vindon interims 2009

A Secure Future in StoreVindon Healthcare plc Interim Report 2009

Vindon

09080706 09080706 09080706

Turnover For the six months ended 30 June 2009

Operating profit For the six months ended 30 June 2009

Gross profit For the six months ended 30 June 2009

£527 £1,641 £2,593 £2,593£2,556

£2,112

£’000 £’000£’000

£1,812

£1,641£1,643

£1,100

£1,346

£527

£846

£506

£603

ContentsAbout the Company

1 Operational highlights 2 Our products & services 4 Chairman’s statement

Financial statements

6 Consolidated income statement 7 Consolidated balance sheet 8 Consolidated cash flow statement 9 Statement of changes in

shareholders’ equity10 Notes (forming part of the interim

financial statements)

Vindon is a manufacturer and service provider of speciality storage solutions for controlled environmental testing, heritage artefact storage, ultra-low temperature and cryogenic sample storage

Vindon Healthcare plcInterim Report 2009 1

09080706 09080706 09080706

Turnover For the six months ended 30 June 2009

Operating profit For the six months ended 30 June 2009

Gross profit For the six months ended 30 June 2009

£527 £1,641 £2,593 £2,593£2,556

£2,112

£’000 £’000£’000

£1,812

£1,641£1,643

£1,100

£1,346

£527

£846

£506

£603

Revenue increased in first six months of year, attributable to the provision • of speciality storage services to the pharmaceutical sector

A move to a new state-of-the-art facility has enabled substantial • progress on implementing key strategic plans:– Continuing growth in the stability storage market to the

pharmaceutical sector– Establishing a presence in the heritage sector, with the

commencement of a five year contract with a leading British heritage institution

– Signing the first contract for the new cryogenic storage facility

Progress has been made in the Group’s strategic international expansion, • with the Irish operation delivering its first profits and establishing a foothold in the US market.

Financial Highlights

Operational Highlights

Vindon Healthcare plcInterim Report 20092

Stability storageVindon provides a full range of services for stability storage trials with on site, secure management. Customer samples are stored in a bespoke high security facility which incorporates chambers and rooms that have been mapped and validated for pharmaceutical stability storage and biological sample storage. These temperature and humidity controlled facilities can be tailored to suit individual customer requirements for shelf life, intermediate and accelerated testing. The facility meets the needs of companies that wish to out-source all or part of their stability storage trials, and also provides back-up facilities and peak requirement cover.

Vindon supplies speciality storage solutions to the pharmaceutical, healthcare, biotechnology and heritage sectors. These are provided at our state-of-the-art stability storage facilities in Rochdale. Our equipment is designed and manufactured to client specification.

Our products & services

CryobankVindon provides cryogenic storage facilities at temperatures as low as minus 197ºC. The storage of cells at temperatures below minus 150ºC, the point at which biological activity ceases, is necessary to preserve materials. The cryobank is capable of providing a national hub for the preservation of biological samples, bone marrow, culture collections, DNA, cell tissue, master cell banks, stem cells and cord stem cells.

ManufacturingManufactured to exacting standards, all of Vindon’s standard and customised environmental cabinets, reach-in rooms, and walk-in rooms are designed to meet the demanding requirements of the pharmaceutical, medical and healthcare industries. They provide the climatic conditions specified in the International Conference on Harmonisation tripartite guidelines, simulating the conditions of all four climatic zones for long-term, intermediate and accelerated testing.

When floor space is at a premium, the ‘reach-in’ rooms provide high capacity storage with an economical footprint. Furthermore, in line with Vindon’s environmental policy, the design and manufacture of its products are geared towards reduced energy usage and therefore lower cost of ownership.


HeritageVindon’s heritage storage service stores artefacts, special collections and film archives in the optimum conditions for the preservation of their integrity. A new purpose-built preservation facility can accommodate samples, special collections, artefacts and historical records, for which the bespoke inventory management software provides comprehensive cataloguing and retrieval.

Ultra-low temperature storageThe ultra-low temperature suite is tailored to the needs of biotechnology and pharmaceutical companies and offers a comprehensive storage solution, including built-in back-up equipment and emergency back-up for the long-term preservation of biologics, reagents, and specimens at temperatures down to minus 86ºC. Vindon’s facility is capable of storing samples, vials or tube racks and is an ideal independent ultra-low temperature storage solution.

