Last checked at 25 Sep 2008 07:00
| Press release | 25 September 2008 |
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 2008.
Highlights
| Group turnover increased by 43% to £1,261,000 (2007: £880,000) | |
| Pre-tax profit of £22,000 (2007: loss £287,000) | |
| Gross margin increased to 58% | |
| Profit per share of 0.04p (2007: loss of 0.6p) | |
| Orders for the Medical business at an annual compound growth rate of above 45% which we expect to maintain | |
| Successful change in focus in the Industrial markets leading to improved margins | |
| Further growth in the medical business. Significant increase interest levels from NHS following NICE guidelines on patient warming during surgery | |
| Neonatal product, CosyTherm, now a UK market leader and attracting interest in the North American market | |
| Significant focus on driving the Medical business in the USA |
Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said:
"This has been a significant period for Inditherm and we are very pleased to announce our first pre-tax profit, albeit modest. We have improved our margins and quality of business which means that we can reach break-even at a lower level of sales.
Our change in focus in the Industrial markets has delivered considerably improved margins although orders are down as anticipated during this initial period. A clear strategy is now in place that should provide the basis for moving forward.
The results achieved in the first half of 2008 benefitted from the delivery of launch stocks to Smiths Medical in the USA. There is significant focus on ensuring this attractive North American market is driven forward as it enters its secondary phase of its development.
We are currently experiencing increased level of interest from the NHS, following NICE guidelines encouraging a significant increase in patient warming before, during and after surgery.
We anticipate making a loss in the second half of the year, although underlying growth in Medical should drive the business towards break-even in the foreseeable future."
- Ends -
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 sarah.hollins@abchurch-group.com | Tel: +44 (0) 20 7398 7728 |
| Simone Alves simone.alves@abchurch-group.com | www.abchurch-group.com |
Chairman's Statement
Introduction
The first half of 2008 has resulted in a pre-tax profit, albeit modest, for the first time in the Company's history. Higher margins and the quality of business secured means that break-even level can be achieved at a lower level of sales. Costs have been contained and cash consumption has been negligible during the period.
Financial Review
Turnover increased by 43% to £1,261,000 (2007: £880,000), boosted by sales to Smiths Medical. Sales in the Industrial market were down on previous year, although margins were much improved.
We saw an encouraging improvement in gross margin, which increased to 58% (46%) delivering £731,000 (2007: £405,000). Overheads held steady at £803,000 (2007: £795,000), leaving a much reduced operating loss of £72,000 (2007: £390,000) and giving a pre-tax profit of £22,000 (2007: loss of £287,000), resulting in a profit per share of £0.04p (2007: loss of 0.6p).
The cash consumption from operating and investing activities was £25,000 (2007: £516,000), giving a net cash and cash equivalents balance of £3,460,000 at the half year.
Operational Review
Our change in focus in the Industrial markets has delivered considerably improved margins although orders are down as anticipated during this initial period. Although results in this sector remain disappointing, prospects are encouraging, with ongoing discussions continuing with major confectionery customers and potential strategic partners. A clear strategy is now in place that should provide the basis for moving forward.
Smiths Medical progress in the USA remains slow, although there are signs that give reason for encouragement. There is significant focus on ensuring that business in this attractive North American market is driven forward. The CosyTherm neonatal range has been launched in the USA and is starting to attract increasing interest; we hope this sector will show strong growth over the coming year.
Further growth in the rest of the Medical business will help to offset the slow progress with Smiths in the USA. NICE recently released a guideline that recommends a significant increase from patient warming before, during and after surgery. This has stimulated an increased interest in the NHS which we hope will further accelerate market uptake of Inditherm technology, with encouraging signs already. We believe that CosyTherm is now firmly established as market leader in the UK for its sector.
In the Construction sector we continue to focus on the pre-cast concrete market where the use of Inditherm has been shown to generate considerable benefits for the customer. Progress has been slow as we complete product development, but we are actively pursuing a number of significant opportunities which should be decided in the second half of 2008.
