Last checked at 28 Mar 2013 07:01
Press Release | 28 March 2013 |
Inditherm plc
("Inditherm" or the "Company")
Preliminary Results
Inditherm plc (AIM: IDM), the provider of innovative specialised heating solutions, today reports its Preliminary Results for the 12 months ended 31 December 2012.
Highlights
·; | Apparent slowing of growth was caused by increased order conversion lead-times, particularly in the NHS. Orders expected in 2012 were delayed and received in early 2013 |
·; | Continued growth in enquiry levels in the UK helped by the positive influence of the recommendation from NICE for our operating theatre products. |
·; | Post-tax losses increased to £164k (2011: £108k) on similar sales £1,673k (2011: £1,659k) due to investment to support future growth |
·; | Medical export market conditions have been challenging in many countries but offer a platform for future growth |
·; | Growth from the arrangements with ADI Group has offset a weakening in the Industrial standard product to leave the Industrial business flat year on year |
·; | Cash out flow for the year £50k (2011: £73k) with year end cash and cash equivalents standing at £1,578k (2011: £1,628k) |
Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said:
"It is our belief that the increased order conversion lead-times we saw in 2012 were caused by general and specific economic circumstances rather than a dampening of enthusiasm for our products.
"We have seen some sizeable orders placed in the first quarter of 2013, some delayed from last year along with business originally expected later in the year. The Company has enjoyed a profitable start to the current year and this gives us cause to be optimistic that we can return to a more attractive growth rate."
- 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 |
Canaccord Genuity Limited (Nominated Adviser and Broker) | |
Henry Fitzgerald-O'Connor / Pippa Underwood | Tel: +44 (0) 20 7523 8350
|
Media enquiries:
Abchurch | |
Henry Harrison Topham / Quincy Allan quincy.allan@abchurch-group.com | Tel: +44 (0) 207 398 7710 |
Chairman's Statement and Chief Executive's Review
Overview
As indicated at the interim stage, the sales for 2012 were similar to those of the prior year. This apparent slowing of revenue growth was caused by the increased order conversion times, particularly in the NHS. Orders which we would have expected to receive in 2012 were delayed and received in early 2013. Accordingly, we believe that the apparent slowing of growth is caused by general and specific economic circumstances rather than a dampening of enthusiasm for our products. Indeed, we continued to grow enquiry levels in the UK, helped by the positive influence of the recommendations from the National Institute for Health & Clinical Excellence (NICE) for our operating theatre products.
In the Medical export sector market conditions remain challenging in many countries, largely mirroring the UK situation; however we have increased our resources in this area of the business and have seen an encouraging start to 2013.
The arrangement with ADI Group for the industrial process solutions sector has continued to deliver growth and despite a downturn for our own standard products in 2012 we have maintained sales levels for the Industrial segment. These activities continue to provide a positive contribution without affecting our focus on the core medical business.
Although turnover for the business held steady despite difficult market conditions, losses increased slightly due to reduced margins. This arose from our decision to maintain a manufacturing organisation geared for turnover levels consistent with profitable operation and retain a loyal workforce in order to meet future orders, which have now been received. In light of projects that have now matured we believe that this decision was appropriate.
We remained almost cash neutral for the year.
Results
The turnover for the year was almost static at £1,673k (2011: £1,659k). Gross profit fell 4% to £960k (2011: £1,000k) due to excess manufacturing capacity for the reasons stated above.
Overheads increased by just over 1% during the year, to £1,146k (2011: £1,131k), resulting in an operating loss of £186k (2011 £131k). The post-tax loss on continuing activities was £164k (2011: £108k).
The year end cash and cash equivalents balance was £1,578k (2011: £1,628k), representing a reduced outflow of £50k (2011: £73k), reflecting prudent control and lower than normal working capital.
Sales and Marketing
Overall Medical revenue in 2012 grew by 3%, reflecting the protracted decision making and uncertainty in the NHS and similar characteristics in many overseas markets. However we have seen some sizeable orders placed in the first quarter of 2013, some delayed from last year along with business originally expected later this year, highlighting the uncertainty of the process timescales for our UK business but giving a welcome boost.
In the UK Medical sector our sales team delivered a significant increase in enquiry levels through the year, helped by the credibility that the recommendations from NICE have given us. Nevertheless the market for capital equipment sales into the NHS is far from buoyant and buying patterns are characterised by delays in decision-making. We have seen a number of major projects delayed, and more recently one brought forward, and this makes forecasting difficult and the order flow uneven. Despite this we managed to grow our UK order levels by just under 10% in 2012, helped by strong performance in the neonatal sector where we have built a strong market position. An increasing number of NHS hospitals are now using Inditherm as their primary surgical patient warming system and this should help us to continue our market penetration as confidence grows.