Service and maintenanceVindon provides a comprehensive service and maintenance plan tailored to customer requirements. Annual service and maintenance is available on all equipment and can incorporate unlimited emergency call-out visits.

ValidationVindon offers full on-site validation services for environmental rooms and chambers, incubators, refrigerators, freezers and all associated monitoring equipment, providing initial and on-going validation services to the pharmaceutical industry. Clients include blue-chip pharmaceutical companies in the UK and Ireland.

Vindon aims to provide its clients with an excellent service which develops long-standing future relationships.


Chairman’s statementThe Group’s strategy is to increase the revenue streams from its in-house speciality storage services. The investment associated with this transition has had a short-term impact on the first half results, as project based revenue is replaced with long-term recurring revenue.

Cash generated from operations before working capital movements was £744,000 compared to £1,013,000 in the corresponding period last year. However, working capital requirements increased by £580,000 to support the growth in export sales.

UK marketThe UK market consists of sales, service and validation of capital equipment, together with the provision of speciality storage services. Over the period, the conversion of capital equipment enquiries into firm contracts has slowed, with customers reviewing capital investment project timelines in the short term.

The new premises offer customers considerable flexibility to utilise the Group’s in-house storage suite as opposed to building and operating their own facility. A number of customers have already entered into long-term storage contracts which, although impacting on our profitability over the period, is good for the long-term prospects of the Group.

Irish marketThe Irish market consists of sales, service and validation of capital equipment, together with the provision of speciality storage services. Having passed the break-even point last year, the Irish subsidiary has traded profitably over the period, continuing to build a blue-chip pharmaceutical customer base.

US marketThe US market consists of the sale of capital equipment, contributing £271,000 over the period compared to £12,000 in the corresponding period last year. The Group sees the US market as a key market for the business and plans to offer speciality storage services during the second half of 2010. This will not involve significant capital expenditure due to the re-use of equipment from other completed projects.

On behalf of the Board of Vindon, I am pleased to present the interim results for the six months ended 30 June 2009.

Financial highlightsFor the half year to 30 June 2009, Vindon and its subsidiaries (the “Group”) increased sales by £37,000 to £2,593,000 compared to the corresponding period last year.

Manufacturing volumes were lower than anticipated as a result of market conditions and an increase in customers outsourcing stability storage. Investment was made in the new premises, including the installation of the cryogenic storage suite, and costs were incurred in moving from the old premises. As a result of these factors, profit before tax reduced by £331,000 to £497,000.

Whilst there is a reduction in profits, the Group achieved a 20% operating profit margin and continues to experience high levels of market share in the stability storage market to the pharmaceutical sector. In addition, the Group has established a foothold in the heritage storage sector and launched its cryogenic storage service.

Capital expenditure reduced by £2,587,000 to £209,000 as a result of the completion of the construction and fit out of the new premises at Kingsway, Rochdale during 2008.


StrategyContinue to develop recurring revenue >

Develop our in-house stability storage service, increasing our long-term contracts and extending visibility of our future revenues.

Expand on our international business >Build on our successful entry into the Irish market and extend our operations in the US, introducing stability storage facilities.

Grow our services portfolio >Capitalise on the opportunities in the European stability storage market that our six-fold increase in storage capacity now allows us to address.

Diversify range of services >Grow revenues from our new heritage and cryobank services targeting both the UK and Europe.

Heritage marketThe Group’s first heritage contract, with a leading British heritage institution, commenced in the first half. The initial contract is for five years, with an option to extend for a further five years. The Board considers the heritage sector as an important vertical market for its specialist storage services which enjoys stable and long-term income visibility.

Cryogenic marketThe Group’s cryogenic storage unit is ready for use and now has the additional benefit of a human tissue licence. Offering cryogenic facilities for storage of samples in our own cryofreezers and housing third party cryofreezers in our cryobank, the Group has received its first contract for the storage of stem cells, and anticipates that storage will start in the fourth quarter of 2009.

Additionally, the Group has agreed in principle a 25 year contract to house and operate two third party cryofreezers. The Board sees its entry into the cryogenic market as a natural progression of its specialist storage services to the health sector. EmployeesThe Board would like to thank the staff for their continued support and enthusiasm. The Group’s business relies on their technical excellence and commitment.