Installation and commissioning of the under-pitch heating for the Aston Villa training ground was completed last month. Whilst we have received further tentative enquiries for pitch-heating projects, we are holding firm on our strategy to pursue only projects that can deliver a reasonable margin and we do not anticipate any orders in the second half of 2008.
Outlook
The results achieved in the first half of 2008 derived significant benefit from the delivery of launch stocks to Smiths Medical in the USA. This market is now in the secondary phase of its development and whilst there are some indications that give cause for encouragement the sales level to the USA will be at a lower rate in the medium term than experienced to date. The process of sell-through into the USA is being closely monitored to maximise growth there.
Orders for the Medical business in other territories are running at an annual compound growth rate of above 45% which we expect to maintain.
The improved margins realised in the Industrial business from our more focused approach should deliver benefit when order levels start to increase.
We anticipate making a loss in the second half of the year, although underlying growth in Medical should drive the business towards break-even in the foreseeable future. Results in the first half have shown how close the balance is now between profit and loss in the business.
Mark Abrahams
Chairman
25 September 2008
Unaudited consolidated income statement
For the six months ended 30 June 2008
| 6 months | 6 months | Year | ||
| ended | ended | ended | ||
| 30-June | 30-June | 31-December | ||
| 2008 | 2007 | 2007 | ||
| Notes | £'000 | £'000 | £'000 | |
| Turnover | 1,261 | 880 | 1,861 | |
| Cost of sales | (530) | (475) | (1,055) | |
| Gross profit | 731 | 405 | 806 | |
| Administrative expenses | (803) | (795) | (1,733) | |
| Operating loss before exceptional items | (72) | (390) | (799) | |
| Exceptional administrative expenses | 1 | - | - | (128) |
| Operating loss | (72) | (390) | (927) | |
| Finance income | 95 | 104 | 215 | |
| Finance costs | (1) | (1) | (2) | |
| Profit/(loss) on ordinary activities before taxation | 22 | (287) | (714) | |
| Taxation credit from loss on ordinary activities | 3 | - | 10 | 15 |
| Profit/(loss) for the period attributable to equity shareholders | 22 | (277) | (699) | |
| Earnings/(loss) per share - basic and diluted | 2 | 0.04p | (0.6)p | (1.4)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 2008
| 30-Jun | 30-Jun | 31-Dec | |
| 2008 | 2007 | 2007 | |
| £'000 | £'000 | £'000 | |
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 155 | 180 | 162 |
| Intangible assets | 9 | 22 | 15 |
| 164 | 202 | 177 | |
| Current assets | |||
| Inventories | 155 | 184 | 192 |
| Trade and other receivables | 449 | 412 | 597 |
| Tax receivable | 15 | 34 | 39 |
| Cash and cash equivalents | 3,460 | 4,037 | 3,485 |
| 4,079 | 4,667 | 4,313 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | (368) | (550) | (622) |
| Net current assets | 3,711 | 4,117 | 3,691 |
| Non-current liabilities | |||
| Provisions | (33) | (83) | (54) |
| Net assets | 3,842 | 4,236 | 3,814 |
| Shareholders' equity | |||
| Called up share capital | 511 | 511 | 511 |
| Share premium account | 9,929 | 9,929 | 9,929 |
| Other reserve | 50 | 50 | 50 |
| Share based payment reserve | 66 | 60 | 60 |
| Retained earnings | (6,714) | (6,314) | (6,736) |
| Total equity | 3,842 | 4,236 | 3,814 |
Unaudited consolidated cash flow statement
For the six months ended 30 June 2008
| 6 months | 6 months | Year | ||
| ended | ended | Ended | ||
| 30-June | 30-June | 31-December | ||
| 2008 | 2007 | 2007 | ||
| Notes | £'000 | £'000 | £'000 | |
| Cash flow from operating activities | ||||
| Cash used in operations | 4 | (117) | (611) | (1,257) |
| Interest received | 95 | 104 | 215 | |
| Interest paid | (1) | (1) | (2) | |
| Taxation | 24 | - | - | |
