Inspiration Hlt Regulatory News (IHC)

27 Mar 2008 07:01

Inditherm PLC27 March 2008 Press Release 27 March 2008 Inditherm plc Preliminary Results Inditherm plc ("Inditherm" or "the Company"), the provider of innovative heatingsolutions, today reports its Preliminary Results for the 12 months ended 31December 2007. Highlights • Group turnover increased by 19% to £1,861k (2006: £1,564k) • Post-tax loss, after exceptional costs and net interest income reduced to £699,000 (2006: £1,132k) • Year end cash balance of £3,485k (2006: £1,747k) • Order intake increased by 30%; substantial growth in Medical sales through Smiths Medical in the USA and a pitch heating system for Aston Villa • Over 30 Medical distributors and overseas partners in the rest of the world driving export business • New Chief Executive, Technical Manager and Operations Manager appointed Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said: "Trading in the first two months of 2008 has been positive, with strong sales assingle large orders are completed and good margins delivering an operatingprofit for the first time in the Company's history. Whilst we believe we arestill several quarters from breaking even, we anticipate significant progress inthe year ahead." - Ends - For further information, please contact: Inditherm plcNick Bettles, Chief Executive Tel: +44 (0) 1709 761000nbettles@indithermplc.comIan Smith, Finance Director www.indithermplc.comismith@indithermplc.com Media enquiries: AbchurchSarah Hollins/George Parker Tel: +44 (0) 207 398 7719george.parker@abchurch-group.com Chairman's Statement Overview The start of 2007 saw a strengthening of the balance sheet with the cash placingin January which raised £2.8m net of expenses. We believe this has provided theCompany with adequate funds to meet its medium term needs. Although sales in 2007 grew modestly, order intake increased by 30% withsubstantial growth in Medical. The football pitch heating system for AstonVilla's new training facility and the Smiths Medical launch stock had asignificant one-off impact on this growth. Improved margins, particularly inthe core business, reduced operating losses by 25%. Performance in Industrial markets showed no growth and actions are alreadyunderway to change the performance of this area of the business in the yearahead. The strategy will be redirected to focus on standardising the productrange. This should enable Inditherm to meet many of the current Industrialcustomers' requirements in a much more efficient manner, thereby leading toimproved margins. Results Turnover for the year rose by 19% to £1,861k (2006: £1,564k), due to growth inMedical sales and work completed on the pitch heating system for Aston Villa.This maintained the growth rate reported in the first half of the year. Administrative expenses were kept under control during the year, with anincrease of 5%. Administrative expenses before exceptional costs were £1,605k(2006: £1,571k), resulting in a 23% improvement in operating loss beforeexceptional items at £799k (2006: £1,087k). After exceptional costs of £128k(2006: £152k) and net interest income of £213k (2006: 83k), the post-tax losswas £699k (2006: £1,132k). The year end cash balance was £3,485k (2006: £1,747k), representing a netoutflow from operating activities of £1,044k (2006: £876k) offset by thefundraising. The year-on-year difference is largely due to a growth in thelevel of polymer stocks held and an increase in trade receivables at the yearend due to the pitch heating system at Aston Villa. Operations Sales in the Industrial markets fell by 10%, however percentage margins doubled.During the year we continued our growth in the food sector with notable ordersfrom two leading international confectionery manufacturers. Progress hasotherwise been disappointing in this area of the business, although it remainedthe largest proportion of annual sales. Medical orders excluding the USA grew by 40% over the previous year, which wasfurther boosted by orders for launch stocks from Smiths Medical. Althoughprogress with Smiths in developing US Medical end user sales has been slowerthan anticipated, the first signs of progress are emerging. We will keep thissituation under review to determine whether additional channels need to bedeveloped. We now have over 30 distributors and overseas partners in the rest of the world,giving us a firm base from which to continue the growth of our export business.UK orders grew by 36% as acceptance of our technology in the market increases;we anticipate that the award of an NHS PASA (Purchasing & Supply Agency)contract during the year will help us to continue this growth. Commercial exploitation of our technology in the pre-cast concrete industrycontinued during the year with a small number of manufacturers. This hasdemonstrated significant advantages to our customers. We are