oncateno plc oncateno plc Annual Report and Accounts 2008 Concateno plc Concateno Annual Report and Accounts 2008 Linking it all together Concateno plc 10 Buckingham Street London WC2N 6DF T +44 20 7004 2800 F +44 20 7004 2801 E [email protected] www.concateno.com > Advisers Contents 01 Highlights 26 Statement of Directors’ Responsibilities 02 Group overview – our products and services 27 Independent Auditors’ Report 04 Group overview – our geographical reach 28 Consolidated Income Statement 06 Group overview – the markets we operate in 28 Consolidated Statement of Recognised Income 08 Chairman’s Statement and Expense 10 Chief Executive Officer’s Review 29 Consolidated Balance Sheet 13 Financial Review 30 Consolidated Cash Flow Statement Registered Office Principal Bankers 16 Board of Directors 31 Notes to the Consolidated Financial Statements Concateno plc Barclays Bank plc 17 Financial Statements index 61 Company Balance Sheet 10 Buckingham Street Head Office Branch 18 Directors’ Report 62 Notes to the Company Balance Sheet London 1 Churchill Place 21 Corporate Governance Report 65 Advisers 24 Directors’ Remuneration Report WC2N 6DF London E14 5HP Registered Number 05396234 England and Wales Public Relations Advisers Concateno is a global provider of drug and alcohol testing Financial Dynamics Nominated Adviser and Broker Holborn Gate and related services as well as a manufacturer of clinical Collins Stewart (Europe) Limited 26 Southampton Buildings diagnostic products. 9th Floor London 88 Wood Street WC2A 1PB London Drug and Alcohol abuse is a growing problem in society. EC2V 7QR Company Secretary Rowena Nixon Concateno is at the forefront of this issue, working with Joint Brokers 10 Buckingham Street SingerCapital Markets Limited London governments, employers and healthcare and law One Hanover Street WC2N 6DF professionals to help reduce the impact of this problem. London W1S 1AX Registrars Our expertise is unmatched and our staff are passionate Capita Registrars about working with clients to identify the best possible Evolution Securities Limited The Registry 100 Wood Street 34 Beckenham Road solutions for them. London EC2V 7AN Beckenham Kent Solicitors to the Company BR3 4TU Following the successful integration of our subsidiary Jones Day 21 Tudor Street Patent Agents businesses, Concateno can now provide the optimal type London Marks and Clerk of drug testing in any biological sample. EC4A 0DJ 4220 Nash Court Oxford Business Park South Auditors Oxford OX4 2RU KPMG Audit Plc Building on our expertise in Europe the Company is now 1 Forest Gate poised to both expand geographically and to develop new Brighton Road Crawley market sectors. RH11 9PT Cozart® DDS: the Group’s leading oral fluid testing device, field proven with police forces and employers internationally. > Our highlights Financial highlights Corporate highlights m > Concateno established as the European £ 47. 5 market leader in the provision of drug and Revenue alcohol testing services (2007: £26.1m) > £3.3m annualised operational synergies achieved earlier than plan > International networks of 90 distributors and 500 sample collectors giving the Group a unique global footprint % > Three specialist UKAS accredited 14 1 Increase in unaudited pro forma revenue laboratories and two state-of-the-art 2008: £47.5m (2007: £41.8m) manufacturing facilities > Unique ‘one-stop-shop’ offering a high quality service for the management of Drugs of Abuse testing > Restructuring of the sales and marketing % functions to target ‘vertical’ customer 54 1 2 markets. Successful adoption of model in Increase in unaudited pro forma adjusted EBITDA 2008: £12.3m (2007: £8.0m) the UK now being rolled out internationally > Winner of the 2008 Queens Award for Enterprise in Innovation > Renewal of the Home Office ‘Drug Intervention Programme’ contract for up to £4.2m three years Operating profit (2007: £2.0m) 1 Pro forma results (unaudited) are annualised results as if all business combinations were in place on 1 January each year. 2 See EBITDA reconciliation in Financial Review. Concateno plc Annual Report and Accounts 2008 01 > Group overview Our products and services Concateno is Europe’s most focused drug and alcohol testing facility. This is reflected in: > The consultative sales and marketing integrated divisional structure, providing expert market knowledge across diverse market sectors. solutions > > The delivery of products and services from the group’s specialist manufacturers, laboratories and distributors. Innovations Concateno’s New Product Development integrates the Company’s unique knowledge specialisms through a rigorously structured and market centred process. New innovations to date include: > Employee