Last checked at 31 Mar 2011 07:00
Press Release | 31 March 2011 |
Inditherm plc
("Inditherm" or "the Company")
Preliminary Results
Inditherm plc, the provider of innovative specialised heating solutions, today reports its Preliminary Results for the 12 months ended 31 December 2010.
Highlights
·; | Revenue from continuing operations increased 47% to £1,324k (2009: £902k) |
·; | Gross profit increased 58% to £805k (2009: £510k) |
·; | Overheads reduced to £1,222k (2009: £1,260k) |
·; | Operating loss of £417k (2009: £750k) |
·; | Year end cash balance £1,701k (2009: £2,092k) |
·; | Good performance from the Medical business with return to growth |
·; | Positive draft recommendation by the UK's National Institute for Health & Clinical Excellence (NICE) on Inditherm's patient warming system |
·; | Disposal of Industrial process solutions activities to focus resources on the Medical business |
Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said: "The encouraging signs we started to see at the beginning of 2010 continued throughout the year. I am pleased to report significant revenue growth, particularly from the Medical business. I am also delighted with the draft guidance from NICE on our patient warming system, which should increase NHS uptake of our products if finalised in its current form.
"Inditherm has appointed a distributor to take over part of the Industrial business that has not met expectations, allowing us to focus on areas of the business with stronger growth potential. Although it is too early to predict whether the market has fully recovered, our increasing global footprint should allow the Company to maintain sales momentum in 2011."
- Ends -
For further information, please contact:
Inditherm plc | |
Nick Bettles, Chief Executive nbettles@indithermplc.com | Tel: +44 (0) 1709 761000 |
Ian Smith, Finance Director ismith@indithermplc.com | www.inditherm.com |
Collins Stewart Europe Limited (Nomad) | |
Tom Hulme THulme@collinsstewart.com | Tel: +44 (0) 207 523 8350 |
Media enquiries:
Abchurch | |
Sarah Hollins/Simone Elviss simone.elviss@abchurch-group.com | Tel: +44 (0) 207 398 7728 |
Chairman's Statement
Overview
Following the economic challenges of 2009, market conditions improved for our business in 2010, with the Medical business benefitting in particular.
The Medical business returned to historic growth rates, with better than average improvement in the UK market. We believe this segment continues to offer our fastest route to break-even.
The standard product sector of our Industrial business continued to make a positive contribution, however the process solutions sector did not make the expected progress. In light of these conditions, promotion and support for the Process Solutions business of the Industrial segment has been assigned to a third party, leading to a reduction in overhead costs. Inditherm retains the IP rights, supply of heating elements and all aspects of the Industrial standard product ranges.
The year showed a substantial reduction in losses and the implementation of our stated intention to focus on the Company's medical product activities.
Results
The results present the continuing operations of the business and also reflect the disposal of the Process Solutions business; they are presented in terms of ongoing operations.
The turnover of continuing operations for the year rose by 47% to £1,324k (2009: £902k). Gross profit increased by 58% to £805k (2009: £510k) due to growth of the Medical business.
Overheads were reduced slightly during the year, to £1,222k (2009: £1,260k), resulting in an operating loss of £417k (2009: £750k). The post-tax loss on continuing activities was £382k (2009: £684k), with additional loss from discontinued activities of £106k (2009: £398k).
The year end cash balance was £1,701k (2009: £2,092k), representing a significantly improved cash outflow from both continuing and discontinued operations of £391k (2009: £1,023k).
Operations
Despite key approvals from some major international companies the Process Solutions business failed to secure expected orders. This was as result of conservative attitudes and continued project delays due to economic uncertainty. In light of this situation the Board decided to withdraw from direct activity in this market to allow resources to be focussed on core activities, predominantly our medical products. We have retained the standard product ranges in our Industrial business and assigned the process solutions activities to the ADI Group. We are confident that this leaves the Process Solutions business in the right hands, whilst the integrity of the technology is maintained by Inditherm plc retaining responsibility for manufacture and supply of polymer in a standard pad form.
Overall Medical orders in 2010 grew by 50%. This comprised 38% growth in orders from our non-US distributors and 90% growth in the UK. Sales in the US amounted to £17k, reflecting some initial success from our more recently appointed distributor. Budget pressures within the NHS helped to stimulate growing interest in the cost savings our products offer in the operating theatre, leading to a number of substantial orders. The same cost constraints did however restrict growth in the neonatal sector.
A draft recommendation by the UK's National Institute for Health & Clinical Excellence (NICE) is positive about the benefits of Inditherm's patient warming systems and should lead to accelerated uptake of our medical products in the NHS. The process for confirming final guidance is still underway and so whilst these are encouraging developments no firm conclusions can be reached at this stage.