With a broad base of international distributors now established, we have started to address territories where our partners are under-performing. In some cases this can result in delivering the perioperative and neonatal ranges through different channels and in others we are in the process of introducing new distributors. The lack of order growth in our export business was partly due to market conditions but also influenced by fewer larger orders being secured in 2012 than the previous year. This variability in order patterns can be expected as our distributor network is maturing. However we believe that we can restore export growth in the year ahead and have been taking action to strengthen our distribution in some regions and increase our resource for export activity.
Largely due to our own constraints we saw no advance in the USA during the year, but we will continue to seek any new opportunity that would allow progress within our limited resources available. We continue to see this market as potential future up-side to our medium term plans, but will ensure that the allocation of resources is proportionate and does not therefore threaten our overall export growth.
In our Industrial business we have seen an increase in revenue from the ADI Group for standard heating pads and jackets used in their process solutions activity, which is providing a valuable revenue stream. This offset a relatively disappointing performance with our own standard industrial product sales, where we have now increased promotional activities to re-invigorate market activity. With the minimal overhead structure, the Industrial sector continues to make a worthwhile contribution to the overall business.
A number of the OEM opportunities that we have been pursuing with other manufacturers have moved forward during the year. Some of these are expected to reach implementation of our partners' product launches towards the end of 2013, with our technology integrated, and at this point the level of commitment and order quantities should become clearer. These projects represent good potential for additional growth for the future, and wider Inditherm brand recognition.
Product Development
We have continued to expand our product ranges during the year, with particular focus on the neonatal sector and some broadening of our operating theatre and emergency room range. We believe that these new additions will improve growth opportunities and increase the size of the markets we can access within our existing area of expertise and channels to market.
We have introduced a range of neonatal accessory products that have attracted good attention and raised our profile and image in this area. These products offer good scope for continued repeat business and whilst the total value of the market is relatively modest it is also likely to have a positive impact on the higher value equipment business.
We have completed the development and release of our LifeStart product for use in obstetrics and this has already attracted attention in the market. The product is designed to facilitate resuscitation of a newborn baby with the umbilical cord intact (delayed cord clamping), which is a technique that is now recommended in most national and international guidelines. First orders have been secured and the long term potential market size could be significant in relation to our existing business areas.
Operations
Our production capacity has been maintained at a level that can support the volumes anticipated in our growth plans, having increased headcount in the second half of 2011. Whilst this has had some impact on margins in 2012, we believe it is important that we have retained the key skills needed and this has been well demonstrated by the production levels required in the first quarter on 2013 to meet critical delivery deadlines related to the end of the NHS financial year. We have maintained a dedicated and adaptable production team that allows us to react to variations in product demand.
We have strengthened our sales and marketing team during the last year and this is starting to show signs that it will have a positive impact on our results. We continue to receive very positive feedback from our distributors in particular, confirming that they consider Inditherm to have high quality products with excellent service and support.
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 2012 and the Board does not expect to declare a dividend during the Company's continuing development.
Employees
We continue to invest in our workforce to ensure we have the appropriate skills with which to grow the business. As stated above we have adopted a policy of retaining our loyal staff through the short term peaks and troughs of demand. This has rewarded us in 2013 as we hit a busier period. On behalf of the Board, we thank our staff most sincerely for their continued support.
Outlook
Despite continuing uncertainty in the UK NHS, which appears to be mirrored in parts of Europe, we have seen some orders deferred. We believe that business we have been pursuing will be secured and this has been borne out in recent months. We have received UK orders in the first quarter of 2013 that are already more than double the same period last year and over two thirds of the total achieved in the whole of 2012. The compelling arguments for Inditherm's cost saving potential in the operating theatre area, backed by the NICE recommendations, are likely to continue to attract increasing attention from the NHS in its current economic situation. The lumpy nature of the business does not allow us to project the successes of the first quarter at the same rate, but it does give considerable cause for optimism that we can deliver growth in the UK sector in the year ahead.
Notwithstanding the static performance in the export sector of our Medical business in 2012, we have a number of initiatives in progress that should allow us to resume export growth this year. Difficult economic conditions continue in many markets and, as with the UK, buying patterns are expected to be somewhat variable. We have a continuously strengthening overseas distribution network and this gives cause for confidence of returning the export business to growth in the year ahead. The USA continues to represent a relatively small proportion of our total sales, but we will pursue any opportunities reactively, whilst maintaining a balanced use of our resources.
We have continued to progress a number of potential projects involving the use of Inditherm technology in third party products (OEM). We remain optimistic that some of these will reach a successful conclusion in the second half of this year. As well as being a useful revenue generator in their own right, they also have the potential to increase the market awareness of Inditherm.
We plan to build our market presence for the Industrial standard product business through the year, within the limits imposed by containing overheads in this sector. We anticipate that the ADI Group have the capability to deliver further growth, although our plans assume this will be modest in relation to the overall business.
The Company has enjoyed a profitable start to the current year and this gives us cause to be optimistic that we can return to a more attractive growth rate.
