Last checked at 24 Sep 2009 07:00
| Press release | 24 September 2009 |
Inditherm plc
("Inditherm" or "the Company")
Interim Results
Inditherm plc, the provider of innovative heating solutions, is pleased to announce its Interim Results for the six months ended 30 June 2009.
Highlights
| First half trading levels depressed in the face of global recessionary pressures, group turnover excluding sales to Smiths Medical, fell by 32% to £555k (2008: £811k). | |
| Pre-tax loss of £635k (2008: £22k profit) | |
| Loss per share of 1.2p (2008: 0.04p earning per share) | |
| Medical orders growth rate at 5% for the first half despite tough market conditions | |
| Two new product enabling technologies developed for food and industrial applications will help with the acceptance of core heating systems | |
| Redirected resources and focus to accelerate the growth of the Medical sector | |
| Shift in sales focus for Medical sector, placing greater emphasis on the cost savings that are available to the NHS through using Inditherm heated mattresses. | |
| Tight control of overheads and restructuring programme completed | |
| Net cash in hand at the half year of £2,586k |
Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said:
"Trading in the second half of 2009 has, so far, followed a similar pattern to that experienced in the first half. The peak summer months are traditionally the quieter period for all areas of the business so we are unclear at this stage how long these market conditions will continue."
"The Company is pushing hard to maximise sales, with emphasis on the Medical sector, as we drive the business towards break-even, but anticipate continuing to make a loss in the second half of the year."
For further information:
| Inditherm plc | |
| Nick Bettles, Chief Executive nbettles@indithermplc.com | Tel: +44 (0) 1709 761000 |
| Ian Smith, Finance Director ismith@indithermplc.com | www.indithermplc.com |
Media enquiries:
| Abchurch | |
| Sarah Hollins / Simone Alves simone.alves@abchurch-group.com | Tel: +44 (0) 20 7398 7728 www.abchurch-group.com |
| Collins Stewart Europe (Nomad) | |
| Hugh Field HField@collinsstewart.com | Tel: +44 (0) 20 7523 8350 |
Chairman's Statement
Introduction
In the face of global recessionary pressures, the first half of 2009 has resulted in trading at reduced levels, particularly in the Industrial markets. Whilst the Medical business has continued to grow the rate is lower than our historic performance. Costs have been contained and a restructuring programme completed to reduce overheads.
Financial Review
Turnover, excluding sales to Smiths Medical, fell by 32% to £555k (2008: £811k). Orders for medical products showed an underlying growth rate of 5% and sales from the non-medical market sectors of the business fell by 53%. We are seeing delayed decision making in all markets as a result of the recession, with this being most marked in the Industrial sector.
The gross margin percentage for each of the market sectors remain broadly comparable with those achieved in 2008. However, overall gross margins have fallen to £169k due to the absence of repeat orders from Smiths Medical and an under recovery of the manufacturing fixed costs, due to the fall in non-medical volumes. Also included in the costs are exceptional costs of £73k and a write off of development costs of £18k.
Overheads remain tightly controlled at £826k (2008: £803k), giving a pre-tax loss of £635k (2008: profit £22k), resulting in a loss per share of 1.2p (2008: profit of 0.04p). Further restructuring costs of £36k will be incurred in the second half.
The cash consumption from operating and investing activities was £529k (2008:£25k), giving a net cash and cash equivalents balance of £2,586k in hand at the half year.
Operational Review
Whilst our Medical business has continued to grow, capital cash constraints on our customers have caused delays in decision-making and thus reduced the rate of growth. Pressures to deliver cost saving in the UK NHS provide the opportunity to target the financial benefits of our operating room products.
We are now offering hospitals a range of payment options which will allow them to achieve immediate cash savings and utilise revenue budgets and shifting our sales approach to increase focus on the cost saving benefits over the clinical advantages. We have recently added additional sales resource to improve coverage in the UK, and whilst we anticipate that it will take a number of months for this to result in an increased order rate, early signs are encouraging. CosyTherm remains strong in the UK neonatal warming sector, although not immune to NHS cost pressures.
Success in the US remains a key part of our strategic aims and is fundamental to our drive towards break-even. We are confident there are significant opportunities for our product ranges but progress to date has been below our expectations and further hindered by the market conditions in the USA. We are actively supporting our American distributors in every way possible, and they remain confident that the cost-saving benefits of our technology will result in progress, particularly in the operating room market.
Our second international distributor conference was held in March, with 28 attendees from 20 different countries. The opportunity was used to give guidance on the best ways to promote our products more successfully, which was well received. We continue to seek opportunities to expand our medical product range with products that can complement our existing ranges and customer base and introduced two such systems to our distributor network during the conference.