Dividends
As stated in previous years, the Board intends to devote the Company's financial resources to business development. This intention, which the Board believes is in the best interest of the shareholders, has continued during 2010 and the Board does not expect to declare a dividend during the Company's continuing development.
Management
As part of the divestment process for the Process Solutions business during the year, our Industrial Business Manager resigned and has not been replaced.
Employees
We continue to invest in our workforce to ensure we have the appropriate skills with which to grow the business. On behalf of the Board, I thank our staff most sincerely for their continued support.
Outlook
The return to historic growth levels in our Medical business during 2010 was encouraging. There has been an increase in uptake with growing acceptance of our technology and recognition of our brand in the UK market over the last year. Once the current cost pressures within the NHS have been absorbed, we believe further progress should be made, stimulated by cost savings offered by using the Inditherm product, combined with existing NICE guidelines on warming patients and further potential recommendations.
We would expect opportunities to emerge from this NICE study albeit, due to the thorough and professional process that NICE undertake before releasing final recommendations, it may be several months before benefits start flowing.
It is difficult to predict trends in our overseas business through independent distributors; however we have been expanding our international network and expect that this will allow us to continue to grow. It is clear that market conditions in a number of regions have been and remain difficult but we hope that a wider geographical spread will help compensate for that. In addition, if successful, some OEM agreements could start to contribute in the current year.
The retained standard product Industrial activities are expected to deliver a positive contribution to the business and with strong performance over the last six months we anticipate that this will continue to grow in 2011.
The disposal of our Process Solutions business will allow us to focus our resources on the Medical segment. We believe that this gives us the opportunity to reach a break-even trading position.
Mark Abrahams
Chairman
31 March 2011
Chief Executive's Review
Overview
Turnover on continuing activities increased by 47% in 2010, with a 58% increase in gross profit, as a consequence of returning to historic growth rates in the Medical sector. Losses for the year on continuing activities fell by 44% to £382k (2009: £684k) and the total deficit attributable to equity holders fell by more than half, year on year.
Our increased focus on the Medical business helped us to deliver good growth both in the UK and export markets. This was achieved despite continued difficult trading conditions in the NHS and in a number of overseas territories.
Our efforts to grow the Process Solutions business in the Industrial sector were frustrated by market conditions and we were unable to deliver the expected progress. As a result we have exited this business, allowing us to reduce costs, focus our resources on the higher margin core activities and remove the uncertainty associated with the industrial process solutions market, whilst retaining control over our core technology.
Sales and Marketing
The Company entered 2010 with encouraging signs from some of our major Industrial customers, including a substantial project for one major international confectionery manufacturer and global technical approval for our product from another, with the prospect of significant orders to follow. Despite this, the expected opportunities failed to materialise and it became clear that any progress was likely to be protracted. The Board believed that this situation would continue to be a drain on the business resources and that the best interests of the Company would be served by finding a partner to front this business sector. The agreement subsequently signed with ADI Group leaves Inditherm in control of the core technology and able to benefit from any future sales, whilst allowing us to focus on the more immediate opportunities offered by the Medical business and standard Industrial products.
In the Medical segment the Company saw a welcome return to sales growth. In the UK we secured a number of large orders with hospitals making a complete conversion to our technology for their operating rooms. One of these larger orders was on a rental basis and will therefore deliver continuing revenue over the coming years; this is a business model we continue to offer the NHS, to help where capital spending is constrained. We have increased our sales and marketing resource during 2010 in order to further drive growth.
Considerable effort has been made throughout the year to obtain approval from the UK's National Institute for Health & Clinical Excellence (NICE) for our operating room product range. After detailed submissions and careful analysis, NICE has issued draft recommendations that are very positive, endorsing the clinical evidence and highlighting the very substantial cost savings our technology delivers. The draft guidance has to complete the public consultation process, but we are hopeful of a positive outcome. The recommendations are specific to the Inditherm product only and should help to stimulate faster uptake in the NHS if confirmed.
We continued to expand our international distribution network during the year, with particular emphasis on the Middle East region. There is an inevitable start-up period associated with such activity but we expect this effort to start to yield results in 2011. A number of our overseas markets continued to be affected by economic constraints in 2010, including some of our historically strongest regions. However the breadth of our geographic distribution network has helped to overcome this downturn giving an overall growth in export orders of 38%. We will be holding a distributor conference early in the second quarter of 2011, which we believe will give us the opportunity to stimulate further export activity in the year ahead.
The US market has remained challenging over the past year. There have been some encouraging signs from our more recently appointed distributor in recent months, with customer orders received, but the rate at which progress can be achieved remains uncertain with our limited resources.
