REG - Vindon HealthcarePlc - Half Year Results

Wed Sep 7, 2011 2:00am EDT

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RNS Number : 6968N
Vindon Healthcare Plc
07 September 2011
 



VINDON HEALTHCARE PLC

 

("Vindon" or the "Company" and, together with its subsidiaries, the "Group")

 

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

 

Vindon, (AIM:VDN), which provides controlled environment services and products to the pharmaceutical, life sciences and heritage sectors in the UK, Ireland and North America announces its unaudited half year results for the six months to 30 June 2011.

 

 

 Unaudited Six Months ended 30 June 2011

£'000

 Unaudited Six Months ended 30 June 2010

£'000

Change

Revenue

3,126

2,638

+18.5%

Gross profit

1,841

1,673

+10.0%

Operating profit

434

433

+0.2%

Profit before tax

416

412

+1.0%

Earnings per share (fully diluted)

0.33pence

0.33pence

-

 

Business highlights

 

UK

·     Significant increase in revenues from equipment sales

·     Continuing strong cash generation

·     Further partner agreements signed for cryogenic stem cell storage

 

Ireland

·     Storage capacity at Tramore facility trebled

·     Irish operation now accounts for 18% of the Group's £4.2 million contracted future income

 

United States

 

·     Turnover increased and costs reduced

·     Storage contracts secured with 5 customers

·     Vindon brand reinforced with name change to Vindon Scientific (USA) Inc.

 

 

Liam Ferguson, Chairman, commented: "We have made good progress in all aspects of our business. Our manufacturing operation is buoyant, with orders received in the half year at their highest for 4 years. The increased storage capacity at Tramore will enable us to fulfil significant new contracts. Results from our Atlanta operation are also improving, closely following our experience when we first opened in Ireland.  The conditions are in place to drive revenues and profits from all aspects of the Group's activities."

 

Enquiries:

 

Vindon Healthcare PLC

Liam Ferguson  (Chairman)

Jon Scopes (Finance Director)

01706 716710

WH Ireland Limited

Dan Bate (Nominated Adviser)

Jessica Metcalf (Corporate Broking)

0161 832 2174

Zeus Capital Limited

Andrew Jones (Financial Adviser)

0161 831 1512

Hansard Communications Limited

Nicholas Nelson/Guy McDougall

020 7245 1100

 

Chairman's statement

On behalf of the Board of Vindon, I am pleased to present the half year results for the six months ended 30 June 2011.

The Group has increased revenue and gross profit in the six months to 30 June 2011 as a result of increased equipment sales and the maintenance of high levels of contracted storage revenue despite challenging market conditions in the pharmaceutical sector.

 

 

Financial Highlights

The Group increased sales by £488,000 compared with the corresponding period last year to achieve revenues of £3,126,000 for the half year to 30 June 2011.

During the first six months of the year we secured substantial orders for installation of environmentally controlled chambers for customers in Ireland. This made a significant contribution to sales of manufactured equipment, which were ahead of management's expectations for the period.

Gross profit was £1,841,000 for the first six months of the year (2010: £1,673,000). The Group achieved a gross margin of 58.9%, down from the 63.4% for the first half of 2010 and the 61.2% for 2010 as a whole. Margins were adversely affected by costs resulting from the development of new methods of site installation.

Administrative expenses were higher than for the first half of 2010 due to increased costs associated with our Irish operations, and costs for professional fees relating to potential acquisitions.

The rise in turnover was largely offset by reduced margins and increased administration and depreciation costs. Operating profit was £434,000 (2010: £433,000), with operating profit margin reduced from 16.4% to 13.9%.

Cash generated from operations before working capital movements was £660,000 (2010: £636,000). The receipt of substantial advance payments on new storage contracts contributed to total cash of £1,055,000 being generated from all aspects of the Group's operations.  This enabled the Group to fund a significant investment in new storage facilities in Ireland (which accounted for £346,000 of the net cash outflow from investing activities of £467,000) and to meet all other financial obligations, whilst adding £121,000 to cash and cash equivalents.