Mark Abrahams | Nick Bettles |
Chairman | Chief Executive |
28 March 2013
Preliminary announcement of results for the year ended 31 December 2012
Consolidated Statement of Comprehensive Income
2012 | 2011 | |||
Notes | £'000 | £'000 | ||
Revenue | 1,673 | 1,659 | ||
Cost of sales | (713) | (659) | ||
Gross profit | 960 | 1,000 | ||
Administrative expenses | (1,146) | (1,131) | ||
Operating loss | (186) | (131) | ||
Finance income | 10 | 10 | ||
Loss on ordinary activities before taxation | (176) | (121) | ||
Taxation credit | 12 | 13 | ||
Loss for the year on attributable to the owners of the parent company | (164) | (108) | ||
Loss per share from total Inditherm Group attributable to the owners of the parent company during the year - basic and diluted | 2 | (0.3p) | (0.2p) | |
All recognised gains and losses are included in the consolidated statement of comprehensive income. As such there is no other comprehensive income.
There is no difference between the results stated above and those prepared on the basis of historic cost equivalents.
Preliminary announcement of results for the year ended 31 December 2012
Consolidated and Company Balance Sheet
2012 | 2011 | |||
£'000 | £'000 | |||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 23 | 26 | ||
Intangible assets | 23 | 50 | ||
46 | 76 | |||
Current assets | ||||
Inventories | 179 | 165 | ||
Trade and other receivables | 216 | 233 | ||
Current tax asset | 12 | 13 | ||
Cash and cash equivalents | 1,578 | 1,628 | ||
1,985 | 2,039 | |||
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | (311) | (238) | ||
(311) | (238) | |||
Net current assets | 1,674 | 1,801 | ||
Net assets | 1,720 | 1,877 | ||
Shareholders' equity | ||||
Called up share capital | 511 | 511 | ||
Share premium account | 9,929 | 9,929 | ||
Share based payment reserve | 141 | 134 | ||
Accumulated losses | (8,861) | (8,697) | ||
Total equity | 1,720 | 1,877 |
Preliminary announcement of results for the year ended 31 December 2012
Consolidated and Company Statement of Changes in Shareholder Equity
Share | Share based | ||||
Share | premium | payment | Retained | ||
capital | account | reserve | earnings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2011 | 511 | 9,929 | 134 | (8,589) | 1,985 |
Loss for the year | - | - | - | (108) | (108) |
At 31 December 2011 | 511 | 9,929 | 134 | (8,697) | 1,877 |
Credit for share based payments | - | - | 7 | - | 7 |
Loss for the year | - | - | - | (164) | (164) |
At 31 December 2012 | 511 | 9,929 | 141 | (8,861) | 1,720 |
Preliminary announcement of results for the year ended 31 December 2012
Consolidated and Company Cash Flow Statement
2012 | 2011 | |||
£'000 | £'000 | |||
Net operating loss for the period | (186) | (131) | ||
Share based payments | 7 | - | ||
Profit on disposal of property, plant and equipment | - | (4) | ||
Depreciation and amortisation | 41 | 64 | ||
Written off development costs | 3 | - | ||
Increase in inventories | (14) | (33) | ||
Decrease in trade and other receivables | 17 | 5 | ||
Increase in trade and other payables | 73 | - | ||
Interest received | 10 | 10 | ||
Tax refund | 13 | 32 | ||
Net cash outflow from operating activities | (36) | (57) | ||
Cash flow from Investing activities | ||||
Purchase of property, plant and equipment | (14) | (7) | ||
Capitalised development costs | - | (13) | ||
Sale of property, plant and equipment | - | 4 | ||
Net cash used in investing activities | (14) | (16) | ||
Net decrease in cash and cash equivalents | (50) | (73) | ||
Cash and cash equivalents at the beginning of the period | 1,628 | 1,701 | ||
Cash and cash equivalents at the end of the period | 1,578 | 1,628 | ||
NOTES
1 | The preliminary results have been prepared in accordance with International Financial Reporting Standards ("IFRSs") and IFRIC interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs. 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 2012. At this present time the directors are not aware of any matters that may give rise to a modification to these preliminary results. The Annual Report and Financial Statements for the year ended 31 December 2012 will be sent to the shareholders today. The preliminary results were approved by the Board on 28 March 2013.
The Annual Report and Financial Statements for the year ended 31 December 2011, 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
| The calculations of loss per ordinary share are based on a weighted average of 51,112,581 (2011: 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 £164k (2011: £108k loss).
|
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 2012 Annual Report and Financial Statements will be sent to all shareholders today. Copies will be available from the Company Secretary at Inditherm plc, Inditherm House, Houndhill Park, Bolton Road, Wath upon Dearne, Rotherham, S63 7LG.
A PDF version of the 2012 Annual Report and Financial Statements will be available on the company's website http://www.inditherm.com today.