There have been positive signs that our technology is becoming more widely recognised in the medical industry, with a number of manufacturers considering incorporation of our warming technology into their products. Most discussions are still at a relatively early stage, but this does give potential for additional growth from OEM agreements whilst also increasing brand recognition.
Product Development
We continued to enhance our Medical product range during the year, culminating with the medical device approval and release of a new control unit with battery option to create mobility for warming patients. This should open new opportunities for us, particularly in applications that involve the transport of patients inside and outside the hospital.
We have managed to broaden our Industrial standard product range to cater for wider applications and customer demands. This allows us to meet more market needs without the distraction of bespoke designs.
Operations
The focus on our Medical business and only standard Industrial products has allowed Inditherm to further streamline our production organisation and processes. We are now able to concentrate on shorter delivery times, faster conversion of orders to sales and increasing customer satisfaction.
Feedback from our customers and distributors confirms that they consider Inditherm to have high quality products with excellent service and support.
Outlook
Uncertainty in the NHS continues and therefore despite our good growth in the UK medical market last year we cannot be certain the trend will continue at the same rate. However the draft recommendations from NICE, if confirmed in final form, should give us a good chance of further progress in the second half of the current year and beyond.
The economic situation in overseas markets remains uncertain in many regions, exacerbated more recently by the political circumstances in the Middle East. We believe that the breadth of our Medical distributor network should allow us to make further progress despite these difficulties, but at this stage it is not clear whether growth can be continued at the same rate.
We have made good progress with our Industrial standard product business over the last year and believe that this performance can be sustained in 2011. We believe that ADI Group is well placed to exploit our technology in the Process Solutions markets and we are hopeful that profitable business for Inditherm will result from the partnership this year.
Nick Bettles
Chief Executive
31 March 2011
Preliminary announcement of results for the year ended 31 December 2010
Consolidated Income Statement
2010 | 2009 | |||
Notes | £'000 | £'000 | ||
Revenue | 2 | 1,324 | 902 | |
Cost of sales | (519) | (392) | ||
Gross profit | 805 | 510 | ||
Administrative expenses | (1,222) | (1,260) | ||
Operating loss | (417) | (750) | ||
Finance income | 8 | 27 | ||
Loss on ordinary activities before taxation | (409) | (723) | ||
Taxation credit from loss on ordinary activities |
| 27 | 39 | |
Loss for the year on continuing activities | (382) | (684) | ||
Loss from discontinued activities | 2 | (106) | (398) | |
Total deficit for the year attributable to equity holders | (488) | (1,082) | ||
Loss per share from total Inditherm Group attributable to equity holders of the company during the year - basic and diluted | 3 | (1.0p) | (2.1p) | |
Loss per share from continuing operations attributable to equity holders of the company during the year - basic and diluted | 3 | (0.7p) | (1.3p) |
All income and expenditure has been recognised in the income statement and therefore no statement of comprehensive income is required.
The results above are presented on the basis of continuing operations. A reconciliation of the comparatives to previously reported numbers is contained in Note 2.Preliminary announcement of results for the year ended 31 December 2010
Consolidated Statement of Changes in Shareholders' Equity
Share | Share based | ||||
Share | premium | payment | Retained | ||
capital | account | reserve | earnings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2009 | 511 | 9,929 | 122 | (7,019) | 3,543 |
Credit for share based payments | - | - | 12 | - | 12 |
Loss for the year | - | - | - | (1,082) | (1,082) |
At 31 December 2009 | 511 | 9,929 | 134 | (8,101) | 2,473 |
Loss for the year | - | - | - | (488) | (488) |
At 31 December 2010 | 511 | 9,929 | 134 | (8,589) | 1,985 |
Preliminary announcement of results for the year ended 31 December 2010
Consolidated Balance Sheet
2010 | 2009 | |||
£'000 | £'000 | |||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 45 | 52 | ||
Intangible assets | 75 | 95 | ||
120 | 147 | |||
Current assets | ||||
Inventories | 132 | 144 | ||
Trade and other receivables | 238 | 265 | ||
Tax recoverable | 32 | 79 | ||
Cash and cash equivalents | 1,701 | 2,092 | ||
2,103 | 2,580 | |||
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | (238) | (249) | ||
(238) | (249) | |||
Net current assets | 1,865 | 2,331 | ||
Non-current liabilities | ||||
Provisions for liabilities and charges | - | (5) | ||
Net assets | 1,985 | 2,473 | ||
Shareholders' equity | ||||
Called up share capital | 511 | 511 | ||
Share premium account | 9,929 | 9,929 | ||
Share based payment reserve | 134 | 134 | ||
Retained earnings | (8,589) | (8,101) | ||
Total equity | 1,985 | 2,473 |
Preliminary announcement of results for the year ended 31 December 2010