Assistance Programmes Cozart® DDS – Concateno’s offering expert advice and specialist enhanced on-site saliva counselling and support. drug detection system > Non-invasive S-PMA testing detecting > Used extensively by police forces, drug treatment centres and benzene at or below current health healthcare professionals standards. > Sample collection in less than one minute > Digital analysis of test cartridge > DDS-U – a rapid urine test with > Multiple printouts of results built-in reader. > EtG hair test – test detecting the metabolite of alcohol Drug Solids Testing > Used internationally by Customs and produced in the body. Border Control Agencies > Able to detect drugs at parts per million > Results in two minutes Pro forma revenue growth 2007>2008 13% Concateno plc 02 Annual Report and Accounts 2008 1 2 Point-of-Care Laboratory testing based Key features: testing > Used on location > Results in minutes Key features: > Oral fluid and urine matrices for drug testing > All laboratories UKAS accredited to ISO 17025 > Oral fluid and breath testing for alcohol > Capability to test any sample type: > Environmental detection of drugs in powders, tablets, hair, urine, sweat, oral fluid, blood resins, liquids and surfaces > Legally defensible results > Global collections network Concateno branded urine point of care tests Oral fluid > The only brand used by HM Prison Service > Non invasive sample collection voluntary testing > Testing for recent use > Onsite and laboratory testing Urine > Good indicator of usage over several days > Well established and understood method > Onsite and laboratory testing 3 Hair Laboratory > Non invasive sample collection > Testing for longer term use > Limited opportunity for sample adulteration products Key features: > Comprehensive range of diagnostic Pro forma revenue tests and reagents to the global clinical Cozart® DDS – Concateno’s growth diagnostics market 2007>2008 > Manufactured at Concateno’s accredited and enhanced on-site saliva purpose built facilities in the UK and Spain drug detection system % > Over 30 years experience of producing clinical > Used extensively by police diagnostic kits forces, drug treatment centres and 13 > Products sold into over 100 countries healthcare professionals > Complementary line of instrumentation > Sample collection in less than one minute > Digital analysis of test cartridge > Multiple printouts of results Pro forma revenue growth 2007>2008 15% Concateno plc Annual Report and Accounts 2008 03 > Group overview Our geographic reach Geographic reach Integrating our global services Through its acquisitions, Concateno Our locations has created a wide footprint of offices, Argentina, Australia, Austria, Bahrain, Belgium, Brazil, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, distribution partners and sample Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Kuwait, collection officers. These resources Liechtenstein, Luxembourg, Maldives, Mexico, Netherlands, New Zealand, North America, Norway, Pakistan, Peru, Philippines, Poland, are a powerful base from which to grow Portugal, Qatar, Romania, Russia, Serbia, Seychelles, Sierra Leone, revenues rapidly and cost effectively. Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Ukraine, United Our aim is to replicate the success of Arab Emirates, United Kingdom, United States, Venezuela, Vietnam. our UK business internationally with initial emphasis on our own offices in Scandinavia, Italy and Spain. In addition, we are focused on increasing sales of our POCT products through existing distribution partners particularly in Australia and Europe. We are also successfully recruiting > North Africa new local channels for other territories, Served by our local partner building first on our worldwide and long Santé Lab (Algeria) established partners that distribute our laboratory products. > South America Served by a number of distributors, including Labcenter in Mexico. We have recently hired a local country manager to develop this market further. > 2008 revenue by geography UK = £28.3m (2007: £18.2m) Continential Europe = £10.7m (2007: £5.0m) Rest of World = £8.4m (2007: £2.9m) connecting sectors > Concateno plc 04 Annual Report and Accounts 2008 > United Kingdom Concateno is the number one supplier in this > EMEA diverse and growing market. Through its long The business enjoys a strong presence in established contracts with government the Middle East through its contracts with, agencies our experience and credibility in all amongst others, Emirates Airlines. In types of drug and alcohol testing is addition it has developed strong distribution unmatched. Equally, we are the largest and partners in the wider region, for example, most experienced provider