 

UK Storage market

 

The Group provides storage services in four main markets. We have maintained a strong presence in the UK stability storage market and revenues from stability storage trials remain a very significant contributor to overall turnover and profits. The Group has also maintained its position as a leading supplier of storage at ultra low temperatures to specialist biotech and biopharma companies. The market in regenerative medicine is developing, with increasing numbers of companies offering "front end" collection and processing of stem cell samples. We are developing relationships with such companies to be their cryogenic storage partner of choice. The Group continues to maintain a high profile in the heritage market and during the first half of the year hosted a seminar on the cold storage of film and other media, which was attended by UK and international curators of film archives. Both cryogenic and heritage storage are significant contributors to contracted future income.

 

Manufacturing and support services

 

The Group also manufactures equipment for customers who wish to manage their own stability storage. Customer requirements range from small standard cabinets to the installation of large stability chambers customised to meet exacting standards and configurations. The validation and servicing of equipment provides a further important revenue stream for the Group. As at 30 June 2011 annual service contracts accounted for 14% of contracted future income.

 

The demand for manufactured equipment has followed a familiar pattern during the early part of the year, with a very slow start followed by a significant ramp up in order intake value by the end of June. By 30 June 2011 the Group's order intake, at £1.2m, was higher than the equivalent value in 2010 of £1.1m and the highest it has been for the first half year in any of the last 4 years.

 

Irish market

 

During the first six months of 2011 the storage suite at Tramore was trebled in size in response to substantial new orders. Contracted future income attributable to storage in Ireland has more than doubled from 30 June 2010 to 30 June 2011 and now accounts for 18% of the total for the Group. Operating profit for the Irish company was £142,000 (2010: £155,000) as a result of the costs of the increased storage capacity, which will be utilised to a greater extent in the second half of this year.

 

US market

 

We continue to make steady progress at our North American subsidiary. Turnover for the six months to 30 June 2011 was £280,000, compared with £212,000 in 2010 for the 5 month period following acquisition. Cost control has been significantly improved with administrative costs now running at 60% of the level inherited at acquisition. Following the opening of the stability storage suite in late 2010, orders have been secured with 5 customers. The Vindon name is now more established in the North American market, and, our American subsidiary will now trade as Vindon Scientific (USA) Inc.

 

Employees

 

We have taken steps to strengthen our team in key areas. A new head of manufacturing has been recruited to ensure we maintain excellent product quality and customer service as our equipment sales increase. This change has released time for the directors to support growth in our American operation. We benefit from low staff turnover and the loyalty and commitment of our workforce are important factors underpinning the Group's strength.

 

Business development and future prospects

We are committed to improving the profitability of the Group through the expansion of the business organically, and we continue to evaluate strategic acquisition targets. The Group's prospects are enhanced by contractual commitments made by customers on storage and service contracts in the UK, Ireland and USA. As at 30 June 2011 the contracted future income amounted to £4.2m (2010: £3.9m), the highest this figure has been for 4 years.

Margins are likely to remain under pressure in our markets. We have on-going initiatives to improve profitability by improving efficiency whilst maintaining the quality of our products and services. Significant product development is also planned to widen the range of equipment offered to our existing and potential customers.

I am confident that the increasing quality, diversity and value of our product and service offering will deliver long term, profitable growth.

 

Liam Ferguson

Chairman

 

7 September 2011


 








Consolidated statement of comprehensive income







for the six months ended 30 June 2011


















Unaudited

Unaudited

Audited





Six months to

Six months to

Year Ended





30 June

30 June

31 December





2011

2010

2010




Note

£'000

£'000

£'000

Revenue



3

3,126

2,638

5,933

Cost of sales




(1,285)

(965)

(2,303)

Gross profit




1,841

1,673

3,630

Administrative expenses




(1,183)

(1,044)

(2,191)

Depreciation and amortisation expense




(224)

(196)

(400)

Operating profit




434

433

1,039

Financial income




-

1

1

Financial expenses




(18)

(22)

(42)

Net financing costs




(18)

(21)

(41)

Profit before tax




416

412

998

Income tax expense



4

(127)

(119)

(225)

Profit for the year attributable to owners of the parent




289

293

773

Other comprehensive income







Exchange differences on translating foreign operations




(7)

(8)

(28)





 