| Net cash inflow/(outflow) from operating activities | 1 | (508) | (1,044) | |
| Cash flow from Investing activities | ||||
| Purchase of property, plant and equipment | (26) | (9) | (25) | |
| Sale of property, plant and equipment | - | 1 | 1 | |
| Net cash (used in)/generated from investing activities | (26) | (8) | (24) | |
| Cash flow from financial activities | ||||
| Issue of shares | - | 3,000 | 3000 | |
| Share Issue expenses | - | (194) | (194) | |
| Net cash (used in) / generated from financial activities | - | 2,806 | 2,806 | |
| Net (decrease) / increase in cash and cash equivalents | (25) | 2,290 | 1,738 | |
| Cash and cash equivalents at the beginning of the period | 3,485 | 1,747 | 1,747 | |
| Cash and cash equivalents at the end of the period | 3,460 | 4,037 | 3,485 |
Unaudited consolidated statement of changes in shareholder equity
For the six months ended 30 June 2008
| Six months | Six months | Year | |
| ended | ended | ended | |
| 30-June | 30-June | 31-December | |
| 2008 | 2007 | 2007 | |
| £'000 | £'000 | £'000 | |
| Profit/ (loss) for the period / year | 22 | (277) | (699) |
| Share based payments | 6 | - | - |
| Issue of shares (including share premium) | - | 3,000 | 3,000 |
| Expenses of share issue | - | (194) | (194) |
| Net movement in shareholders' equity | 28 | 2,529 | 2,107 |
| Opening shareholders' equity | 3,814 | 1,707 | 1,707 |
| Closing shareholders' equity | 3,842 | 4,236 | 3,814 |
Notes to the interim report
| 1 | Exceptional administrative expenses The £128,000 incurred in the year ended 31 December 2007 comprises compensation for loss of office and associated costs. |
| 2 | Profit/(loss) per share The calculation of profit per ordinary share is based on a profit of £22,000 (31 December 2007: loss of £699,000. 30 June 2007: Loss of £277,000) and on a weighted average number of shares of 51,112,581 (31 December 2007: 49,821,862 and 30 June 2007; 48,779,248) in issue for the period. The outstanding share options are currently anti-dilutive. |
| 3 | 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. |
| 4 | Reconciliation of operating loss to net cash outflow from operating activities: |
| 6 months | 6 months | Year | |
| ended | ended | ended | |
| 30-June | 30-June | 31-December | |
| 2008 | 2007 | 2007 | |
| £'000 | £'000 | £'000 | |
| Operating loss
| (72) | (390) | (927) |
| Share based payments
| 6 | - | - |
| Profit on disposal of property, plant and equipment
| - | (1) | (1) |
| Depreciation and amortisation
| 39 | 45 | 86 |
| Decrease/(increase) in inventories
| 37 | (63) | (71) |
| Decrease/(increase) in trade and other receivables
| 148 | (145) | (330) |
| (Decrease)/increase in trade and other payables
| (254) | (33) | 39 |
| Decrease in provisions
| (21) | (24) | (53) |
| Net cash outflow from operating activities | (117) | (611) | (1,257) |
| 5 | Interim financial information The interim financial information for the period ended 30 June 2008 is unaudited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 and has been prepared under the accounting policies set out in the 2007 annual report and financial statements. The comparative figures for the financial year ended 31 December 2007 are extracted from the audited accounts for that period. The company's annual report and financial statements for the year ended 31 December 2007 which were prepared under International Financial Reporting Standards (IFRS) as endorsed by the EU 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 2007 are also unaudited and were approved by the Board of Directors on 27 September 2007. |
| Copies of the announcement will be sent to shareholders today 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.co.uk |
| Headquarters and Registered Office: |
| Inditherm House Houndhill Park Bolton Road Wath-upon-Dearne Rotherham S63 7LG |
| Telephone: +44 (0) 1709 761000 |
| Fax: +44 (0) 1709 761066 |
| sales@indithermplc.com |
| www.indithermplc.com |