Inspiration Hlt Regulatory News (IHC)

27 Sep 2007 07:02

Inditherm PLC27 September 2007 Press Release 27 September 2007 Inditherm plc Interim Results Inditherm plc ("Inditherm" or "the Company"), the provider of innovative heatingsolutions, today reports its Interim Results for the six months ended 30 June2007. Highlights • Group turnover increased by 18% to £880,000 (2006: £745,000)• Pre-tax loss reduced by 50% to £287,000• Loss per share reduced to 0.6p (2006: loss of 2.7p).• Improved product mix resulted in gross margins increasing by 17 percentage points• Delivery of medical demonstration stock units commenced to Smiths Medical in the USA• Significant growth in enquiry levels, still not reflected in orders flow• Order to heat Aston Villa Football Club's new Training Centre and Academy received in August 2007 Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said: "Inditherm's results for the first half show satisfactory progress, althoughchallenges remain to improve the order flow in our Industrial business and todevelop the Medical business in the important North American Market." - ends - For further information, please contact:Inditherm plc Richard Harpum, Chief Executive Tel: +44 (0) 1709 761000 Ian Smith, Finance Directorrharpum@indithermplc.com www.indithermplc.comismith@indithermplc.com Media enquiries:Abchurch Communications Justin Heath/Sarah Hollins Tel: +44 (0) 20 7398 7781justin.heath@abchurch-group.com Chairman's Statement Introduction 2007 started with the re-financing and strengthening of the Balance Sheet, byway of a placing of 30,000,000 new Ordinary Shares raising a net £2.8m,providing the Company with sufficient funds to trade for the medium term.During the first half of the year, we commenced deliveries of demonstrationstock to our new US distributor, Smiths Medical. We also continued to developour Industrial business, with a substantial further order from a leadingconfectionary manufacturer. Financial Review Turnover increased by 18% to £880,000 (2006: £745,000), as a result ofsignificant growth in our Medical business. In our Industrial business salesgrowth was held back by customers delaying deliveries into the second half. As a result of improved product mix, we saw an encouraging improvement in grossmargin percentage, which increased by 17 percentage points to £405,000 (2006:£215,000). Overheads were reduced to £795,000 (2006: £841,000), leaving anoperating loss of £390,000 (2006: £626,000), halving the pre-tax loss to£287,000 (2006: £580,000), and resulting in a loss per share of 0.6p (2006: lossof 2.7p). The cash consumption from operating and investing activities was £516,000 (2006:£540,000), giving a net cash and cash equivalents balance of £4,037,000 at thehalf year. Operational Review Our Industrial business remained focused on process industries and waterutilities. We recruited a number of new sales people and we are now betterplaced to service our customers. Although Industrial orders grew by 13%, saleswere held back due to the phasing of customer requirements. We received furtherorders for our modular pipe work heating system launched in 2006, notably athird major order from a leading international confectionary manufacturer. The system is operational and brings the total business awarded by this newcustomer to over £336,000 in the 15 months to 30 June 2007. During the firsthalf a great deal of emphasis was placed on generating Industrial enquirieswhich are now running at an average £450,000 per month. Medical sales doubled in the first half and orders were up by 76% over the sameperiod last year. We appointed four further overseas medical distributors andreplaced one which was under-performing. As a result, most major targetedoverseas territories are now covered. Smiths Medical placed an initial orderfor demonstration stock at the end of 2006 and these units have now beendelivered. Having completed various approvals and prepared marketing materials,the Smiths sales force is now starting to promote our patient warming systems,although it is still too early to judge how successful their sales and marketingefforts will be. Orders from the NHS picked up noticeably compared to last year, helped by thestrengthening of our medical sales force. We have also been awarded a NHS PASA(Purchasing & Supply Agency) contract; this should enhance our chances ofwinning NHS business, as it meets the requirements of European legislation,allowing hospitals to purchase without the need to issue tenders. Our CosyTherm neonatal warming system is being well received. Following US FDAclearance, we have identified a US distributor specialising in neonatalproducts. The system will be shown at a major US medical trade show inSeptember. Our Construction business obtained further orders for pre-cast concrete curingsystems. Sales increased by 36% over