Other recognised income and expense for the period, net of tax




(7)

(8)

(28)

Total comprehensive income attributable to owners of the parent




282

285

745

Earnings per share







Basic



7

0.33p

0.34p

0.89p

Diluted



7

0.33p

0.33p

0.87p








 

 

 






























Unaudited

Unaudited

Audited




as at

as at

as at




30 June

30 June

31 December




2011

2010

2010



Note

£'000

£'000

£'000

Non-current assets







Property, plant and equipment



5

5,698

5,321

5,457

Intangible assets




2,760

2,741

2,760

Deferred tax assets




242

107

216

Total non-current assets



3

8,700

8,169

8,433

Current assets







Inventories




216

480

211

Trade and other receivables




2,288

1,679

1,905

Cash and cash equivalents




152

 -

38





2,656

2,159

2,154

Assets classified as held for sale




313

 -

313

Total current assets




2,969

2,159

2,467

Total assets




11,669

10,328

10,900

Current liabilities







Bank overdraft




 -

(55)

 -

Other interest bearing loans and borrowings




(289)

(288)

(288)

Trade and other payables




(508)

(489)

(574)

Current tax liabilities




(217)

(148)

(225)

Accruals and deferred income




(1,442)

(447)

(593)

Obligations under finance leases




-

(20)

(7)

Other liabilities




(14)

(10)

(14)

Total current liabilities




(2,470)

(1,457)

(1,701)

Non-current liabilities







Interest-bearing loans and borrowings




(1,554)

(1,835)

(1,694)

Deferred tax liabilities




(219)

(209)

(218)

Total non-current liabilities




(1,773)

(2,044)

(1,912)

Total liabilities




(4,243)

(3,501)

(3,613)

Net assets




7,426

6,827

7,287

Equity







Share capital




889

889

889

Treasury shares




 -

 -

 -

Translation reserve




(52)

(25)

(45)

Share premium




1,950

1,950

1,950

Retained earnings




4,639

4,013

4,493

Total equity attributable to equity shareholders




7,426

6,827

7,287








 

 








Consolidated cash flow statement







for the six months ended 30 June 2011


















Unaudited

Unaudited

Audited





Six months to

Six months to

Year Ended





30 June

30 June

31 December





2011

2010

2010




Note

£'000

£'000

£'000

Cash flows from operating activities







Profit attributable to equity shareholders




289

293

773

Adjustments for:







Depreciation




224

196

400

Financial income




-

(1)

(1)

Financial expense




18

22

42

Loss on sale of property, plant and equipment




2

7

15

Taxation




127

119

225

Operating profit before changes in working capital




660

636

1,454

(Increase)/decrease in trade and other receivables




(383)

(38)

2

(Increase)/decrease in inventories




(5)

(251)

17

Increase/(decrease) in trade and other payables




783

(19)

(71)

Cash generated from operations




1,055

328

1,402

Tax paid




(160)

(160)

(288)

Net cash inflow from operating activities




895

168

1,114

Cash flows from investing activities







Interest received




-

1

1

Acquisition of property, plant and equipment




(471)

(51)

(719)

Proceeds from disposal of property, plant and equipment andequipmentequipment




4

2

11

Acquisition of subsidiary undertaking




-

(110)

(110)

Net cash outflow from investing activities




(467)

(158)

(817)

Cash flows from financing activities







Dividends paid



6

(143)

(143)

(143)

Interest paid




(18)

(22)

(42)

Repayment of loans




(139)

(132)

(273)

Payment of finance lease liabilities




(7)

(23)

(36)

Net cash outflow from financing activities




(307)

(320)

(494)

Net increase/(decrease) in cash and cash equivalents




121

(310)

(197)

Opening cash and cash equivalents




38

263

263

Effect of foreign exchange rate changes




(7)

(8)

(28)

Closing cash and cash equivalents




152

(55)

38








 

 

 








Consolidated statement of changes in equity







for the six months ended 30 June 2011














Unaudited 30 June 2011

  Share capital

Share  premium

Treasury        shares

Translation

Retained earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2011

889

1,950

-                                  -

(45)

