REG - Vindon HealthcarePlc - Half Year Results

Wed Aug 15, 2012 2:00am EDT

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RNS Number : 0266K
Vindon Healthcare Plc
15 August 2012
 



For immediate release: 15 August 2012

 

Vindon Healthcare plc

 

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

 

Half Year Results For The Six Months Ended 30 June 2012

 

Vindon Healthcare plc, (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 2012.

 

 

 Unaudited Six Months ended 30 June 2012

£'000

 Unaudited Six Months ended 30 June 2011

£'000

Change

Revenue

3,126

+6.0%

Gross profit

1,684

1,676

+0.5%

Operating profit

434

-27.2%

Profit before tax

416

-27.9%

Earnings per share (fully diluted)

0.25p

0.33p

-24.2%

 

Business highlights

 

·     6% increase in revenue driven by strong performance in storage services

·     Gross profit maintained despite significant pressure on equipment margins

·     Profits from activity in Ireland at record levels

·     Revenue from North American operations up by 53%

·     Net debt at lowest level for 4 years

·     Product and service development under way to broaden revenue streams

 

 

Liam Ferguson, Chairman, commented: "We continue to make progress in all areas of our business with storage in particular showing excellent growth. Although it is disappointing to report reduced pre-tax profits these results have been achieved against the background of fierce competition and lower demand for equipment. I am pleased that the Company continues to implement initiatives to improve cost effectiveness and I am confident that we are responding well to the changing conditions in our markets."

 

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

The Communications Portfolio
Philip Ranger/Caolan Mahon (PR Adviser)
philip.ranger@communications-portfolio.co.uk

020 7536 2028/2029

 

 

Chairman's statement

On behalf of the Board, I am pleased to present the half year results for the six months ended 30 June 2012.

The period under review has seen a strong improvement in our storage business, profits from activities in Ireland at record levels and net debt at a 4-year low. However, demand for manufactured equipment has been subdued globally and subject to intense competition and, as a result, profit margins and pre-tax profits have fallen.

 

Financial Highlights

Group sales increased by 6% over the corresponding period last year to achieve revenues of £3,312,000 for the half year to 30 June 2012 with the increase in storage revenues being more than sufficient to offset the decline from sales of equipment and associated services. 

Gross profit was £1,684,000 for the first six months of the year (2011: £1,676,000). Market prices for equipment came under severe competitive pressure impacting significantly on overall gross margin, which reduced to 50.8% (2011: 53.6%).

The increase in storage activities throughout the Group resulted in higher utilities, property and payroll costs and was the main reason behind the £92,000 rise in administrative expenses and the £34,000 increase in depreciation charges compared with the first 6 months of 2011.  As a result, operating profit fell to £316,000 (2011: £434,000) and operating profit margin reduced from 13.9% to 9.5%.

Cash generated from operations before working capital movements was £587,000 (2011: £660,000), reflecting the reduced level of operating profit. Substantial advance payments received on storage contracts early in 2011 continued to unwind during the first 6 months of 2012 as the related revenue flowed to the profit and loss account. Consequently the total cash generated from the Group's operations returned to more normal levels at £552,000 (2011: £1,055,000).

The net cash outflow from investing activities in the first 6 months of 2012 was £159,000 (2011: £467,000). This is in line with the planned reduction in the Group's capital expenditure.  The Group's net debt, at £1,521,000 is the lowest it has been for 4 years.

Strategy and Business Development

 

In the face of consolidation in the pharmaceutical industry and consequent fierce competition, we continue to take cost out of our products and services whilst enhancing value and adding new sources of revenue, in order to maintain our pre-eminent position in our domestic markets and gain share in North America.

Product development remains a priority, and in the second half of 2012 we will introduce our enhanced control system for environment cabinets and rooms.

Our strategy in storage remains the optimal utilisation of our Kingsway facility and growing the number and utilisation of overseas operations. We are enhancing our storage capability by developing bespoke solutions for our clients' specialist storage requirements.

UK manufacturing and storage

 

In previous years we have experienced a pattern where there has been a strong level of enquiries in the early part of the year, but slow conversion to firm orders. This trend has continued in 2012, and has impacted on manufacturing output in the first six months of the year. 

Activities in the validation and servicing of equipment continue to provide an important revenue stream for the Group and in the six months to 30 June 2012 service and validation contracts accounted for 18% of Group revenues.

Our UK storage markets comprise pharmaceutical, biotech, regenerative medicine and heritage. Reflecting the Company's strategy to develop specialist storage activities, we have recently won a prestigious contract with the UK government for the storage of important historical artefacts.

Ireland

 

The investment in additional storage facilities at Tramore during early 2011 generated substantial storage income in the first 6 months of 2012. Despite the impact of the weaker Euro, our Irish subsidiary increased storage revenues by 90% to £352,000. Operating profits also rose substantially to £272,000 (2012: £124,000).

North America

 

Revenues in North America rose 53% in the first 6 months of 2012, to £427,000 (2011: £280,000). We have taken steps to improve our competitiveness by identifying local suppliers in Atlanta for standard materials which will reduce our procurement and shipping costs. Storage revenues have grown further and are currently running at an equivalent annual rate of £70,000, compared with the £24,000 achieved for the whole of 2011.