As already highlighted, the level of Industrial orders has suffered from protracted decision making and delays in customer projects. This has been exacerbated by their own financial constraints. Consequently we do not believe that we are losing significant business to competition and a number of significant opportunities are still ongoing. As a result of market conditions the business has been restructured to significantly reduce headcount and cost base in the Industrial part of the organisation.
In working with a major confectionery company we were challenged to make a number of changes to our product offering. As a result we have strengthened our offering through the development of a new food grade cladding system (Inditherm Pro) and an advanced control and monitoring package (Inditherm Plus).
We believe that these additions will prove enabling technologies that will help increase acceptance of our core industrial heating systems. A trial installation is currently under evaluation and results should be published within the customer's organisation this year.
The business has directed its resources and focus to accelerating the growth of the Medical sector. The Board believe that this gives the company its potentially fastest route to break-even.
Outlook
Trading in the second half of 2009 has, so far, followed a similar pattern to that experienced in the first half. The peak summer months are traditionally the quieter period for all areas of the business so we are unclear at this stage how long these market conditions will continue.
We are pushing hard to maximise sales, with emphasis on the Medical sector, as we drive the business towards break-even, but anticipate continuing to make a loss in the second half of the year. There remains some significant opportunities in both Medical and Industrial sectors, which we are pursuing vigorously. If successful, these have the potential to take us through break-even.
Mark Abrahams
Chairman
24th September 2009
Unaudited consolidated income statement
For the six months ended 30 June 2009
| 6 months | 6 months | Year | ||
| ended | ended | ended | ||
| 30-Jun | 30-Jun | 31-Dec | ||
| 2009 | 2008 | 2008 | ||
| Notes | £'000 | £'000 | £'000 | |
| Turnover | 555 | 1,261 | 1,983 | |
| Cost of sales | (386) | (530) | (878) | |
|
|
|
| ||
| Gross profit | 169 | 731 | 1,105 | |
| Administrative expenses | (826) | (803) | (1,607) | |
| Operating loss before exceptional items |
| (584) | (72) | (502) |
| Exceptional costs | 1 | (73) | - | - |
| Operating loss | (657) | (72) | (502) | |
| Finance income | 22 | 95 | 179 | |
| Finance costs | - | (1) | (1) | |
|
|
|
| ||
| (Loss)/profit on ordinary activities before taxation | (635) | 22 | (324) | |
| Taxation credit from loss on ordinary activities | 2 | - | - | 41 |
|
|
|
| ||
| (Loss)/profit for the period attributable to equity shareholders | (635) | 22 | (283) | |
| (Loss)/earnings per share - basic and diluted | 3 | (1.2)p | 0.04p | (0.6)p |
All amounts relate to continuing activities
All recognised gains and losses are included in the income statement
There is no difference between the results stated above and those prepared on the basis of historic cost equivalents
Unaudited consolidated balance sheet
As at 30 June 2009
| 30-Jun | 30-Jun | 31-Dec | |
| 2009 | 2008 | 2008 | |
| £'000 | £'000 | £'000 | |
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 67 | 155 | 115 |
| Intangible assets | 83 | 9 | 92 |
| 150 | 164 | 207 | |
| Current assets | |||
| Inventories | 129 | 155 | 175 |
| Trade and other receivables | 202 | 449 | 317 |
| Tax receivable | 40 | 15 | 40 |
| Cash and cash equivalents | 2,586 | 3,460 | 3,115 |
| 2,957 | 4,079 | 3,647 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | (188) | (368) | (311) |
|
|
|
| |
| Net current assets | 2,769 | 3,711 | 3,336 |
| Non-current liabilities | |||
| Provisions | (5) | (33) | - |
|
|
|
| |
| Net assets | 2,914 | 3,842 | 3,543 |
| Shareholders' equity | |||
| Called up share capital | 511 | 511 | 511 |
| Share premium account | 9,929 | 9,929 | 9,929 |
| Share based payment reserve | 128 | 116 | 122 |
| Retained earnings | (7,654) | (6,714) | (7,019) |
|
|
|
| |
| Total equity | 2,914 | 3,842 | 3,543 |
Unaudited consolidated cash flow statement
For the six months ended 30 June 2009
| 6 months | 6 months | Year | ||
| ended | ended | Ended | ||
| 30-Jun | 30-Jun | 31-Dec | ||
| 2009 | 2008 | 2008 | ||
| Notes | £'000 | £'000 | £'000 | |
| Cash flow from operating activities | ||||
