Isotron plcFull Year Results 2004/5

John Barker CEOPaul 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

Isotron Earnings Per Share

20

25

30

35

40

2001 2002 2003 2004 2005

4

Revenue Growth by Market

£m2004/5

£m2003/4

£m

Medical 24.84 22.55 +10% +2.29

Biological 7.94 7.81 +2% +0.13

Chemical 2.70 2.24 +20% +0.46

Laboratory 4.11 3.48 +18% +0.63

39.59 36.08 +10% +3.51

5

Medical Revenues (Sterilisation)

• Growth 10% – 2% price– 8% volume

• Market drivers still valid• Strong in most countries • “One off” revenues

– Temporary outsourcing– Remedial processing

£20.5m£22.5m

£24.8m

2003 2004 2005

6

Biological Revenues

• Steady - not expected to move significantly• Positives

– Food packaging – Dog chews

• Negatives– Water filters– Food

£7.3m

£7.8m£7.9m

2003 2004 2005

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Chemical Revenues (Materials Modification)

• Two strong years (2004: +24%)(2005: +20%)• Outsourcing for Tyco

– Automotive – Specialist cabling

• Volatile Market£1.81m

£2.24m£2.70m

2003 2004 2005

8

Lab Services

• Pathology + 17%• Microbiology + 19%• National drug monitoring contract

(Pathology)• Ireland Laboratories

– outsourcing micro – residual testing

£3.05m £3.48m£4.11m

2003 2004 2005

9

Profit & Loss Account

2005 2004 Increase % change£000 £000 £000

Turnover 39,588 36,076 3,512 9.7%

Staff Costs (11,901) (11,082) (819) 7.4%Depreciation (6,336) (6,296) (40) 0.6%Other Costs (10,294) (8,795) (1,499) 17.0%

Total Costs (28,531) (26,173) (2,358) 9.0%

EBITA 11,057 9,903 1,154 11.7%

Interest (823) (1,087) 264 (24.3%)

PBT* 10,234 8,816 1,418 16.1%

10

Other Costs

• Two key components: Operating costs General and Admin costs

• Operating cost increases due to: Technology mix Energy, R&M 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

2005 2004£000 £000

Staff Costs 11,901 11,082

Depreciation 6,336 6,296

Other Costs 10,294 8,795

Total Costs 28,531 26,173

12

Capital Expenditure

2005 2004£000 £000

Cobalt 4,360 4,863

Assets in courseof construction 1,363 267

Other assets 2,118 1,811

7,841 6,941

13

Cashflow

2005 2004 Movement % change

£000 £000 £000

Cashflow from operating

activities 17,729 14,759 2,970 20%

Capex (7,348) (6,649) (699)

Interest (756) (1,054) 298

Taxation (2,034) (1,712) (322)

Dividend (2,194) (1,971) (223)

Issue of shares 475 619 (144)

Net cash inflow 5,872 3,992 1,880 47%

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

£16.2m

£11.9m

£9.1m

£6.2m

Jun-03 Jun-04 Dec-04 June '05

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Taxation

• Current yearPrior year adjOrigin of profits

• Future influencesOrigin of profitsEuropean tax ratesThai tax holiday

24.3%

21.7%

2004 2005

16

Banking

• New banking facilities were negotiated during the year• Key benefits:

Increased facilitiesLower 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 cashDynamics for Isotron• Strengthen UK Medical Market• New Market - Semiconductor processing• Irradiation of Gemstones (Topaz)• Increase in beam expertiseActions• 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 v’s 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”