0.34
Laboratory Laboratory 2.06 1.74 18 0.32
19.58 17.79 10 1.79
6
Medical Revenues

• Strong volume growth in Medical sector across the
  Group
• Price increases c. inflation
• One off revenues
• Sterilisation support for manufacturers
  breakdown
• High value remedial processing

H1
7
Biological Revenues

• Mature market
• Largest sector Food Packaging
• More dog chews
• Less water filters

H1
8
Chemical Revenues

• Much better than expected
• Growth focused on E-beam in Swindon
• Automotive wiring
• Specialist cabling
• A volatile market with limited customers and
  unpredictable scheduling

H1
9
Lab Services

• Business split 50/50 - Pathology Microbiology
• Both sectors up c. 18
• New drug monitoring contract win (Pathology)
• 3rd party product development work (Microbiology)
• Dutch lab under construction

H1
10
Financial - Summary PL
11
Financial Cost Review

• Key Impacts
• Overall cost increase 7.7
• Staff Costs impact of volume growth
• Operating Costs strong growth in EtO/Eb Lab
  volumes
• rise in
  energy costs maintenance
• Share Scheme Costs design and implementation

12
Financial - Taxation

• Key Impacts
• Effective rate expected to continue decline in
  the short term
• Rate of reduction expected to slow
• Rate will gradually increase from 2008

13
Financial Capital Expenditure

• Ireland expansion impacts H2

14
Financial - Cashflow
15
Financial Debt/Interest

• Net debt 9.1m
• Reduction since June 04 2.8m ahead of
  expectations
• Cash from operating activities 3.1m less F/X
  impact.
• Annual repayments 3m but impact on net debt
  depends on level of capex

16
Visibility of Earnings

• Fundamentally Good
• Long term relationships (esp Medical)
• Daily/weekly/monthly processing
• Medical market grows steadily overall
• Costs have a fixed element
• But
• No order book / no volume level is contracted or
  guaranteed
• Medical market is product diverse, with mixed
  growth rates
• Chemical business is volatile
• Consequence
• Fast changes to bottom line, both up and down
• Difficulty on guidance

17
Second Half Outlook

• 300k of one-off profit in H1 will not recur in
  H2
• However
• Medical will continue to underpin performance
• Strong Chemical volumes expected to continue
  through H2
• Lost Medical volumes in Ireland will be treated
  elsewhere in Isotrons network
• ? Board expectation now more favourable than in
  July 2004

18
Business Development Outlook

• Expansion in Ireland
• Lab in Holland
• Looking at single site acquisitions
• Developing business in Thailand / Malaysia /
  Singapore / China