4,493

7,287

Profit for the period

-                                  ----

-                                  -

-                                  -

 -

289

289

Other comprehensive income for the period

-                                  -

-                                  -

 -                                 -

(7)

 -

(7)

Total comprehensive income for the period

 -                                 -

 -                                 -

-                                  -

(7)

289

282

Dividends paid

--                                  -

-                                  --

 -                                 -

 -

(143)

(143)

Balance at 30 June 2011

889

1,950

-                                

(52)

4,639

7,426








Unaudited 30 June 2010

Share             capital

Share        premium

Treasury         shares

Translation

Retained    earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2010

889

1,950

-

                                 -

(17)

3,863

6,685

Profit for the period

-                                  -

-                                  -

-                                  --

-                                  -

293

293

Other comprehensive income for the period

-                                 -

-                                  -

-                                  -

(8)

          -                      -

(8)

Total comprehensive income for the period

-                                  -

-                                  -

-                                  -

(8)

293

285

Dividends paid

-                                  -

-                                  -

-                                  ---

 -

(143)

(143)

Balance at 30 June 2010

889

1,950

 -                                

(25)

4,013

6,827








Audited 31 December 2010

Share capital

Share  premium

Treasury      shares

Translation

Retained earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2010

889

1,950

-                                  -

(17)

3,863

6,685

Profit for the year

 -                                 -

-                                  -

-                                  -

 -

773

773

Other comprehensive income for the year

-                                  -

-

-                                  -

(28)

 -

(28)

Total comprehensive income for the year

-                                  -

-                                  -

 -                                 -

(28)

773

745

Dividends paid

-                                  -

-                                  -

-                                  -

 -

(143)

(143)

Balance at 31 December 2010

889

1,950

-                                

(45)

4,493

7,287








 

 

1 Basis of preparation

This half year report for the period ended 30 June 2011 has been prepared on the basis of the

accounting policies set out in Vindon Healthcare's annual report and financial statements 2010 and

in accordance with the International Financial Reporting Standards as adopted by the European Union and IAS34, 'Interim financial reporting'.

The half year report was approved by the Board of Directors on 7 September 2011.

The half year report does not constitute statutory financial statements as defined in section 434 of the

 Companies Act 2006.

It does not include all of the information and disclosures required for full annual financial statements,

and should be read in conjunction with the annual report and financial statements for the year ended

31 December 2010.

The financial information contained in this half year report in respect of the year ended 31 December

2010 has been produced from the annual report and financial statements for that year which have

been filed with the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did

not include a reference to any matters to which the auditors 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.

The half year results for the current and comparative periods are unaudited.


2 Accounting policies

The accounting policies applied by the Group in this half year report are the same as those applied

by the Group in the annual report and financial statements for the year ended 31 December 2010.


3 Segmental Reporting

IFRS 8 requires consideration of the Chief Operating Decision Maker ('CODM') within the Group. In line with the Group's internal reporting framework and management structure, the key strategic and operating decisions are made by the Board of Directors, who review internal monthly management reports, budget and forecast information as part of this. Accordingly, the Board of Directors is deemed  to be the CODM.

The group's only class of business activity is the manufacture of environmental control products for the pharmaceutical industry, life sciences and food sectors together with the provision of related services.

The Board does not review assets and liabilities on a segmental basis given the similar nature of each segment as defined under the aggregation criteria per IFRS 8. The operating segments exhibit similar long-term financial performance because they have similar economic characteristics. This is highlighted by applying IFRS 8 criteria in respect of the following points:

• the nature of the products and services are similar, being for environmental control purposes;

• the nature of the production process is the same for each product;

• the type or class of customer for each product and service are similar; and

• the methods used to distribute the products or provide the services are similar.

In the opinion of the Directors the Group's activities meet the aggregation criteria per IFRS 8 and therefore the Group only has one reportable segment.

The group's key operating segments are geographical, and are located in the United Kingdom, Ireland and the USA. These geographical regions are the basis on which the Group reports its segment information.