Consolidated Cash Flow Statement
2010 | 2009 | |||
£'000 | £'000 | |||
Net operating loss for the period from continuing operations | (417) |
(750) | ||
Profit on disposal of property, plant and equipment | - |
(3) | ||
Depreciation and amortisation | 46 | 61 | ||
Write off of development costs | - | 18 | ||
Share based payments | - | 12 | ||
Increase in inventories | (35) | (18) | ||
Decrease in trade and other receivables | 18 | 31 | ||
Decrease in trade and other payables | (7) | (38) | ||
(Decrease)/increase in provisions | (5) | 5 | ||
Interest received | 8 | 27 | ||
Taxation received | 74 | - | ||
Net cash outflow from operating activities -continuing operations | (318) | (655) | ||
Net cash outflow from operating activities -discontinued operations | (49) | (327) | ||
Cash flow from Investing activities - continuing operations | ||||
Purchase of property, plant and equipment | (21) | (4) | ||
Capitalised development costs | (3) | (40) | ||
Sale of property, plant and equipment | - | 3 | ||
Net cash used in investing activities - continuing operations | (24) | (41) | ||
Net cash used in investing activities -discontinued operations | - | - | ||
Net (decrease)/increase in cash and cash equivalents | (391) | (1,023) | ||
Cash and cash equivalents at the beginning of the period | 2,092 | 3,115 | ||
Cash and cash equivalents at the end of the period | 1,701 | 2,092 |
NOTES
1 |
The preliminary results have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The preliminary announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. This announcement has been agreed with the company's auditors for release.
This preliminary results announcement contains information extracted from the unaudited financial statements of the group for the year ended 31 December 2010. At this present time the directors are not aware of any matters that may give rise to a modification to these preliminary results. The statutory accounts for the year ended 31 December 2010 will be sent to the shareholders shortly. The preliminary results were approved by the Board on 31 March 2011.
The statutory accounts for the year ended 31 December 2009, which have been delivered to the Registrar of Companies, included an audited report which was unqualified and which did not contain a statement under Section 498 of the Companies Act 2006. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Discontinued operations
On 23 September 2010 it was announced that the board had decided to exit the process solutions part of the Industrial business.
On 13 December 2010 Inditherm announced that it has signed an exclusive distribution agreement with ADI Inditherm Ltd ("ADI"), a wholly owned subsidiary of Systems ADI Group Ltd (the "Agreement") under which ADI promote heating solutions to the food, chemicals, pharmaceuticals and petrochemicals markets utilising heating pads that are manufactured by Inditherm plc for ADI. Under the Agreement, Inditherm has also granted a license to ADI to use know-how in respect of the application of the Inditherm heating solutions technology and a license to use Inditherm trade marks. Inditherm plc retain all intellectual property rights and rights to manufacture the core polymer technology.
Under the Agreement, ADI will bear costs of up to £10,000 that would be otherwise borne by Inditherm in implementing the Agreement. In addition, the employment contracts of staff allocated to the Process Solutions Business transferred under TUPE terms.
Inditherm plc retained its standard product offerings in the Industrial markets.
The business being discontinued was only part of the activities of the company, Inditherm plc. It is the directors' opinion that any apportionment of Finance income and Taxation credit would be highly subjective and potentially misleading.
Included in the discontinued operations are costs that had previously been disclosed as exceptional costs in results for the 6 months ended 30 June 2010 and Year ended 31 December 2009.
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3 |
The calculations of loss per ordinary share are based on a weighted average of 51,112,581 (2009: 51,112,581) ordinary shares in issue during the year. The share options are anti-dilutive due to the loss in the year, and have therefore been excluded.
The loss per share from total Inditherm Group attributable to equity holders of the company is based on the total deficit for the year attributable to equity holders of £488k (2009: £1,082k).
The loss per share from continuing operations attributable to equity holders of the company is based on a loss for the year on continuing activities of £382k (2009:£684k).
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Forward looking statements
Certain statements contained in this document constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of Inditherm plc to be materially different from any future results, performance or achievements expressed or implied by such statements. Such risks, uncertainties and other factors include, among others: general economic conditions and the business environment.
Annual Report
Copies of the 2010 Annual Report and Accounts will be sent to all shareholders. Copies will be available from the Company Secretary at Inditherm plc, Inditherm House, Houndhill Park, Bolton Road, Wath upon Dearne, Rotherham, S63 7LG.