Inspiration Hlt Regulatory News (IHC)

28 Sep 2005 07:01

Inditherm PLC28 September 2005 Press Release 28 September 2005 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 June2005. Highlights • Turnover decreased by 27% to £579k (2004: £789k)• Turnover restricted by the absence of new football pitch heating contracts; like for like sales across the remainder of the business grew by 82%• Pre-tax loss of £682k (2004: £462k)• Loss per share of 3.2p (2004: 2.2p)• Reduced first half cash out-flow of £645k (2004: £1,017k)• Cash balance of £3m• Major contract at Terminal 5 and EU research grant for concrete curing system• Key supplier approvals gained from major water utilities and their AMP4 contractors• New Chief Executive has re-focussed business on higher value projects, particularly in construction, industrial tanks, water utilities and medical Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said: "Inditherm remains convinced by the quality of its product and theprofessionalism of its service, and this conviction has been confirmed by arecent, independent customer perception study. The second half of the year istraditionally the stronger period for industrial sales activity and, combinedwith the ramp-up in water utility activity, we anticipate a stronger finalquarter. "However, the lack of pitch heating orders, which accounted for £888k of salesin 2004, will mean that it is most unlikely that we will better last year'sperformance, despite the solid growth in each of our other three business areas." - 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.com ismith@indithermplc.com Media enquiries:Abchurch Communications Justin Heath Tel: +44 (0)20 7398 7781 Sarah Hollins Tel: +44 (0) 113 203 1341justin.heath@abchurch-group.com Notes to Editors: Inditherm plc is an AIM-listed provider of low power, cost-effective heatingtechnology. It manufactures, installs and licenses its specialised heatingtechnology for use in numerous applications that require temperature maintenanceor frost protection, including medical, industrial, utility, pharmaceutical,construction, sports pitch heating, physiotherapy and automotive. Inditherm's technology uses a carbon-based electrically conductive polymer, alsocalled Inditherm, to produce a cost-effective, flexible and adaptable heatingsurface that heats between ambient temperature and 120degreesC. Typicallypowered from a 6V to 48V (ac or dc) power supply, Inditherm generates uniformheat over its entire surface with no hot or cold spots. It can be shaped to fitover a wide variety of applications, making it highly adaptable. Chairman's Statement Introduction As reported in my previous statement, our new Chief Executive, Richard Harpum,has implemented a new strategy, with a number of changes made to both the focusand resources of the Company. During the period there was a greaterconcentration on larger potential projects, with particular emphasis onconstruction, industrial tanks, water utilities and medical. Although in itsearly days and as yet unproven, there are some encouraging signs emerging,albeit, that the larger projects necessarily take longer to convert into sales.Consequently, the sales impact to date does not reveal the benefits of this newstrategy. Of particular relevance to the first half performance is the lack of footballpitch sales, which last year represented 60% of first half sales. In all otherareas of the business healthy progress has been made. As part of this strategy, considerable progress has been made in improving ouroperational processes. Financial Review Turnover for the first half of 2005 was £579k (2004: £789k), a decrease of 27%.Like for like sales excluding football pitches, grew by 82%. Investment in sales development increased administrative expenses to £935k(2004: £761k), leaving an operating loss before exceptional items of £708k(2004: £465k) and a pre-tax loss of £682k (2004: £462k), resulting in a loss pershare of 3.2p (2004: 2.2p). Exceptional costs of £50k were associated withemployee severance costs. Assisted by a reduction in working capital, the cash out-flow in the first halfwas £645k (2004: £1,017k) leaving a cash balance of £3m, which we consider to besufficient to meet the near term requirements of the business. Operational Review The business has now been organised into four segments: Industrial, Medical,Sport and Construction. Our Industrial business expanded its customer base in the first half, withincreased orders for process heating, especially for tanks and pipework. Thestrategy has been not only to identify new accounts but to build on our existingcustomer base by growing the volume of smaller orders, whilst also pursuinglarger contracts, which generally have longer lead times. We have seencontinuing success in food processing, with major projects being successfullycompleted at Manor Bakeries (Mr. Kipling Cakes) and Richmond Foods. The Companyhas also seen growing demand in the chemicals and pharmaceutical sectors for ourprocess and bulk storage heating applications, where our Zone 2 Certificationallow us to be used in hazardous areas. A new range of drum heaters has beenlaunched and a new sales person with experience in these sectors was hired atthe beginning of the second half. The anticipated growth in water utility applications has been slow to commence,due to the delay in demand for heating requirements as part of the new AssetManagement Programme (AMP4), which commenced in April 2005. Inditherm has beengaining supplier approvals from both the major water utilities and their newAMP4 contractors, which will enable us to supply our heating and insulationproducts. Demand