now focused ondeveloping these relationships to gain valuable reference sites. In August 2007, we were awarded the contract to heat a football pitch at the newAston Villa training ground, worth £199k. This adds a further reference site,and has helped maintain high utilisation of the factory. The heating pads wereinstalled on schedule before the end of the year; installation of electricalpanels and controls are planned during the second quarter of 2008. Dividends As stated in previous years, the Board intends to devote the Company's financialresources to business development. This intention, which the Board believes isin the best interest of the shareholders has continued during 2007. The Boarddoes not expect to declare a dividend during the Company's continuingdevelopment. Management Following the successful growth and encouraging signs of the Company's Medicalbusiness, the Board decided to promote Nick Bettles to the position of ChiefExecutive. Richard Harpum retired and left the Company in November 2007. I would like to thank Richard for all his efforts and commitment during histhree years as Chief Executive. We further strengthened our management team with the appointment of a newTechnical Manager in September 2007. In addition to this, an Operations Managerhas been appointed in March 2008. Employees We continue to invest in our workforce to ensure we have the appropriate skillswith which to grow the business. On behalf of the Board, I thank our staff mostsincerely for their continued support. Outlook Trading in the first two months of 2008 has been positive, with strong sales assingle large orders are completed and good margins delivering an operatingprofit for the first time in the company's history. However, we do not expectthis to continue in the immediate future. The Medical business, outside the USA, is encouraging, with increasing orderflow. We anticipate the same rate of growth in this sector in the year ahead. In our Industrial and Construction businesses, the change of strategy involvesus in concentrating on standardised product ranges, with improvements inefficiency and higher margins on a lower volume of sales. Whilst we believe we are still several quarters from breaking even, weanticipate significant progress in the year ahead. Mark AbrahamsChairman 27 March 2008 Chief Executive's Review Overview The Company saw some further sales growth during 2007, but this was modest atjust under 20%. However, operating losses were reduced by 25%. Order intake grew substantially in Medical but fell slightly in Industrial,giving an overall increase in orders of 30%. The sale of a football pitchheating system and start-up trading with Smiths Medical for the USA market hadan impact on this growth at a level that is unlikely to be repeated in the shortterm. Gross margins almost doubled to £806k, primarily due to improvements inthe Industrial sector and the greater proportion of Medical business. Sales and Marketing Sales and orders in the Industrial markets were down by around 10% year-on-year.The results from this area of the business were not satisfactory, largely dueto the conversion rates and the proportion of bought-in components andsubcontracted activities. This is largely a result of Inditherm acting as themain contractor on larger projects. Our intention is now to focus more on areas where our technology and expertiseadd value, where possible forming strategic partnerships to help deliver oursolutions more effectively to the market. Whilst this may not deliver highsales growth in the short term, it should drive up the profitability of thispart of the business and place us in a better position for long term growth. Medical sales and orders grew by over 80% in 2007; however this was boostedsignificantly by the demonstration systems and launch stock ordered by SmithsMedical for the USA market. Excluding the USA, Medical orders grew by 40%.Neonatal sales increased by over 60% in the UK market, where we believe we arenow the clear market leader for our sector, although uptake has been slower inthe export territories. Our products for operating theatres and neonatal warming were awarded an NHSPASA contract during the year and are now offered through NHS Logistics tohospitals. This allows hospitals to purchase without the need to go to tenderand we expect this to help in increasing uptake within the NHS in the yearsahead. We have identified a distributor for our neonatal range in the USA andexpect to conclude a formal agreement and fully launch the product in the firsthalf of 2008. We introduced a number of new products during the year; although these are forinherently smaller market sectors they give us additional growth potential. Themarket uptake in the USA has been slower than we had hoped, however SmithsMedical have made a large investment and recently secured their first