last year, albeit from a low base.Development work in conjunction with a pan-European consortium backed by aEuropean R&D grant is drawing to a close and is now focused on commercialexploitation of the technology. With the prospect of winter looming, we arestarting to see increasing interest in our curing systems. After three years without any major sports-related orders, in August we wereawarded a contract worth £200,000 for the supply of under-pitch heating at AstonVilla Football Club's new Training Centre and Academy at Bodymoor Heath.Installation is expected to start before the year end and should be completed inthe first quarter of 2008. We remain convinced that our heating systems can offer customers significantbenefits in terms of cost reductions, control, hygiene and the environment.Independent research by a leading confectionary manufacturer confirmed that ourprocess heating systems can provide energy cost savings of more than 75%compared to traditional systems. In concrete curing, greater environmental benefits are possible, notably inenergy savings and opportunities to reduce cement content, both of which reducecarbon footprints. Outlook Whilst we have been encouraged by a significant increase in the rate ofenquiries and quotations, we have been disappointed by the time it is taking toconvert these into orders, especially on larger projects, where gestationperiods are long. Although some of these have recently been won, it is tooearly to judge whether the historical rate of order conversion will bemaintained, especially in our core Industrial business. Our Medical business has shown encouraging growth, both in the UK and overseas,it is still very early days in the key US market, and we have yet to establishend-user sales through Smiths Medical. Mark Abrahams Chairman 27 September 2007 Unaudited consolidated income statement For the six months ended 30 June 2007 6 months 6 months Year ended ended ended 30-June 30-June 31-December 2007 2006 2006 Notes £'000 £'000 £'000 Turnover 880 745 1,564 Cost of sales (475) (530) (1,155) Gross profit 405 215 409 Administrative expenses (795) (841) (1,648) Operating loss before exceptional items (390) (586) (1,087)Exceptional administrative expenses 3 - (40) (152) Operating loss (390) (626) (1,239) Finance income 104 46 84 Finance costs (1) - (1) Loss on ordinary activities before taxation (287) (580) (1,156)Taxation credit from loss on ordinary 5 10 - 24activitiesDeficit for the period attributable to equity (277) (580) (1,132)shareholders Loss per share - basic and diluted 4 (0.6)p (2.7)p (5.4)p All amounts relate to continuing activities All recognised gains and losses are included in the income statement Unaudited consolidated balance sheet As at 30 June 2007 30-Jun 30-Jun 31-Dec 2007 2006 2006 £'000 £'000 £'000 Assets Non-current assets Property, plant and equipment 180 246 209 Intangible assets 22 36 29 202 282 238 Current assets Inventories 184 157 121 Trade and other receivables 412 425 267 Tax receivable 34 24 24 Investment - 250 - Cash and cash equivalents 4,037 1,819 1,747 4,667 2,675 2,159 Liabilities Current liabilities Trade and other payables (550) (657) (583) (550) (657) (583) Net current assets 4,117 2,018 1,576 Non-current liabilities Provisions (83) (41) (107) Net assets 4,236 2,259 1,707 Shareholders' equity Called up share capital 511 211 211 Share premium account 9,929 7,423 7,423 Other reserve 50 50 50 Share based payment reserve 60 60 60 Retained earnings (6,314) (5,485) (6,037) Total equity 4,236 2,259 1,707 Unaudited consolidated cash flow statement For the six months ended 30 June 2007 6 months 6 months Year ended ended Ended 30-June 30-June 31-December 2007 2006 2006 Notes £'000 £'000 £'000 Cash flow from operating activities Cash used in operations 6 (611) (569) (983) Interest received 104 46 84 Interest paid (1) - - Interest element of hire purchase payments - - (1) Taxation - - 24 Net cash outflow from operating activities (508) (523) (876) Cash flow from Investing activities Purchase of property, plant and equipment (9) (17) (19) Sale of property, plant and equipment 1 - - Sale of investment - - 284 Net cash (used in)/generated from investing activities (8) (17) 265 Cash flow from financial activities Issue of shares 3,000 - - Share Issue expenses (194) - - Capital element of hire purchase payments - (4) (5) Net cash (used in)/generated from financial activities 2,806 (4) (5) Net increase/(decrease) in cash and cash equivalents 2,290 (544) (616) Cash and cash equivalents at the beginning of the 1,747 2,363 2,363 period Cash and cash equivalents at the end of the period 4,037 1,819 1,747 Unaudited consolidated statement of changes in shareholder equity For the six months ended 30 June 2007 Six months Six months Year ended ended ended 30-June 30-June 31-December 2007 2006 2006 £'000 £'000 £'000 Loss for the period/year (277) (580) (1,132) Issue of shares (including share premium) 3,000 - - Expenses of share issue (194) - - Net movement in shareholders' equity 2,529 (580) (1,132) Opening shareholders' equity 1,707 2,839 2,839 Closing shareholders' equity 4,236 2,259 1,707 Notes to the Interim Report 1. Basis of preparation The interim report has been prepared under the historical cost convention and,for the first time, under the International Financial Reporting Standards (IFRS)accounting policies set out below, as required by AIM rules. These policieshave been applied consistently to all periods presented and are consistent withthose the Directors intend to use in the annual financial statements.Previously, the group has prepared its accounts using UK Generally AcceptedAccounting Principals (UK GAAP). Inditherm's effective date of transition toIFRS is 1 January 2006 (the start of its 2006 financial year). The disclosures required by IFRS 1 'First-time adoption of InternationalFinancial Reporting Standards' concerning the transition from UK GAAP areincluded in this statement. Transitional arrangements On transition to IFRS, an entity is generally required to apply IFRSretrospectively, except where an exemption is available under IFRS 1. The grouphas adopted the IFRS 1 exemption in relation to business combinations and willonly apply IFRS 3 'Business combinations' prospectively from 1 January 2006,with no restatement of previous business combinations. Impact of transition to IFRS The transition from UK GAAP to IFRS has not resulted in any changes to thepreviously reported net losses or net equity of the group. There arepresentational changes arising from the move to IFRS, which have been dealt withusing IAS 1 'Presentation of Financial Statements'. The presentational changes are generally not significant, the most significantdifference being that the format of the group's cash flow statement has changedfrom reconciling opening and closing cash held at bank and in hand toreconciling opening to closing cash and cash equivalents. The adoption of IFRS does not impact the group's strategy or commercialdecisions. 2. Summary of Significant Accounting Policies Basis of preparation These interim financial statements have been prepared, for the first time, inaccordance with International Financial Reporting Standards (IFRS),International Financial Reporting Interpretations Committee (IFRIC)interpretations and with those parts of the Companies Act 1985 applicable tocompanies reporting under IFRS. The standards used are those published by theInternational Accounting Standards Board (IASB) and endorsed by the EU at thetime of preparing these statements. The accounts have been prepared under thehistorical cost convention and on the basis of the accounting policies set outbelow, which Inditherm plc expects to apply to its financial statements for 31December 2007 and which are to be prepared in accordance with IFRS. Basis of consolidation The financial statements of the group consolidate the financial statements ofInditherm plc and its subsidiary undertakings up to 30 June 2007 usingacquisition accounting. The results of subsidiary undertakings acquired duringa financial period are included from the effective date of acquisition. Accounting estimates and judgements The preparation of these financial statements requires management to makeestimates and judgements that affect the reported amounts of assets andliabilities at the date of the financial statements and the reported amounts ofrevenue during the reporting period. Actual results could differ from theseestimates. Information about such judgements and estimation is contained inindividual accounting policies. Key sources of estimation uncertainty that could cause an adjustment to berequired to the carrying amount of asset or liabilities within the nextaccounting period are: • Revenue recognition and assessment on long term contract performance; • Warranty provisions; and • Allowances against the valuation of inventories. Turnover and recognition of income Turnover comprises the fair value of the consideration received or receivablefrom the sale of goods and services in the ordinary course of the group'sactivities. Turnover is shown net of value added tax, returns, rebates anddiscounts. Turnover is recognised when title of the goods passes to thecustomer or when the services have been provided. Turnover and attributable profit on long-term contracts is recognised accordingto the percentage of estimated total contract value completed, provided that theoutcome of the contract can be assessed with reasonable certainty. Amountsrecognised as turnover in respect of work done but not yet billed are includedwithin work in progress. Costs incurred, including an appropriate allocation ofoverheads, in respect of long