29th Mar 2012 07:00
Press Release | 29 March 2012 |
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 2011.
Highlights
·; | Publication of NICE guidance on operating theatre products in August 2011 has stimulated a significant increase in sales enquiries |
·; | Turnover of continuing operations increased by 25% to £1,659k (2010: £1,324k) |
·; | Gross profit increased by 24% to £1,000k (2010: £805k) |
·; | Post-tax losses on continuing activities reduced 72% to £108k (2010: £382k) |
·; | Reduced operating loss of £131k (2010: £417k) |
·; | Year end cash balance £1,628k (2010: £1,701k) reflecting a significantly reduced outflow of £73k (2010: £391k) |
·; | Overall Medical revenue in 2011 grew by 24% |
·; | 29% increase in revenue from Industrial standard product ranges |
·; | Further reduction in overheads to £1,131k (2010: £1,222k) |
Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said:
"During 2011 Inditherm made good progress in its core Medical business. Against a backdrop of significant uncertainty in the NHS, the publication of the NICE guidance on our operating theatre products in August 2011 has stimulated a significant increase in sales enquiries and we anticipate that this will translate into increased order flow in the year ahead.
"Despite the variable nature of the export sector of our Medical business through independent distributors, with partners now in over 50 overseas countries, we expect that sales growth can continue. Additionally, we are involved in a small number of potential projects involving the use of Inditherm technology in third party products (OEM), some of which we hope will reach a successful conclusion in the second half of 2012.
"We plan to continue to develop our Industrial standard product business through the year, whilst containing the associated overheads. We anticipate that our relationship with the ADI Group should help to deliver further growth, albeit probably modest in relation to the overall business.
"The Company has traded profitably in seven of the last twelve months to the end of February 2012, which includes a modestly profitable start to the current year. This gives us reason to be optimistic of entering a more profitable period."
- Ends -
For further information, please contact:
Inditherm plc | |
Nick Bettles, Chief Executive | Tel: +44 (0) 1709 761000 |
Ian Smith, Finance Director | www.inditherm.com |
Canaccord Genuity Limited (Nominated Adviser and Broker) | |
Mark Dickenson / Pippa Underwood | Tel: +44 (0) 20 7523 8350 |
Media enquiries:
Abchurch | |
Sarah Hollins / Oliver Hibberd | Tel: +44 (0) 207 398 7714 |
Chairman's Statement
Overview
During 2011 Inditherm made good progress in its core Medical business. The recommendations of the UK's National Institute for Health & Clinical Excellence (NICE) on our patient warming system has increased our profile within the NHS and led to a gathering momentum of enquiries for the Company's operating theatre products. This has helped to sustain our progress in what could otherwise have been a difficult period with the NHS facing numerous pressures and reorganisations.
The standard product sector of our Industrial business continued to make a positive contribution. We also saw some pick-up in orders from the ADI Group, for process solutions heating components, in the second half of the year.
The year showed a substantial reduction in losses allowing us to maintain our cash reserves.
Overall, the enhanced focus and efficiency arising from the disposal of our industrial process solutions business has been a great help to our progress.
Results
The results comparisons with 2010 reflect the continuing activities of the business and are presented in terms of ongoing operations.
The turnover of continuing operations for the year rose by 25% to £1,659k (2010: £1,324k). Gross profit increased by 24% to £1,000k (2010: £805k) due to growth of both the Medical and Industrial businesses.
Overheads were reduced slightly during the year, to £1,131k (2010: £1,222k), resulting in an operating loss of £131k (2010: £417k). The post-tax loss on continuing activities was £108k (2010: £382k), giving a 72% reduction, and representing a total 78% reduction when taking into account losses from discontinued activities in 2010 (£106k).
The year end cash balance was £1,628k (2010: £1,701k), representing a significantly reduced outflow of £73k (2010: £391k), reflecting the improved operating result.
Operations
Overall Medical revenue in 2011 grew by 24%, notwithstanding the challenges in the UK NHS sector. Pressures within the NHS generally stalled decision-making and release of funds; however the Company managed to sustain the previous year's order levels, with a gathering momentum during the year. There was a 20% increase in orders from our non-US distributors, with the growth coming from outside Europe. Orders from the USA amounted to £71k, giving a welcome increase but representing only 5% of our global Medical business.
The final recommendations by NICE relating to Inditherm's technology were released in August 2011. These were very positive about the benefits of Inditherm's patient warming products and are already showing signs that they will accelerate uptake of our medical products in the NHS in the year ahead.