| Cash used in operations | 4 | (533) | (117) | (481) |
| Finance Income | 22 | 95 | 179 | |
| Finance Costs | - | (1) | (1) | |
| Taxation | - | 24 | 40 | |
|
|
|
| ||
| Net cash (outflow)/ inflow from operating activities | (511) | 1 | (263) | |
| Cash flow from Investing activities | ||||
| Purchase of property, plant and equipment | (18) | (16) | (17) | |
| Capitalised development costs | - | (10) | (91) | |
| Sale of property, plant and equipment | - | - | 1 | |
|
|
|
| ||
| Net cash used in investing activities | (18) | (26) | (107) | |
|
|
|
| ||
| Net decrease in cash and cash equivalents | (529) | (25) | (370) | |
| Cash and cash equivalents at the beginning of the period | 3,115 | 3,485 | 3,485 | |
| Cash and cash equivalents at the end of the period | 2,586 | 3,460 | 3,115 | |
Unaudited consolidated statement of changes in shareholder equity
For the six months ended 30 June 2009
| 6 months | 6 months | Year | |
| ended | ended | ended | |
| 30-Jun | 30-Jun | 31-Dec | |
| 2009 | 2008 | 2008 | |
| £'000 | £'000 | £'000 | |
| (Loss)/profit for the period/year | (635) | 22 | (283) |
| Share based payments | 6 | 6 | 12 |
| Net movement in shareholders' equity | (629) | 28 | (271) |
| Opening shareholders' equity | 3,543 | 3,814 | 3,814 |
|
|
|
| |
| Closing shareholders' equity | 2,914 | 3,842 | 3,543 |
Notes to the interim report
1. Exceptional costs
Included in cost of sales is a provision for £51,000 against inventories and £22,000 against fixed assets of the Industrial segment of the business. The provisions reflect an adjustment to net realisable value following the change in strategy announced in the Trading Statement released on 27 July 2009.
In the second half of 2009 a charge of £36,000 will be taken to reflect costs associated with the redundancy programme that was announced with the Trading Statement.
2. Taxation
No corporation tax has been provided for in the period due to the projected result for the period not exceeding the losses brought forward. Deferred tax assets arising from accelerated capital allowances and trading losses have not been recognised on the basis that their future economic benefit is uncertain.
3. Profit/(loss) per share
The calculation of loss per ordinary share is based on a loss £635,000 (30 June 2008: Profit £22,000, 31 December 2008: loss £283,000) and on a weighted average number of shares of 51,112,581 in issue for the period.
The outstanding share options are currently anti-dilutive.
4. Reconciliation of operating loss to net cash outflow from operating activities:
| 6 months | 6 months | Year | |
| ended | ended | ended | |
| 30-Jun | 30-Jun | 31-Dec | |
| 2009 | 2008 | 2007 | |
| £'000 | £'000 | £'000 | |
| Operating loss | (657) | (72) | (502) |
| Profit on disposal of property, plant and equipment | - | - | (1) |
| Depreciation and amortisation | 35 | 39 | 78 |
| Share based payments | 6 | 6 | 12 |
| Write off of intangible Assets | 18 | - | - |
| Write off of tangible Assets | 22 | - | - |
| Write off of inventories | 51 | - | - |
| (Increase)/decrease in inventories | (5) | 37 | 17 |
| Decrease in trade and other receivables | 115 | 148 | 280 |
| (Decrease) in trade and other payables | (123) | (254) | (311) |
| Increase/(decrease) in provisions | 5 | (21) | (54) |
| Net cash outflow from operating activities | (533) | (117) | (481) |
5. Continuing activities
Continuing activities in these accounts is in accordance with the provisions of IFRS 5 Non current assets held for sale and discontinued operations.
6. Interim financial information
The interim financial information for the period ended 30 June 2009 is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the financial year ended 31 December 2008 are extracted from the audited accounts for that period. The company's annual report and financial statements for the year ended 31 December 2008 which were prepared under International Financial Reporting Standards (IFRS) in accordance with the Companies Act 1985 have been delivered to the Registrar of Companies with an unqualified audit report. The Interim accounts for the six months ended 30 June 2008 are also unaudited and were approved by the Board of Directors on 25 September 2008.
Copies of the announcement will be sent to shareholders and are available to members of the general public from the Company Secretary, Inditherm plc, Inditherm House, Houndhill Park, Bolton Road, Wath upon Dearne, S63 7LG or via the Company website at www.inditherm.com.
- ENDS -