Inspiration Hlt Regulatory News (IHC)

29 Mar 2006 07:02

Inditherm PLC29 March 2006 Press Release 29 March 2006 Inditherm plc Preliminary Results Inditherm plc ("Inditherm" or "the Company") , the provider of innovativeheating solutions, today reports its Preliminary Results for the 12 months ended31 December 2005. Summary • Pre-tax loss, after exceptionals & net interest income, of £1,314k (2004: £1,322k) • Group turnover of £1,035k (2004: £1,598k), reflecting a lack of pitch-heating orders, worth £888k in 2004 • Turnover across remaining business increased by 42% • Medical orders up 54%: appointment of six new distributors, launch of neo-natal product, introduction of leasing scheme • Industrial turnover up by 30% • Loss per share 6.1p (2004: 6.2p) • Year end cash balance of £2,363k (2004: £3,590k) Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said: "Order intake for the first 3 months of 2006 shows a continuation of the recenttrends, with a steady pickup in Industrial volumes. Our growth continues but at a slower rate than originally envisaged.Accordingly, we are reviewing strategic options for realising the value of ourtechnology more quickly. These include license and royalty arrangements,technical collaboration and joint venturing." - ENDS - For further information, please contact: Inditherm plcRichard Harpum, Chief Executive Tel: +44 (0) 1709 761000 rharpum@indithermplc.comIan Smith, Finance Director www.indithermplc.com ismith@indithermplc.com Media enquiries: AbchurchJustin Heath Tel: +44 (0) 113 203 1340Sarah Hollinsjustin.heath@abchurch-group.com www.abchurch-group.com Chairman's Statement Introduction During 2005 our efforts were focused on developing strong market positionswithin the four business segments of Industrial, Medical, Construction andSport. Whilst the first three segments grew, the lack of any pitch heatingorders resulted in Sales being lower than 2004. During the year substantial efforts were put into professionalising our businessprocesses. As a consequence, there has been an improvement in our operationalquality and response to customers. It has also enabled us to undertake largeror more complex projects. An external survey was undertaken during the second half by an independentmarket research firm. The research showed that the Company and its products arewell regarded by our customers but that potential customers tend to beconservative when switching away from traditional heating technologies.However, once converted to Inditherm, there is a high degree of satisfaction andconfidence in both the Company and its products. We believe that this explainsthe relatively slow take-up of the technology. On 9 December 2005, Inditherm announced that an approach had been made to theCompany which may or may not lead to an offer being made. Since that time we have conducted meaningful talks with the party that made theinitial approach. As a result of our discussions, they have informed us thattheir conclusion is that opportunities exist for deals to exploit Indithermtechnology. These include license and royalty agreements, technicalcollaboration and joint venturing. However, the other party has also indicatedit prefers exploring these alternative structures to an outright purchase of thebusiness. Accordingly offer talks have now terminated. Meanwhile discussions continue onthe other opportunities. Results Turnover for the year fell to £1,035k (2004: £1,598k), due to the lack of sportspitch heating orders, which accounted for sales of £888k in 2004 and £30k in2005. The remaining businesses therefore grew by 42%. The Industrial business showed continued growth of 30% in both small and largerorders for industrial process heating solutions. Although our expectations forgrowth in water utilities were not met, due to the slow start-up of the UK AssetManagement Programme (AMP4), we are now seeing demand pick up, as the Programmegathers momentum. The Medical business saw growth of 54%, with a steady flow of orders fromoverseas distributors. After a slow first half in purchases from the NHS, thesepicked up in the second half. At the end of the year we launched the newCosyTherm neo-natal warming system, which has received a positive marketresponse. The Construction business took off in the year with a large order for concretecuring blankets at London Heathrow's new Terminal 5. The cost base was maintained with headcount being tightly controlled during theyear. Overheads before exceptional costs were £1,739k (2004: £1,694k) resultingin an operating loss before exceptional costs of £1,402k (£1,176k). Afterrestructuring and exceptional costs of £50k (2004: £328k) and net interestincome of £138k (2004: £182k), the post-tax loss was £1,279k (2004: £1,306k). The year end cash balance was £2,363k (2004: £3,590k). We believe that theCompany has sufficient funds to meet our current and medium term needs. Dividends As stated in previous years, it is the Board's intention to devote the Company'sfinancial resources to business development. This intention, which the Boardbelieves is in the shareholders' best interests, has been pursued during 2005and will continue for the foreseeable future. The Board therefore does notexpect to declare a dividend during the Company's continuing formative period. Management Since the appointment last year of Richard Harpum as Chief Executive, there havebeen a number of