We have seen a 29% increase in revenue from our Industrial standard product ranges compared to the previous year. With our reduced overhead structure this sector now makes a positive contribution to the overall business. The order intake from the ADI Group for standard heating pads used in their process solutions activity showed encouraging growth during the year.
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 2011 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. On behalf of the Board, I thank our staff most sincerely for their continued support.
Outlook
Against the backdrop of significant uncertainty in the UK NHS, which appears to be reflected in much of Europe, the publication of the NICE guidance on our operating theatre products in August 2011 has stimulated a significant increase in sales enquiries. Whilst we cannot ignore the continuing uncertainty, we anticipate that the interest generated by the NICE recommendations will translate into increased order flow in the year ahead.
Despite the variable nature of the export sector of our Medical business through independent distributors, with partners now in over 50 overseas countries, we expect that sales growth can continue. Whilst economic conditions remain difficult in many European countries, we are seeing growing activity in other regions which we expect to compensate for that. The USA represents a relatively small proportion of our total sales, but there was some order progress in 2011 and we will continue to pursue any opportunities in the year ahead, whilst maintaining a balanced use of our resources. Additionally, we are involved in a small number of potential projects involving the use of Inditherm technology in third party products (OEM), some of which we hope will reach a successful conclusion in the second half of 2012.
We plan to continue to develop our Industrial standard product business through the year, whilst containing the associated overheads. We anticipate that our relationship with the ADI Group should help to deliver further growth, albeit probably modest in relation to the overall business.
The Company has traded profitably in seven of the last twelve months to the end of February, which includes a modestly profitable start to the current year. This gives us reason to be optimistic of entering a more profitable period.
Mark Abrahams
Chairman
29 March 2012
Chief Executive's Review
Overview
Turnover on continuing activities increased by 25% in 2011, with a corresponding increase in gross profit, despite difficult trading conditions in the NHS. With continuing containment of overheads, losses for the year on continuing activities fell by 72% to £108k (2010: £382k).
The results of our initiative in securing evaluation of Inditherm technology by NICE reached fruition during the year. This yielded very positive guidance and has stimulated a noticeable growth in interest for operating theatre applications from NHS hospitals.
In the Medical sector we have continued to build on our international distribution activity during the year, with notable success from some of our newer partners. Market conditions remain challenging in many countries; however the broad network of distributors we have now established has allowed us to continue our export growth.
The very specific focus of our remaining Industrial activities has ensured that this sector delivered a positive impact on trading performance, without distracting us from our core Medical business objectives.
Sales and Marketing
In the Medical sector the economic situation in many countries continues to render market conditions difficult, not least of which being the UK. Despite this we managed to sustain order levels from the NHS, helped by growing appreciation of the significant cost advantages that our products offer.
Considerable effort continued during the year to obtain approval from NICE for our operating room product range. Their final recommendations were very positive, endorsing the clinical evidence and highlighting the very substantial cost savings our technology delivers. We executed a co-ordinated marketing campaign across the UK when the guidance was released and have seen an encouraging upturn in enquiries for our products as a result. The typical sales cycle in the NHS would suggest that we will see the benefits flowing through to results during 2012.
We realised some further expansion of our international distribution network during 2011, and now have nearly 60 overseas partners. We have concentrated on building the contribution from our established distributors throughout the year and have increased our resource allocation to the Middle East region. The breadth of our geographic distribution network has helped to overcome the impact of the global economic downturn on healthcare markets, giving an overall growth in export orders of nearly 20%.
We have seen early signs of growing interest in our operating theatre products in the USA, but this has so far only translated into modest revenues. We see this market as potential future up-side to our plans, but will continue to ensure that the allocation of resources is proportionate and does not therefore threaten our overall export growth.
We continue to pursue a number of potential OEM opportunities with other manufacturers in a range of different industry sectors. Some of these are progressing faster than others, and whilst none have yet reached the point of firm commitment to proceed to product launch, they do represent good potential for additional growth and in some cases would contribute to enhanced Inditherm brand recognition.
Product Development
We have continued to develop our existing product ranges, with particular focus on the Medical business, to improve customer uptake and market opportunities. We have completed the introduction of our heat therapy product for use in chemotherapy and have seen an encouraging start to market uptake in the UK.
The development of our neonatal range to suit transport applications was advanced during 2012 and product launch is now underway. We have very recently started the introduction of a range of warming cabinets developed with a partner company, which are used for fluids and blankets in operating theatre suites and intensive care units and support our existing patient warming activities.