end-userorders. Nevertheless, they have not reached the target purchase levels and wewill therefore consider opening parallel channels to market in the USA. We havecarried a significant order book into 2008, primarily forward orders fromSmiths, which will boost sales in the first quarter of 2008 above previouslyachieved rates. Market uptake in the USA through Smiths is unproven as yet andwe therefore continue to review progress on an ongoing basis. The Companycannot expect the recent sales rate to continue during the coming period. Commercial results from Construction markets were disappointing. However,activities with a small number of customers during the year have allowed us todetermine where the best opportunities lie. Our intention is to focus on thepre-cast concrete market in the immediate future, where Inditherm technologyappears to offer a unique solution that delivers real benefit to the customer. We secured the order for heating of the new Aston Villa training pitch, whichshould further enhance our credibility in this market. However, theprofitability in this application has been marginal and it has been decided thatnow we have good reference sites we will only pursue such projects in the futureif reasonable margins can be realised. Product Development Our development team has been substantially strengthened during the year and weare already beginning to realise the benefits. Further work on developingproducts for Industrial applications continued, with particular focus on some ofthe standard products towards the end of the year. Work on our Medical product range saw the launch of new products at ourdistributor conference in October 2007. These included systems for veterinarywarming and A&E departments. Further developments are in progress. Activity in the construction field has delivered systems for warming pre-castconcrete by integration into the manufacturers' moulds. This is proving asuperior solution to the original blanket type design and further work in thisarea continues. Work on the heating of railway tracks has continued, with successful trialsconcluded that have demonstrated that Inditherm can meet the heatingspecifications required. The primary focus is now on developing the solution tomeet the practical needs for routine use. This is a longer term project,although we hope to realise revenue from funded development work and large scaleevaluations in the short term. Operations We continue to be perceived by our customers as delivering high quality productsand being a responsive supplier. The potential for further improvements inefficiency remains and this is being addressed. The growth in Medical product orders has proved a challenge; however we haveadded to this team during the year and have already demonstrated that we can nowcope with the increased output. Outlook In order to secure a faster route to profitability we intend to focus on areaswhere we have already demonstrated greatest strength and opportunity. Performance in the Medical markets has already shown good growth andprofitability and we will devote our energy to continue this trend andaccelerate wherever possible. This is heavily dependent on the success ofSmiths Medical in the USA, therefore we intend to focus on trying to driveforward that relationship. In Industrial applications we plan to reduce our activity in several areas whichrequire disproportionate effort for poor returns. This will allow us to focuson developing market areas where we can deliver a larger proportion of standardproducts. Wherever possible we will restrict ourselves to the supply of heatingcomponents, and work with strategic partners who can deliver the associatedinfrastructure such as pipes, tanks and cladding. Our Construction activity will focus particularly on the pre-cast concretemarket, where we have demonstrated that we can deliver significant customerbenefits. This will ensure that we concentrate on areas that can delivergrowth, in both the short and longer term, realise good margins, and avoiddistractions that reduce market penetration. Inditherm still faces significant challenges, however the proven performance inMedical combined with a more focused approach in Industrial and Construction,give reason for optimism. A trading profit in the first two months of 2008gives further encouragement, although this is highly influenced by the deliveryof USA launch stocks. Nick BettlesChief Executive 27 March 2008 Preliminary announcement of results for the year ended 31 December 2007Consolidated Income Statement 2007 2006 £'000 £'000 Turnover 1,861 1,564 Cost of sales (1,055) (1,155) Gross profit 806 409 Administrative expenses (1,733) (1,648) Operating loss before exceptional items (799) (1,087)Exceptional administrative expenses (128) (152) Operating loss (927) (1,239) Finance income 215 84 Finance costs (2) (1) Loss on ordinary