management changes. Colin Tarry, Technical and BusinessDevelopment Director, left the Company in June to pursue other interests. Anew Technical Manager was recruited in May and a new Sales & Marketing Directorhas recently started to lead the selling efforts in Industrial and Construction. Employees We continue to invest in our workforce to ensure that we have the appropriateskills with which to grow the business. The workforce is extremely flexible,which enables us to respond quickly to customers' needs and quickly develop newsolutions to complex heating problems. On behalf of the Board, I thank all our staff most sincerely for their continuedsupport. Outlook Order intake for the first three months of 2006 shows a continuation of therecent trends, with a steady pickup in Industrial volumes. Our water utilities solutions are now gaining market acceptance and formalsupplier agreements with water utilities and AMP4 partners are in the process ofbeing signed. The launch of the new CosyTherm neo-natal heating mattress is expected toenhance the growth prospects of the Medical segment. Although the Construction business is in its infancy, it will be helped by workarising from the European FP6 CRAFT grant with orders from consortium partners. Whilst we are pursuing several major pitch heating projects, we are notanticipating carrying out any installations during 2006. Our growth continues but at a slower rate than originally envisaged.Accordingly, we are reviewing strategic options for realising the value of ourtechnology more quickly. Mark AbrahamsChairman Chief Executive's Review Overview During 2005 we have concentrated on implementing the new business strategydescribed in last year's Report. This involved focusing on four businesssegments, growing these businesses, developing new applications and standardproduct for these sectors, improving our internal processes and continuing totrain and develop our people. There has been steady growth in the Industrial and Medical businesses and goodinitial development of the Construction segment. Because we did not secure anypitch heating orders, which accounted for £888k of sales last year, the totalsales were lower than 2004. Industrial Sales in this segment increased by 30% over 2004, mainly due to growth inprocess heating orders. We made a decision to pursue larger orders, such as storage tanks, whilst notneglecting the need to keep a strong flow of smaller orders; these havetraditionally acted as the seedbed from which larger orders have grown, ascustomers gain confidence in our products and solutions. Whilst we sawsubstantial growth in smaller orders, we saw less impact from larger projects,which generally have much longer lead times. Although we successfully completedseveral larger projects, notably for storage vessels and pipework heating in thefood and chemicals sectors, several of the larger opportunities have onlyrecently been realised. To take advantage of the increasing emphasis on energy savings, fuelled byrising energy costs, we are promoting the energy saving benefits of Inditherm toall our customers. This work is already starting to bear fruit, as customersbecome increasingly energy conscious. There was a major effort to develop more standard products, which has alsoresulted in some new innovations, such as the prefabricated heated pipeworksystem that is now being installed at two leading confectionary manufacturingoperations in the UK. We have strengthened the industrial sales organisations with the recruitment ofa Sales and Marketing Director and improved our selling processes anddocumentation. The anticipated growth in water utility sales was not realised, as the timetaken by the utilities to establish the infrastructure required for the AMP4Asset Management Programme, which started in April, took much longer thanexpected. However, we concentrated on building relationships with the new AMP4partners, as well as becoming registered as an approved supplier. I am pleasedto report that we have now started to receive orders. A trial with Severn Trent Water to heat sewerage sludge lines, to stop thembecoming blocked, proved to be a total success. We are now in the process ofcapitalising on this throughout the water utility industry. Medical Medical orders increased by 54%. There was strong growth in export salesthrough the increasing network of distributors, which was increased to eleven bythe appointment of six new distributors. A further four have already beenappointed in 2006. Sales to the NHS were very slow in the first half year but picked up in thesecond half. Nevertheless, NHS investment remains lower than we would like. Toovercome some of the barriers to entry, we developed a new leasing scheme, whichhas already resulted in an order. Towards the end of the year we launched CosyTherm, a new neo-natal heatingsystem for use with premature or low birth-weight babies, or as a step-down fromincubator nursing, freeing up more expensive resources. There has been a verypositive market response, especially as our product fits well with modernclinical trends in nursing new-born infants. Construction After two years of joint research with the Centre for Infrastructure Managementat Sheffield Hallam University, the Construction business was set up at thebeginning of the year and was quickly rewarded with a substantial order forconcrete curing blankets for London