Isotron plc Full Year Results 2004/5

1
Isotron plcFull Year Results 2004/5

• John Barker CEO
• Paul Wynne CFO
• September 2005

2
Highlights of 2004/05

• Revenue Growth 10
• EBIT Growth 12
• Pre-tax Profit Growth 16
• E.P.S Growth 20
• Net debt down to 6.2m (from 11.9m)
• Markets - Medical, Chemical and Laboratories all
  strong
• Success in Asia - Revenue 18 and low tax
• Strong cashflow ? lower net debt
• News!
• Acquisition Ebis
• Thailand Expansion
• IT Investment
• Logistics

3
EPS growth
4
Revenue Growth by Market
m 2004/5 m 2003/4 m
Medical Medical 24.84 22.55 10 2.29
Biological Biological 7.94 7.81 2 0.13
Chemical Chemical 2.70 2.24 20 0.46
Laboratory Laboratory 4.11 3.48 18 0.63
39.59 36.08 10 3.51
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Medical Revenues (Sterilisation)

• Growth 10
• 2 price
• 8 volume
• Market drivers still valid
• Strong in most countries
• One off revenues
• Temporary outsourcing
• Remedial processing

6
Biological Revenues

• Steady - not expected to move significantly
• Positives
• Food packaging
• Dog chews
• Negatives
• Water filters
• Food

7
Chemical Revenues (Materials Modification)

• Two strong years (2004 24)(2005 20)
• Outsourcing for Tyco
• Automotive
• Specialist cabling
• Volatile Market

8
Lab Services

• Pathology 17
• Microbiology 19
• National drug monitoring contract (Pathology)
• Ireland Laboratories
• outsourcing micro
• residual testing

9
Profit Loss Account
10
Other Costs

• Two key components
• Operating costs
• General and Admin costs
• Operating cost increases due to
• Technology mix
• Energy, RM
• Logistics - new
• General and Admin cost increases due to
• Share schemes
• IFRS
• Training

11
Cost Dynamics

• We are essentially a fixed cost business but
• Costs do increase over time, therefore
• Revenue growth is critical in determining
  profitability and
• Technology mix will infl cost growth
• Impact of strategic investments need to be
  considered e.g. IT / new capacity

12
Capital Expenditure
13
Cashflow
14
Net Debt

• 5.7m reduction during the year
• Ahead of expectations
• F/X impact small
• Majority of debt and , rates 5-7, before
  refinancing

15
Taxation

• Current year
• Prior year adj
• Origin of profits
• Future influences
• Origin of profits
• European tax rates
• Thai tax holiday

16
Banking

• New banking facilities were negotiated during the
  year
• Key benefits
• Increased facilities
• Lower rates/reduced costs
• Increased competition
• Improved flexibility
• Cash management processes/systems under review

17
IFRS

• Plans/Timescales
• 2005 Annual Report
• Re-stated Numbers

• Impact historic/future
• IFRS 2 (Share based payments)
• IFRS 3 (Goodwill)
• IAS 19 (Pensions)
• IAS 32/39 (Financial instruments)
• IAS 10 ( Dividends)
• IAS 12 (Deferred tax)

18
Acquisition of Ebis Iotron Ltd - 1/09/05

• Physical
• 3 process lines, 2 buildings at Harwell (40
  minutes from Swindon) - 25 people
• Consideration 2.55m in cash
• Dynamics for Isotron
• Strengthen UK Medical Market
• New Market - Semiconductor processing
• Irradiation of Gemstones (Topaz)
• Increase in beam expertise
• Actions
• Integration / restructuring
• Rebalancing medical processing
• Potential development of unique technology

19
Thailand Expansion

• Total cost circa 2.0m 75 in current year
• On-stream 2006 / 2007
• Tote vs Pallet
• Expansion is customer led (multi-national)

20
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 minimum volume 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

21
Outlook
Another successful year is expected