activities before taxation (714) (1,156) Taxation credit from loss on ordinary activities 15 24 Deficit for the year attributable to equityholders (699) (1,132) Loss per share - basic and diluted (1.4p) (5.4p) All amounts relate to continuing activities. Preliminary announcement of results for the year ended 31 December 2007Consolidated Statement of Changes in Shareholder Equity Share Share based Share premium Other payment Retained capital account reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 211 7,423 50 60 (4,905) 2,839 Loss for the year - - - - (1,132) (1,132) At 31 December 2006 211 7,423 50 60 (6,037) 1,707 Loss for the year - - - - (699) (699) Issue of shares 300 2,700 - - - 3,000 Expenses of share issue - (194) - - - (194) At 31 December 2007 511 9,929 50 60 (6,736) 3,814 Preliminary announcement of results for the year ended 31 December 2007Consolidated balance sheet 2007 2006 £'000 £'000 Assets Non-current assets Property, plant and equipment 162 209 Intangible assets 15 29 177 238 Current assets Inventories 192 121 Trade and other receivables 597 267 Tax recoverable 39 24 Cash and cash equivalents 3,485 1,747 4,313 2,159 Liabilities Current liabilities Trade and other payables (622) (583) (622) (583) Net current assets 3,691 1,576 Non-current liabilities Provisions for liabilities and charges (54) (107) Net assets 3,814 1,707 Shareholders' equity Called up share capital 511 211 Share premium account 9,929 7,423 Other reserve 50 50 Share based payment reserve 60 60 Retained earnings (6,736) (6,037) Total equity 3,814 1,707 Preliminary announcement of results for the year ended 31 December 2007Consolidated cash flow statement Group and company 2007 2006 £'000 £'000 Cash flow from operating activities Cash used in operations (1,257) (999) Interest received 215 84 Interest paid (2) - Interest element of hire purchase payments - (1) Taxation - 40 Net cash outflow from operating activities (1,044) (876) Cash flow from Investing activities Purchase of property, plant and equipment (25) (19) Sale of property, plant and equipment 1 - Sale of investment - 284 Net cash (used in)/generated from investing activities (24) 265 Cash flow from financing activities Issue of shares 3,000 - Share Issue expenses (194) - Capital element of hire purchase payments - (5) Net cash generated/(used in)from financing activities 2,806 (5) Net increase/(decrease) in cash and cash equivalents 1,738 (616) Cash and cash equivalents at the beginning of the period 1,747 2,363 Cash and cash equivalents at the end of the period 3,485 1,747 Preliminary announcement of results for the year ended 31 December 2007Consolidated cash flow statement (continued) 2007 2006 £'000 £'000 Operating loss (927) (1,239) Profit on disposal of current asset investment - (34) Profit on disposal of property, plant and equipment (1) - Depreciation and amortisation 86 94 (Increase)/decrease in inventories (71) 79 (Increase)/decrease in trade and other receivables (330) (15) Increase in trade and other payables 39 277 Decrease in provisions (53) (161) Net cash outflow from operating activities (1,257) (999) 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 1985 applicable to companies reporting under IFRS. The preliminary announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. This announcement has been agreed with the company's auditors for release. This preliminary results announcement contains information extracted from the audited financial statements of the group for the year ended 31 December 2007. The statutory accounts for the year ended 31 December 2007 will be sent to the shareholders shortly. The preliminary results were approved by the Board on 27 March 2008. The information for the year ended 31 December 2006 has been amended for the adoption of IFRS. The statutory accounts for the year ended 31 December 2006, 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 237(2) or (3) of the Companies Act 1985. 2 The calculation of loss per ordinary share is based on losses of £699,000 (2006: £1,132,000) and on a weighted average of 49,821,862 (2006: 21,112,581) ordinary shares in issue during the year. The share options are anti-dilutive due to the loss in the year. Exceptional costs of £128k consist of compensation for loss of office and associated costs for Richard Harpum the former CEO of the company. The exceptional items of £152k in 2006. £75k has3 been provided for the costs of upgrading patient warming systems to include additional safety features to detect damage to the product caused by misuse or storage in a method contrary to operating instructions. £57k arose as a result of the Corporate finance work associated with pursuing strategic options to secure additional funding. £20k was incurred as compensation for loss of office. 4 Copies of the 2007 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