Employees

 

It is evident that our clients place a high value on the stability and technical capability of our workforce. I would like to thank all our employees for their commitment and teamwork during a demanding but progressive period for the Group.

Future prospects

In common with many companies the Group has experienced a decline in the demand for manufactured goods in the first half of 2012. We believe we have made the necessary changes to maintain and improve profitability through increased volumes and cost reduction programmes.

We anticipate the strong performance of our storage business will continue. The contractual commitments made by customers on storage and service contracts in the UK, Ireland and USA give us good visibility of future income. As at 30 June 2012 contracted future income amounted to £4.4m (£4.2m at 30 June 2011).

The steps taken to bolster the profitability of our core business are being supplemented by the development of new products and services and an ongoing search for suitable acquisitions.

Despite difficult market conditions, I am confident the quality of our product and service offering, combined with our strong balance sheet, will enable us to both mitigate those conditions and continue to grow profitably.

 

Liam Ferguson

Chairman

 

15 August 2012

 

 

 

Financial statements







Consolidated statement of

comprehensive income







for the six months ended 30 June 2012


















Unaudited

Unaudited

Audited





Six months to

Six months to

Year ended





30 June

30 June

31 December





2012

2011

2011






(Re-presented)    - see note 2





Note

£'000

£'000

£'000

Revenue



3

3,312

3,126

6,831

Cost of sales




(1,628)

(1,450)

(3,138)

Gross profit




1,684

1,676

3,693

Administrative expenses




(1,110)

(1,018)

(2,084)

Depreciation and amortisation expense




(258)

(224)

(476)

Operating profit




316

434

1,133

Financial income




1

 -

1

Financial expenses




(17)

(18)

(38)

Net financing costs




(16)

(18)

(37)

Profit before tax




300

416

1,096

Income tax expense



4

(75)

(127)

(246)

Profit attributable to owners of the parent




225

289

850

Other comprehensive income







Exchange differences on translating foreign operations




(6)

(7)

(4)

Income tax relating to components of other recognised income and expense




 -

 -

 -

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




(6)

(7)

(4)

Total comprehensive income attributable to owners of the parent




219

 

282

 

846

Earnings per share







Basic



7

0.26p

0.33p

0.98p

Diluted



7

0.25p

0.33p

0.96p

 

Financial statements







Consolidated balance sheet







as at 30 June 2012


















Unaudited

Unaudited

Audited




as at

as at

as at




30 June

30 June

31 December




2012

2011

2011



Note

£'000

£'000

£'000

Non-current assets







Property, plant and equipment



5

6,041

5,698

6,152

Intangible assets




2,760

2,760

2,760

Deferred tax assets




333

242

310

Total non-current assets



3

9,134

8,700

9,222

Current assets







Inventories




570

216

479

Trade and other receivables




2,576

2,288

2,788

Cash and cash equivalents




39

152

126





3,185

2,656

3,393

Assets classified as held for sale




 -

313

 -

Total current assets




3,045

2,969

3,393

Total assets




12,319

11,669

12,615

Current liabilities







Other interest bearing loans and borrowings




(291)

(289)

(290)

Trade and other payables




(918)

(508)

(992)

Current tax liabilities




(97)

(217)

(145)

Accruals and deferred income




(1,436)

(1,442)

(1,518)

Other liabilities




(25)

(14)

(25)

Total current liabilities




(2,767)

(2,470)

(2,970)

Non-current liabilities







Interest-bearing loans and borrowings




(1,269)

(1,554)

(1,412)

Deferred tax liabilities




(232)

(219)

(243)

Total non-current liabilities




(1,501)

(1,773)

(1,655)

Total liabilities




(4,268)

(4,243)

(4,625)

Net assets




8,051

7,426

7,990

Equity







Share capital




889

889

889

Treasury shares




 -

 -

 -

Translation reserve




(55)

(52)

(49)

Share premium




1,950

1,950

1,950

Retained earnings




5,267

4,639

5,200

Total equity attributable to equity shareholders




8,051

7,426

7,990

 

 

Financial statements







Consolidated cash flow statement







for the six months ended 30 June 2012


















Unaudited

Unaudited

Audited





Six months to

Six months to

Year Ended





30 June

30 June

31 December





2012

2011

2011




Note

£'000

£'000

£'000

Cash flows from operating activities







Profit attributable to equity shareholders




225

289

850

Adjustments for:







Depreciation




258

224

476

Financial income




(1)

-

(1)

Financial expense




17

18

38

Loss on sale of property, plant and equipment




13

2

1

Taxation




75

127

246

Operating profit before changes in working capital




587

660

1,610

Decrease/(increase) in trade and other receivables




212

(383)

(883)

Increase in inventories




(91)

(5)

(268)

(Decrease)/increase in trade and other payables




(156)

783

1,354

Cash generated from operations




552

1,055

1,813

Tax paid




(157)

(160)

(395)