A geographical segment is engaged in providing products or services within a particular economic environment subject to risks and returns that are different from those of segments operating in other

economic environments. A geographical analysis of turnover and the related non-current assets is given

below:

 

 


Unaudited

Unaudited

Audited

 


Six months to

Six months to

Year Ended

 


30 June

30 June

31 December

 


2011

2010

2010

 

Net sales by point of origin:

£'000

£'000

£'000

 

United Kingdom

2,510

2,115

4,972

 

Ireland

336

311

606

 

USA

280

212

355

 


3,126

2,638

5,933

 





 


Unaudited

Unaudited

Audited


Six months to

Six months to

Year Ended


30 June

30 June

31 December


2011

2010

2010

Non-current assets:

£'000

£'000

£'000

United Kingdom

7,395

7,854

7,546

Ireland

607

172

185

USA

456

36

486

Deferred tax

242

107

216


8,700

8,169

8,433





4 Taxation

 

The tax charge is based on the estimated effective tax rate for the year ending 31 December 2011.

 


 

5 Property, plant and equipment


 


Total

 

Group

£'000

 

Cost at 1 January 2011

6,973

 

Additions

471

 

Disposals

(22)

 

At 30 June 2011

7,422

 



 

Depreciation at 1 January 2011

1,516

 

Charge for the period

224

 

On disposals

(16)

 

At 30 June 2011

1,724

 



 

Carrying value


 

At 30 June 2011

5,698

 

At 1 January 2011

5,457

 



 

 

 


 

6 Dividends

 

As advised in the annual report and financial statements for the year ended 31 December 2010 and in

 

accordance with the resolution passed at the Company's Annual General Meeting on 27 May 2011 a

 

dividend of 0.165 pence per ordinary share, totalling £143,303 was paid on 30 June 2011 in respect of

 

the financial year ended 31 December 2010.

 


 

7 Earnings per share

 

The calculation of the basic earnings per share is based on the profit after taxation divided by the

 

weighted average number of ordinary shares in issue in the period ended 30 June 2011, being

 

86,850,000 (period ended 30 June 2010: 86,850,000; year ended 31 December 2010: 86,850,000).

 

The diluted earnings per share takes the weighted average number of ordinary shares in issue during

 

the period and adjusts this for dilutive share options existing at the period end. The diluted weighted

 

average number of ordinary shares in the period ended 30 June 2011 was 88,850,000 (period ended

 

30 June 2010: 88,850,000; year ended 31 December 2010: 88,850,000).

 

The Company holds 2,000,000 shares in an employee benefit trust.

 


 

8 Capital commitments

 

The Company is committed to capital expenditure of £37,000 (period ended 30 June 2010: £360,000;

 

year ended 31 December 2010: £nil).

 


 

9 Related party transactions

 

Zeus Capital Limited is a connected party by reason of R I Hughes's interest in both Zeus Capital Limited and Vindon.

 

The Company has entered into a consultancy agreement with Zeus Capital Limited dated 14 February 2005 under which the company has appointed Zeus Capital Limited to act as financial advisers.  The Company has agreed to pay Zeus Capital Limited a fee of £15,000 plus VAT per annum for this service.

 

During the period, fees totalling £7,500 were paid to Zeus Capital Limited and the total amount owing to them at the 30 June 2011 was £nil.

 

HQC Ltd was a connected party during the period by reason of M L Ferguson's interest in both HQC Ltd and Vindon.  Mr Ferguson's interest in HQC Ltd terminated on 28 February 2011. During the two months up to 28 February 2011 the Company placed orders totalling £14,780 for goods from HQC Ltd to be used in the assembly of Vindon's products.

 

Carter Scopes is a connected party by reason of J E Scopes's interest in both Carter Scopes and Vindon During the period the Company placed orders totalling £3,000 for training services from Carter Scopes. The total amount owing to Carter Scopes at 30 June 2011 was £nil.

 

Key management personnel are considered to be Executive and Non-Executive Directors.

 


 

10 Communication with shareholders

 

This statement will be posted to shareholders on Monday 26 September 2011. Copies will also be available, free of charge from the Company's registered office at John Boyd Dunlop Drive, Kingsway Business Park, Rochdale, Lancashire, OL16 4NG and can be downloaded from the Company's website at www.vindonhealthcare.com. A powerpoint presentation of these half year results will also be available for download on the website.

 


 

 

 


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