is expected to pick-up in the second half, as new AMP4projects are commenced and also the colder weather generates demand for frostprotection of pipework and pumps. Our new design of heating jacket for multiplechemical dosing lines has been well received and several sizable proposals havenow been submitted. The Medical business, which we have been rebuilding over the last year, hascontinued to develop its international markets, with a further four newinternational distributors being appointed in the first half. Throughout theyear, we have been processing an application to the US Food and DrugsAdministration (FDA) for approval of our Medical products. Our SpeedHeattherapeutic heating products have now been approved and approval of our patientwarming products is expected this year. In anticipation of gaining approval,discussions with several potential US distributors have been initiated.Although an improvement on last year, progress in the UK was disappointing, withsales of heated mattresses to the NHS remaining at low levels and orders takinga long time to process. This is partly due to the conservatism of this marketbut also the lack of investment by the NHS. A new rental scheme is beingtrialled and has received positive interest. Following completion last year of the under-pitch heating installations atFalkirk Community Stadium and Chelsea Football Club's new training facility, thesystems saw operational use in the first quarter. This proved that our heatingsystem works well, and showed energy savings of around £1,000 per day per pitchover equivalent hot water heating systems. Unfortunately, the two major UKpitch heating projects planned for 2005/2006 had already decided to installwater heating systems and attempts to change these decisions were notsuccessful. As most major pitch heating project requirements are in the publicdomain, we are pursuing all known opportunities in the UK and Europe. However,orders are not expected until late 2005 or 2006, so no pitch heating sales areanticipated for this year. In the first half we achieved initial successes in the construction market, witha small bridge heating project at Hammersmith, London, followed by a majorproject at London Heathrow Airport's new Terminal 5. This involved the supplyof concrete curing blankets covering a total area of over 800m2 and results insignificantly accelerated curing, as well as giving the contractor, LaingO'Rourke, the ability to pour concrete in cold weather. In conjunction with theCentre for Infrastructure Management at Sheffield Hallam University, we wereawarded a grant from the European FP6 CRAFT programme. The grant will support R&D to develop thermal curing systems for pre-cast concrete manufacturing, basedon the core Inditherm technology as the heat source. The systems will bedeveloped within a multi-faceted trans-European consortium of developmentpartners, some of whom we hope will also become regular customers, once thesolutions are developed. Management Since the appointment last year of Richard Harpum as Chief Executive, there havebeen a number of management changes. We hired a Technical Manager in May 2005who has succeeded Colin Tarry, the former Technical and Business DevelopmentDirector, who left the Company in June to pursue other interests. The salesforce has been strengthened with new recruits and further enhancements areplanned for the second half. Outlook We continue to believe in the merits of the Inditherm product but have beenconcerned at the slow market penetration. As a consequence, we have undertakenan external study to examine customer perception and acceptance of Inditherm.The findings have been helpful in confirming the quality of products andservices being offered. Whilst validating the logic of our strategy ithighlighted the conservatism in the markets we serve and that many customersneed considerable persuasion to convert to Inditherm. Nevertheless, onceconvinced, acceptance levels have been extremely high. During the remainder of the year we anticipate continuing progress in our coreactivities. We have seen the traditional summer slowdown in terms of sales butwe have been encouraged by an increase in the rate of quotations, especially forIndustrial solutions. The second half of the year is traditionally the strongerperiod for Industrial sales activity and combined with the ramp-up in waterutility activity, we anticipate a stronger final quarter. However, the lack of any pitch heating orders, which accounted for £888k ofsales in 2004, will mean that it is most unlikely that we will better lastyear's performance, despite the solid growth in each of our other three businessareas. Mark AbrahamsChairman Unaudited consolidated profit and loss accountFor the six months ended 30 June 2005 Year 6 months 6 months ended ended ended 31-December 30-June 30-June 2004 2005 2004 £'000 £'000 £'000 1,598 Turnover 579 789 (1,080) Cost of Sales (402) (580) 518 Gross profit 177 209 (2,022) Administrative expenses (935) (761) (1,176) Operating loss before exceptional item (708) (465) (328) Exceptional administrative expenses (50) (87) (1,504) Operating Loss (758) (552) 186 Interest receivable 77 92 (4) Interest payable (1) (2) (1,322) Loss on ordinary activities before (682) (462) taxation 16 Taxation credit from loss on ordinary - - activities (1,306) Deficit for the period/year (682) (462) (6.2)p Loss per share - basic and diluted (3.2)p (2.2)p All amounts relate to continuing activitiesAll recognised gains and losses are included in the profit and loss account Unaudited consolidated balance sheetAs at 30 June 2005 31-Dec 30-Jun 30-Jun 2004 2005 2004 £'000 £'000 £'000 Fixed assets 56 Intangible assets 50 63 294 Tangible assets 284 338 _______ _______ _______ 350 334 401 Current assets 224 Stocks 215 184 507 Debtors 299 1,063 250 Investment 250 250 3,590 Cash at bank and in hand 2,984 4,036 _______ _______ _______ 4,571 3,748 5,533 (538) Creditors: amounts falling due within one year (388) (730) _______ _______ _______ 4,033 Net current assets 3,360 4,803 _______ _______ _______ 4,383 Total assets less current liabilities 3,694 5,204 (7) Creditors : amounts falling due after more than one (2) (11) year (272) Provision for liabilities and charges (270) (245) _______ _______ _______ 4,104 Net assets 3,422 4,948 _______ _______ _______ Capital and reserves - equity 211 Called up share capital 211 211 7,409 Share premium account 7,409 7,409 50 Other reserve 50 50 (3,566) Profit and loss account (4,248) (2,722) _______ _______ _______ 4,104 Shareholders' funds 3,422 4,948 _______ _______ _______ Unaudited consolidated cash flow statementFor the six months ended 30 June 2005 Year Note 6 months 6 months Ended ended ended 31-December 30-June 30-June 2004 2005 2004 £'000 £'000 £'000 (1,554) Net cash outflow from operating activities 4 (645) (1,017) Returns on investments and servicing of finance 186 Interest received 77 92 (4) Interest element of hire purchase payments (1) (2) _______ _______ _______ 182 Net cash inflow from returns on investments and servicing 76 90 of finance 16 Taxation - - Capital expenditure (92) Purchase of tangible fixed assets (29) (68) 24 Sale of tangible fixed assets - - _______ _______ _______ (68) Net cash inflow/(outflow) from capital expenditure (29) (68) _______ _______ _______ (1,424) Net cash outflow before management of liquid resources (598) (995) and financing Management of liquid resources 1034 (Increase)/decrease in cash on short term deposit 5 703 664 Financing (33) Capital element of hire purchase payments (8) (16) _____________ _____________ _____________ (423) Increase/(decrease) in cash 5 97 (347) ________ ________ ________ Notes to the interim report 1. Basis of preparation The interim report has been prepared using accounting policies consistent withthose adopted in the statutory accounts of the group for the year ended 31December 2004 except where any changes, and the reasons for them, are disclosed. 2.Taxation No corporation tax has been provided for in the period due to the projectedresult for the period not exceeding the losses brought forward. Deferred tax assets arising from accelerated capital allowances and tradinglosses have not been recognised on the basis that their future economic benefitis uncertain. 3.Exceptional item Included within administrative expenses is an amount of £50,000 in respectof severance payments. 4.Reconciliation of operating loss to net cash outflow from operatingactivities: Year 6 months 6 months ended ended ended 31-December 30-June 30-June 2004 2005 2004 £'000 £'000 £'000 (1,504) Operating loss (758) (552) 92 Depreciation and amortisation 45 45 (155) Decrease/(Increase)in stock 9 (115) 65 Decrease/(Increase)in debtors 208 (491) (70) (Decrease)/Increase in creditors (147) 101 14 Increase/(decrease) in provisions (2) (5) 4 Loss on disposal of fixed assets - - _______ _______ _______ (1,554) Net cash outflow from operating activities (645) (1,017) _______ _______ _______ 5. Reconciliation of net cash flow to movements in net funds Year 6 months 6 months ended ended ended 31-December 30-June 30-June 2004 2005 2004 £'000 £'000 £'000 (423) Increase/(decrease) in cash in year/period 97 (347) 33 Cash outflow from decrease in debt 8 16 (1,034) Cash (inflow)/outflow from (decrease)/increase (703) (664) _______ _______ _______ (1,424) Increase/(decrease) in net funds from cashflows (598) (995) _______ _______ _______ 4,995 Net funds brought forward 3,571 4,995 _______ _______ _______ 3,571 Net funds carried forward 2,973 4,000 _______ _______ _______ 6. Analysis of changes in net funds 01-Jan Cash 30-Jun 2005 flow 2005 £'000 £'000 £'000 Cash at bank and in hand 3,590 (606) 2,984 Less: deposits treated as liquid resources (3,572) 703 (2,869) _______ _______ _______ 18 97 115 Obligations under hire purchase contracts (19) 8 (11) Term deposits 3,572 (703) 2,869 _______ _______ _______ 3,571 (598) 2,973 _______ _______ _______ 7. Reconciliation of movement in shareholders' funds/(deficit) Year 6 months 6 months ended ended ended 31-December 30-June 30-June 2004 2005 2004 £'000 £'000 £'000 (1,306) Loss for the period/year (682) (462) _______ _______ _______ (1,306) Net movement in shareholders' funds (682) (462) 5,410 Opening shareholders' funds 4,104 5,410 _______ _______ _______ 4,104 Closing shareholders' funds 3,422 4,948 _______ _______ _______ 8. Loss per share The calculation of loss per share is based on losses of £682,000 (31 December2004: £1,306,000, 30 June 2004: £462,000) and on a weighted average number ofshares of 21,069,980 (31 December 2004: 21,069,980, 30 June 2004: 21,069,980) inissue for the period. The outstanding share options are anti-dilutive due to the loss in the period. 9. Copies of this interim report are available from the Company's registeredoffice. 10.The interim financial information for the period ended 30 June 2005 isunaudited and does not constitute statutory accounts within the meaning ofSection 240 of the Companies Act 1985. The financial information for the yearended 31 December 2004 is derived from the statutory accounts. Full accountswere delivered to the Registrar of Companies with an unqualified audit report. This information is provided by RNS The company news service from the London Stock Exchange