Future prospectsThe Group’s short-term prospects are underpinned by committed revenue on storage and service contracts. It currently has committed revenue of £1.3m for the second half of the year and of £0.9m for 2010, with total committed revenue of £3.9m.

The Board recognises that conditions remain challenging, however, the business is underpinned by a blue chip customer base and long-term storage contracts. This, together with the substantial investment in facilities and products, lays the foundations for us to deliver long-term growth.

Liam FergusonChairman 15 September 2009


Consolidated income statementfor the six months ended 30 June 2009

Unaudited Unaudited Audited Six months to Six months to Year ended 30 June 30 June 31 December 2009 2008 2008 Notes £’000 £’000 £’000

Revenue 3 2,593 2,556 5,510 Cost of sales (952) (913) (2,084)

Gross profit 1,641 1,643 3,426Administrative expenses (1,114) (797) (1,842)

Operating profit 527 846 1,584Financial income 2 30 32Financial expenses (32) (48) (116)

Net financing costs (30) (18) (84)

Profit before tax 497 828 1,500Income tax expense 4 (149) (263) (440)

Profit after tax 348 565 1,060

Basic earnings per share 6 0.40p 0.65p 1.22pDiluted earnings per share 6 0.39p 0.64p 1.19p

There were no recognised gains and losses in the period, or in the prior periods shown, other than the results shown above.


Consolidated balance sheetas at 30 June 2009

Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 December 2009 2008 2008 £’000 £’000 £’000

Non-current assets Property, plant and equipment 5,422 4,413 5,425 Intangible assets 2,361 2,361 2,361 Deferred income tax assets 107 – 107

Total non-current assets 7,890 6,774 7,893

Current assets Inventories 496 624 398 Trade and other receivables 1,501 1,104 1,205 Cash and cash equivalents – – 361

Total current assets 1,997 1,728 1,964

Total assets 9,887 8,502 9,857

Current liabilities Bank overdraft (152) (455) –Other interest-bearing loans and borrowings (359) (405) (406)Trade and other payables (191) (513) (327)Current tax payable (165) (286) (58)Accruals and deferred income (417) (342) (467)Other financial liabilities (51) (84) (59)Other liabilities (6) (117) (6)

Total current liabilities (1,341) (2,202) (1,323)

Non-current liabilities Other interest-bearing loans and borrowings (2,126) (725) (2,312)Other financial liabilities (23) (71) (48)Deferred tax liabilities (187) (92) (187)

Total non-current liabilities (2,336) (888) (2,547)

Total liabilities (3,677) (3,090) (3,870)

Net assets 6,210 5,412 5,987

Equity Share capital 889 889 889 Share premium 1,950 1,950 1,950 Retained earnings 3,371 2,573 3,148

Total equity attributable to equity shareholders 6,210 5,412 5,987


Consolidated cash flow statementfor the six months ended 30 June 2009

Unaudited Unaudited Audited Six months to Six months to Year ended 30 June 30 June 31 December 2009 2008 2008 £’000 £’000 £’000

Cash flows from operating activities Profit attributable to equity shareholders 348 565 1,060 Adjustments for: Depreciation 205 113 308 Financial income (2) (30) (32)Financial expense 32 48 116 Loss on sale of property, plant and equipment 7 6 8 Equity settled share-based payment expenses 5 48 96 Taxation 149 263 440

Operating profit before changes in working capital provisions 744 1,013 1,996 (Increase)/decrease in trade and other receivables (296) 34 (67)(Increase)/decrease in inventories (98) (156) 70(Decrease)/increase in trade and other payables (186) 269 97

Cash generated from operations 164 1,160 2,096 Income tax paid (42) (267) (652)

Net cash inflow from operating activities 122 893 1,444

Cash flows from investing activities Financial income 2 30 32 Acquisition of property, plant and equipment (209) (2,796) (4,004)

Net cash outflow from investing activities (207) (2,766) (3,972)

Cash flows from financing activities Dividends paid (130) (87) (87) Financial expense (32) (48) (116)New loans – – 1,800Repayment of borrowings (233) (200) (412)Payment of finance lease liabilities (33) (41) (89)Advance on finance leases – 84 83

Net cash (outflow)/inflow from financing activities (428) (292) 1,179

Net (decrease)/increase in cash and cash equivalents (513) (2,165) (1,349) Opening cash and cash equivalents 361 1,710 1,710