term contracts are included in work in progressnet of progress payments received and provisions for foreseeable losses.Provision is made in full for any losses as soon as they can be foreseen. Anypayments on account or provisions for foreseeable losses in excess of contractbalances are included in current liabilities. Exceptional items Exceptional items are non-recurring items which are either outside of thegroup's ordinary activities or that due to their size or nature require separatedisclosure in order for the financial statements to provide a better indicationof the underlying results of the business. Employee benefits The group operates a stakeholder pension scheme and contributions are also paidinto employees' personal pension schemes. Contributions are charged to theincome statement in the period in which they become payable. The group has nofurther payment obligations once the contributions have been paid. Share-based incentives The group issues equity settled share options to certain employees. These aremeasured at fair value at the date of grant and recognised as an expense in theincome statement over the vesting period based upon the group's estimate of thenumber and value of options that will eventually vest. The fair value isdetermined by the Black-Scholes pricing model. Research and development costs Research expenditure is written off in the year in which it is incurred.Development expenditure is charged to the income statement in the year in whichit is incurred unless it meets the criteria for capitalisation in IAS 38 'Intangible assets'. Measurement and other uncertainties generally mean thatsuch criteria are not met. Where the criteria are met, intangible assets arecapitalised and amortised over their useful economic lives. Leases Payments made under operating leases, net of any incentives received from thelessor, are charged to the income statement on a straight line basis over theperiod of the lease. Assets acquired under hire purchase contracts are capitalised in the balancesheet and depreciated over the shorter of the lease term or their expecteduseful lives. The capital element of future lease payments are included inliabilities. The interest element is charged to the income statement over theterm of the contract. Foreign currency transactions and balances Foreign currency transactions are translated using exchange rates prevailing atthe date of the transactions. Assets and liabilities are translated at exchangerates ruling at the end of each financial period, gains and losses onretranslation are recognised in the income statement. Property, plant and equipment Property, plant and equipment is stated at cost net of accumulated depreciationand any provision for impairment. Cost comprises purchase cost together withany incidental costs of acquisition. Depreciation is provided to write off thecost less the estimated residual value of the tangible fixed assets by equalinstalments over their estimated useful economic lives. The asset's residualvalues and useful economic lives are reviewed, and adjusted as appropriate, ateach balance sheet date. The following rates are applied: Fixtures and fittings - 10% - 25% per annumMotor vehicles - 25% per annumPlant, machinery and office equipment - 20%- 33% per annum Intangible assets Intangible assets are recognised if it is possible that there will be futureeconomic benefits attributable to the asset, the cost of the asset can bemeasured reliably, the asset is separately identifiable and there is controlover the use of the asset. The assets are amortised over the period over whichthe group expects to benefit from these assets. Provision is made for anyimpairment in value if applicable. Purchased intellectual property rights are capitalised and amortised over theDirectors' estimate of their useful economic life of 10 years. Deferred taxation Deferred taxation is recognised, using the full liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amount in the consolidated financial statements. Deferred taxation isdetermined using tax rates (and laws) that have been enacted, or substantiallyenacted, by the balance sheet date, and are expected to apply when the relateddeferred taxation asset is realised or deferred taxation liability is settled. Deferred taxation assets are recognised only to the extent that it is probablethat future taxable profits will be available against which the temporarydifferences can be utilised. Inventories Inventories which include raw materials and work in progress are stated at thelower of cost and net realisable value. Raw materials are valued on a first infirst out basis. Net realisable value is based on estimated selling price less additional coststo completion or disposal. Allowance is made for obsolete, defective and slowmoving items based on estimated future usage. Trade and other receivables Trade and other receivables are stated at cost less provisions, whereappropriate. Investments Investments held as non-current and current assets are stated at cost lessprovision for any impairment in value. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held on call withbanks, other short term highly liquid investments with original maturities ofthree months or less, and bank overdrafts. Bank overdrafts are shown withinborrowings on the balance sheet. Grants Revenue based grants are credited to the income statement against relatedexpenditure whilst grants of a capital nature are treated as deferred income andare transferred to the income statement over the expected useful lives of therelevant assets. Provisions Provisions are recognised when the Group has a present obligation as a result ofa past event , and it is probable that the Group will be required to settle thatobligation. Provisions are measured at the directors' best estimate of theexpenditure required to settle the obligation at the balance sheet date, and arediscounted to present value where the effect is material. Warranty provision: The performance of products is warranted against clearlydefined performance specifications established by reference to the technical anddevelopment testing carried out at the manufacturing facility in Wath uponDearne and in the field. The estimated cost of work to be performed underwarranty on items sold by the group is provided for when the above criteria aremet. Share capital Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares are shown in equity as a deduction, netof tax, from the proceeds. 3. Exceptional administrative expenses The £152,000 incurred in the year ended 31 December 2006 comprises of Corporatefinance advice of £57,000 (of which £40,000 was reported in the statement to 30June 2006), a provision of £75,000 for the costs of upgrading patient warmingsystems and £20,000 for compensation for loss of office. 4. Loss per share The calculation of loss per share is based on losses of £277,000 (31 December2006: £1,132,000, 30 June 2006: £580,000) and on a weighted average number ofshares of 48,779,248 (31 December 2006 and 30 June 2006 21,112,581) in issue forthe period. The outstanding share options are anti-dilutive due to the loss inthe period. 5. Taxation No corporation tax has been provided for in the period due to the projectedresult for the period not exceeding the losses brought forward. Provision has been made for a tax refund under the provision of the Research andDevelopment tax credit scheme. Deferred tax assets arising from accelerated capital allowances and tradinglosses have not been recognised on the basis that their future economic benefitis uncertain. 6. Reconciliation of operating loss to net cash outflow from operatingactivities: 6 months 6 months Year ended ended ended 30-June 30-June 31-December 2007 2006 2006 £'000 £'000 £'000 Operating loss (390) (626) (1,239) Profit on disposal of current asset investment - - (34) Profit on disposal of property, plant and equipment (1) - - Depreciation and amortisation 45 47 94 (Increase)/decrease in inventories (63) 43 79 (Increase)/decrease in trade and other receivables (145) (157) 1 (Decrease)/increase in trade and other payables (33) 133 277 Decrease in provisions (24) (9) (161) Net cash outflow from operating activities (611) (569) (983) 7. Auditors Tenon Audit Limited resigned as auditors on 21 August 2007. Upon resignationthey confirmed in accordance with section 394 of the Companies Act 1985, thereare no circumstances connected with their resignation that should be brought tothe notice of the members or creditors of the company. The company has appointed PricewaterhouseCoopers LLP as auditors for the companyand the group. 8. Interim financial information The interim financial information for the period ended 30 June 2007 is unauditedand does not constitute statutory accounts within the meaning of Section 240 ofthe Companies Act 1985. The restated comparative figures for the financial yearended 31 December 2006 are also unaudited. The company's annual report andfinancial statements for the year ended 31 December 2006, which were preparedunder UK GAAP in accordance with the Companies Act 1985 have been delivered tothe Registrar of Companies with an unqualified audit report. The Interimaccounts for the six months ended 30 June 2006 are also unaudited and wereapproved by the Board of Directors on 28 September 2006. Copies of the announcement will be sent to shareholders and are available tomembers of the general public from the Company Secretary, Inditherm plc,Inditherm House, Houndhill Park, Bolton Road, Wath upon Dearne, S63 7LG or viathe Company website at www.inditherm.co.uk. This information is provided by RNS The company news service from the London Stock Exchange