Net cash inflow from operating activities




395

895

1,418

Cash flows from investing activities







Interest received




1

-

1

Acquisition of property, plant and equipment




(172)

(471)

(989)

Proceeds from disposal of property, plant and equipment




12

4

130

Net cash outflow from investing activities




(159)

(467)

(858)

Cash flows from financing activities







Dividends paid



6

(158)

(143)

(143)

Interest paid




(17)

(18)

(38)

Repayment of loans




(142)

(139)

(280)

Payment of finance lease liabilities




-

(7)

(7)

Net cash outflow from financing activities




(317)

(307)

(468)

Net (decrease)/increase in cash and cash equivalents




(81)

121

92

Opening cash and cash equivalents




126

38

38

Effect of foreign exchange rate changes




(6)

(7)

(4)

Closing cash and cash equivalents




39

152

126

 

 

Financial statements

 

Consolidated statement of changes in equity

 

for the six months ended 30 June 2012

 


 

Unaudited 30 June 2012

Share

capital

Share

premium

Treasury

shares

Translation

Retained

earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2012

889

1,950

-                                 

(49)

5,200

7,990

Profit for the period

-                                 

-                                 

  -                               

 -

225

225

Other comprehensive income for the period

-                                 

-                                 

-                                 

(6)

 -

(6)

Total comprehensive income for the period

-                                 

-                                 

 -                                

(6)

225

219

Dividends paid

-                                 

-                                 

-                                 

 -

(158)

(158)

Balance at 30 June 2012

889

1,950

                                 -

(55)

5,267

8,051








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








Audited 31 December 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 year

-                                 

-                                 

-                                 

 -

850

850

Other comprehensive income for the year

-                                 

-                                 

-                                 

(4)

 -

(4)

Total comprehensive income for the year

-                                 

-                                 

-                                 

(4)

850

846

Dividends paid

 -                                

-                                 

 -                                

 -

(143)

(143)

Balance at 31 December 2011

889

1,950

-                                

(49)

5,200

7,990

 

1 Basis of preparation


 

This half-year report for the period ended 30 June 2012 has been prepared on the basis of the accounting policies set out in Vindon Healthcare plc's annual report and financial statements 2011 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 15 August 2012.

 

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 ended31 December 2011.

 

The financial information contained in this half-year report in respect of the year ended 31 December 2011 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.


 



 

 

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 2011.


 



 

Re-presentation of comparatives


 

As advised in the annual report and financial statements for the year ended 31 December 2011, travel costs which are directly attributable to sales have been shown within cost of sales. Accordingly the prior year comparatives have been re-presented to move £165,000 from administrative expenses to cost of sales.


 



 



 

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, heritage 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


2012

2011

2011

Net sales by point of origin:

£'000

£'000

£'000

United Kingdom

2,369

2,510

5,259

Ireland

516

336

791

USA

427

280

781


3,312

3,126

6,831






Unaudited

Unaudited

Audited


Six months to

Six months to

Year Ended


30 June

30 June

31 December


2012

2011

2011

Non-current assets:

£'000

£'000

£'000

United Kingdom

7,746

7,395

7,846

Ireland

568

607

589

USA

487

456

477

Deferred tax

333

242

310


9,134

8,700

9,222









4 Taxation


 

The tax charge is based on the estimated tax rate for the year ended 31 December 2012.

 

 


 

5 Property, plant and equipment


 


Total

 

Group

£'000

 

Cost at 1 January 2012

8,063

 

Additions

172

 

Disposals

(115)

 

At 30 June 2012

8,120

 



 

Depreciation at 1 January 2012

1,911

 

Charge for the period

258

 

On disposals

(90)

 

At 30 June 2012

2,079

 



 

Carrying value


 

At 30 June 2012

6,041

 

At 1 January 2012

6,152

 



 



 

6 Dividends

As advised in the annual report and financial statements for the year ended 31 December 2011 and in accordance with the resolution passed at the Company's Annual General Meeting on 25 May 2012 a dividend of 0.182 pence per ordinary share, totaling £158,067 was paid on 29 June 2012 in respect of the financial year ended 31 December 2011.


 

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 2012, being

86,850,000 (period ended 30 June 2011: 86,850,000; year ended 31 December 2011: 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 2012 was 88,850,000 (period ended

30 June 2011: 88,850,000; year ended 31 December 2011: 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 £nil (period ended 30 June 2011: £37,000; year

ended 31 December 2011: £nil).

 


 

9 Related party transactions

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

 

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.

During the period, fees totalling £7,500 were paid to Zeus Capital Limited, and the total amount owing to them at the 30 June 2012 was £nil.

 

HQC Ltd was a connected party during 2011 by reason of M L Ferguson's interest in both HQC Ltd and Vindon Healthcare plc. 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, on an arm's length basis, 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 Healthcare plc. During the six months up to 30 June 2011 the Company placed orders totalling £3,000 for training services from Carter Scopes.

 

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

 

 

 

10 Communication with shareholders

This statement will be posted to shareholders on Friday 7 September 2012. Copies will also be available to the public, 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.


 


 

 

 

 


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