Closing cash and cash equivalents (152) (455) 361


Statement of changes in shareholders’ equity

Share Share Retained capital premium earnings TotalUnaudited 30 June 2009 £’000 £’000 £’000 £’000

Dividends paid – – (130) (130)Share options – – 5 5

Net income recognised directly in equity – – (125) (125) Profit for the period – – 348 348

Total recognised income and expense – – 223 223

Opening shareholders’ funds at 1 January 2009 889 1,950 3,148 5,987

Closing shareholders’ funds at 30 June 2009 889 1,950 3,371 6,210

Share Share Retained capital premium earnings TotalUnaudited 30 June 2008 £’000 £’000 £’000 £’000

Dividends paid – – (87) (87) Share options – – 48 48

Net income recognised directly in equity – – (39) (39) Profit for the period – – 565 565

Total recognised income and expense – – 526 526 Opening shareholders’ funds at 1 January 2008 889 1,950 2,047 4,886

Closing shareholders’ funds at 30 June 2008 889 1,950 2,573 5,412

Share Share Retained capital premium earnings TotalAudited 31 December 2008 £’000 £’000 £’000 £’000

Dividends paid – – (87) (87)Share options – – 96 96 Tax credit relating to share option scheme – – 32 32

Net income recognised directly in equity – – 41 41 Profit for the period – – 1,060 1,060

Total recognised income and expense – – 1,101 1,101 Opening shareholders’ funds at 1 January 2008 889 1,950 2,047 4,886

Closing shareholders’ funds at 31 December 2008 889 1,950 3,148 5,987


1 Basis of preparationThis interim report for the period ended 30 June 2009 has been prepared on the basis of the accounting policies set out in Vindon Healthcare’s annual report and financial statements 2008 and in accordance with the International Financial Reporting Standards as adopted by the European Union.

The interim report was approved by the Board of Directors on 15 September 2009.

The interim report does not constitute 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 2008.

The financial information contained in this interim report in respect of the year ended 31 December 2008 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 237(2) or (3) of the Companies Act 1985.

The interim results for the current and comparative periods are unaudited.

2 Accounting policiesThe accounting policies applied by the Group in this interim report are the same as those applied by the Group in the annual report and financial statements for the year ended 31 December 2008.

3 Segmental reportingThe Group’s primary reporting segment is by business. The Group only has one business segment.

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and rewards that are different from those of other business segments. A geographical segment is geographic area that is subject to risks and returns that are different from other geographic areas. A geographical analysis of turnover is given over the page:

Notes(forming part of the interim financial statements)


Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 December 30 June 2009 30 June 2008 2008 £’000 £’000 £’000

United Kingdom 1,722 2,085 4,339Europe 599 459 880North America 271 12 289Rest of World 1 – 2

2,593 2,556 5.510

4 TaxationThe tax charge is based on the estimated tax rate for the year ended 31 December 2009.

5 DividendsAs advised in the annual report and financial statements for the year ended 31 December 2008 and in accordance with the resolution passed at the Company’s Annual General Meeting on 22 May 2009 a dividend of 0.15 pence per ordinary share, totalling £130,275 was paid on 30 June 2009 in respect of the financial year ended 31 December 2008.

6 Earnings per shareThe 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 2009, being 86,850,000 (period ended 30 June 2008: 86,850,000; year ended 31 December 2008: 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 2009 was 88,850,000 (period ended 30 June 2008: 88,850,000; year ended 31 December 2008: 88,850,000).

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

7 Capital CommitmentsThe Company is committed to capital expenditure of £nil (period ended 30 June 2008: £593,000; year ended 31 December 2008:£100,000).

8 Communication with shareholdersThis statement will be posted to shareholders on Friday 2 October 2009. 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.


Shareholder notes

www.vindon.co.ukwww.vindon.ie

Vindon Healthcare plcJohn Boyd Dunlop DriveKingsway Business ParkRochdale, OL16 4NG

Tel: +44 (0)1706 716710Fax: +44 (0)1706 716740

www.vindonhealthcare.com

vindon interims 2009

Documents

stability storage market

stability storage trials

storage of cells

cryogenic storage facilities

heritage artefact storage

biological sample storage

months of year

stability storagevindon