Heathrow's new Terminal 5. Although curingblankets are seen as a good application for Inditherm, we are seeing much moremarket interest in heating pre-cast concrete moulds. In conjunction with Sheffield Hallam University, we were awarded a grant fromthe European FP6 CRAFT programme. The grant supports R&D to develop thermalcuring systems for pre-cast concrete manufacturing, based on Indithermtechnology as the heat source. The trans-European consortium of 13 developmentpartners, called LOVACS, is already well established and orders are beingreceived. Other opportunities in infrastructure heating are also being pursued, albeit asa lower priority, so as not to lose focus on concrete curing applications. Sport Following the installation of under-pitch heating systems at Falkirk CommunityStadium and Chelsea Football Club's new Training Academy during 2004, we spent2005 marketing the benefits of our system and have received significant levelsof interest from a number of clubs in the UK and Europe. However, because ofthe very long lead times on most pitch heating projects, no further orders wereobtained. The pitch heating business tends to be driven by new projects or a combinationof available financing and the replacement of existing, inefficient systems.Because the Inditherm solution involves installing heating pads 300mm below thepitch surface, projects are normally carried out in conjunction with major pitchrefurbishment. Nevertheless, Inditherm has now been specified on at least onemajor stadium project and although we expect to receive at least one orderduring 2006, it is unlikely that any projects will be undertaken during theyear. Operations Substantial progress was made during the year to improve our operationaleffectiveness, our internal processes and business systems. Where appropriate,some automation was applied, not only to reduce costs but also to reducevariation and improve quality. There was also a concerted effort to keep overhead expenses under tight control,without sacrificing our promotional and marketing efforts. The new web site has been well-received and has started to generate a higherlevel of enquiries from around the world. Independent market research conducted during the year showed that our customersview our people as highly responsive and professional. Product Development Product development work was carried out in all main sectors during the year.Substantial improvements were made to our Industrial products, notably thedevelopment of more standard products, along with a new prefabricated pipeworkheating system and innovative removable tank heating jackets. There wereongoing improvements made to our Medical products, and CosyTherm was developedand launched during the year. Development of Construction products remainsmainly in partnership with Sheffield Hallam University and the LOVACS Projectpartners. Sport applications development has focused mainly on research intothe effects of heating on grass growth, plus the use of improved materials andinnovative control systems. Outlook Industrial applications will remain the mainstay of the business for the comingyear, with growth anticipated in process heating, especially for large pipeworkand tank heating systems. More widespread deployment of standard products willenable growth in international sales through newly-appointed Europeandistributors and sales agents. We will also capitalise on the successful sewerage sludge line heating trials atSevern Trent Water and other strong product offerings in the water utilitiessector. Where possible, we will take advantage of the opportunities arisingfrom the AMP4 investment programme, which now appears to have started, a yearlater than anticipated. Medical continues to be a key part of our business and whilst we will continueto see growth in overseas markets, the UK tends to be more conservative due tocapital spending constraints. The Construction sector is expected to see growth in 2006, particularly forpre-cast concrete curing applications. We intend to capitalise on the addedbenefits of EU funding for these applications and an established base ofdevelopment partners will help to accelerate both technical and marketdevelopment. The sector lends itself to the deployment of standard heating padsthat can be applied in a variety of applications. Although we are targeting at least one pitch heating order during 2006, thiswill not be installed until the stadium is completed in 2007. In the meantime,we are concentrating on getting Inditherm specified in other projects and arealso seeking to capitalise on any of the few short term opportunities that arisefrom time to time. The challenges facing Inditherm in 2006 remain considerable but so are theopportunities. At the year end there was a substantial value of quotesoutstanding and based upon our historical lead times and conversion rates, 2006should be a much better year than 2005. The encouraging factor is thatcustomers are clearly gaining confidence in Inditherm's polymer technology andin our ability to deliver value-added solutions that perform better than thealternatives. Richard HarpumChief Executive Preliminary announcement of results for the year ended 31 December 2005Consolidated profit and loss account 2005 2004 £'000 £'000 Turnover 1,035 1,598 Cost of sales (698) (1,080) ________ ________Gross profit 337 518 Administrative expenses (1,789) (2,022) Operating loss before exceptional costs (1,402) (1,176)Exceptional costs (50) (328) _______ _______Operating loss (1,452) (1,504) Interest receivable 139 186Interest payable (1) (4) ________ ________Loss on ordinary activitiesbefore taxation (1,314) (1,322) Taxation credit from loss onordinary activities 35 16 ________ ________ Sustained deficit for the year (1,279) (1,306) ________ ________ Loss per share - basic and diluted (6.1) p (6.2) p ________ ________ All amounts relate to continuing activities. All recognised gains and losses are included within the profit and loss account. INDITHERM plcPreliminary announcement of results for the year ended 31 December 2005Consolidated balance sheet 2005 2004 £'000 £'000 £'000 £'000Fixed assetsIntangible assets 43 56Tangible assets 270 294 ______ ______ 313 350Current assetsStocks 200 224Debtors: amounts falling due within one year 292 468 Debtors: amounts falling due afterone year - 39Investment 250 250Cash at bank and in hand 2,363 3,590 ________ ________ 3,105 4,571Creditors: amounts falling due within one year (311) (538) ________ ________Net current assets 2,794 4,033 _______ _______Total assets less current liabilities 3,107 4,383 Creditors: amounts falling due after more than one year - (7) Provision for liabilities (268) (272) ________ ________Net assets 2,839 4,104 ________ ________ Capital and reserves - equityCalled up share capital 211 211Share premium 7,423 7,409Other reserve 50 50Profit and loss account (4,845) (3,566) ________ ________Shareholders' funds 2,839 4,104 ________ _________ Approved by the Board on 28 March 2006 and signed on its behalf by: R Harpum ID SmithDirector Director Preliminary announcement of results for the year ended 31 December 2005Consolidated cash flow statement 2005 2004 £'000 £'000 £'000 £'000 Net cash outflow fromoperating activities (1,340) (1,554) Returns on investments and servicing of financeInterest received 139 186Interest element of hire purchase payments (1) (4) _____ _____ Net cash inflow from returns on investments and servicing 138 182of finance Taxation 35 16 Capital expenditure and financial investmentPurchase of tangible fixed assets (60) (92)Sale of tangible fixed assets - 24 _____ _____ Net cash outflow from capital expenditure and financial investment (60) (68) ______ _____ Net cash outflow before managementof liquid resources and financing (1,227) (1,424) Management of liquid resourcesDecrease in cash on short-term deposit 1,208 1,034 FinancingIssue of shares 14 -Capital element of hire purchase payments (14) (33) _____ _____ Net cash outflow from financing (0) (33) ______ _____ Decrease in cash (19) (423) ______ _____ Preliminary announcement of results for the year ended 31 December 2005Consolidated cash flow statement (continued) Reconciliation of operating loss to net cash outflow from operating activities 2005 2004 £'000 £'000 Operating loss (1,452) (1,504)Depreciation and amortisation 92 92Loss on disposal of fixed assets 5 4Decrease/(increase) in stocks 24 (155)Decrease in debtors 215 65Decrease in creditors (220) (70)(Decrease)/increase in provisions (4) 14 _______ _______ Net cash outflow from operating activities (1,340) (1,554) _________ ___________ Analysis of changes in net funds 01-Jan 31-Dec 2005 Cashflow 2005 £'000 £'000 £'000 Cash at bank and in hand 3,590 (1,227) 2,363Less: Term deposits treated as liquid resources (3,572) 1,208 (2,364) _______ _______ _______ 18 (19) (1) Obligations under hire purchase contracts (19) 14 (5)Term deposits 3,572 (1,208) 2,364 _______ _______ _______ 3,571 (1,213) 2,358 _______ _______ _______ Preliminary announcement of results for the year ended 31 December 2005Consolidated cash flow statement (continued) Reconciliation of net cash flow to movement in net funds 2005 2004 £'000 £'000 Decrease in cash in year (19) (423)Cash outflow from decrease in debt 14 33Cash inflow from decrease in liquid resources (1,208) (1,034) _______ _______ Decrease in net funds from cash flows (1,213) (1,424) ________ _______ Net funds at the beginning of the year 3,571 4,995 _______ _______ Net funds at the end of the year 2,358 3,571 _______ ________ NOTES The preliminary results have been prepared under the historical cost 1 convention, in accordance with applicable Accounting Standards in the United Kingdom and with the company's accounting policies as set out in the financial statements for the year ended 31 December 2005. The preliminary results were approved by the Board on 28 March 2006 and are unaudited. The financial information contained in this unaudited preliminary announcement statement does not constitute accounts as defined by Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2004 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2005 and the auditors report thereon will be finalised based on the information in this preliminary announcement and will be delivered to the Registrar of Companies following the company's AGM. 2 The calculation of loss per ordinary share is based on losses of £1,279,000 (2004: £1,306,000) and on a weighted average of 21,073,948 (2004: 21,069,980) ordinary shares in issue during the year. The share options are anti-dilutive due to the loss in the year. 3 Copies of the 2005 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. This information is provided by RNS The company news service from the London Stock Exchange