We have secured the worldwide rights to a new product for obstetric use that will complement our existing sales activity and should underpin our growth potential. We have led the development of a commercial product from a concept initiated within a multi-centre NHS research group and expect to launch this later in the year.
Operations
Our production capacity has been expanded during the year, with the recruitment of additional staff and a reorganisation of the production areas to support the increased sales volumes and product range expansion. We have a very dedicated and adaptable production team and the Company has invested in training to ensure we can adapt to variations in product demand, both medical and industrial.
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.
Outlook
Economic conditions in the NHS have exacerbated the reluctance to adopt new technologies, which is a situation already recognised at government level. It has made sales of medical equipment particularly challenging. The compelling arguments for Inditherm's ability to deliver cost savings in the operating theatre area are helping us to sustain sales levels, against the general market trend. Following publication of the NICE guidance on our patient warming technology we have seen a significant upturn in interest from NHS hospitals with a growing number of prospects progressing through the sales cycle. Overall we see the opportunity to realise further sales growth in the UK in the year ahead.
The breadth of our international distribution organisation affords us a good degree of protection against regional market difficulties. The indications are that we can continue our export growth in the year ahead, although the rate we will be able to achieve remains a little uncertain. With a number of potential up-side opportunities, we are hopeful that we can outperform current market trends for medical equipment sales.
We have made progress with our Industrial standard product business over the last year as business with the ADI Group has become established and we believe that this performance can be sustained in 2012.
The Company will continue to contain overheads to maintain a profitable contribution from this sector and will resist any activities that risk deflecting us from our focus on the Medical business.
Nick Bettles
Chief Executive
29 March 2012
Preliminary announcement of results for the year ended 31 December 2011
Consolidated Statement of Comprehensive Income
2011 | 2010 | |||
Notes | £'000 | £'000 | ||
Revenue | 2 | 1,659 | 1,324 | |
Cost of sales | (659) | (519) | ||
Gross profit | 1,000 | 805 | ||
Administrative expenses | (1,131) | (1,222) | ||
Operating loss | (131) | (417) | ||
Finance income | 10 | 8 | ||
Loss on ordinary activities before taxation | (121) | (409) | ||
Taxation credit from loss on ordinary activities | 13 | 27 | ||
Loss for the year on continuing activities | (108) | (382) | ||
Loss from discontinued activities | 2 | - | (106) | |
Total deficit for the year attributable to equity holders | (108) | (488) | ||
Loss per share from continuing operations attributable to equity holders of the Company during the year - basic and diluted | 3 | (0.2p) | (0.7p) | |
Loss per share from total Inditherm Group attributable to equity holders of the Company during the year - basic and diluted | 3 | (0.2p) | (1.0p) |
All recognised gains and losses are included in the 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.
The results above are presented on the basis of continuing operations. A reconciliation of the comparatives to previously reported results is contained in Note 2.
Preliminary announcement of results for the year ended 31 December 2011
Consolidated and Company Balance Sheet
2011 | 2010 | |||
£'000 | £'000 | |||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 26 | 45 | ||
Intangible assets | 50 | 75 | ||
76 | 120 | |||
Current assets | ||||
Inventories | 165 | 132 | ||
Trade and other receivables | 233 | 238 | ||
Tax recoverable | 13 | 32 | ||
Cash and cash equivalents | 1,628 | 1,701 | ||
2,039 | 2,103 | |||
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | (238) | (238) | ||
(238) | (238) | |||
Net current assets | 1,801 | 1,865 | ||
Net assets | 1,877 | 1,985 | ||
Shareholders' equity | ||||
Called up share capital | 511 | 511 | ||
Share premium account | 9,929 | 9,929 | ||
Share based payment reserve | 134 | 134 | ||
Retained earnings | (8,697) | (8,589) | ||
Total equity | 1,877 | 1,985 |
Preliminary announcement of results for the year ended 31 December 2011
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 2010 | 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 |
Loss for the year | - | - | - | (108) | (108) |
At 31 December 2011 | 511 | 9,929 | 134 | (8,697) | 1,877 |
Preliminary announcement of results for the year ended 31 December 2011
Consolidated and Company Cash Flow Statement
2011 | 2010 | |||
£'000 | £'000 | |||
Net operating loss for the period from continuing operations | (131) | (417) | ||
Profit on disposal of property, plant and equipment | (4) | - | ||
Depreciation and amortisation | 64 | 46 | ||
Increase in inventories | (33) | (35) | ||
Decrease in trade and other receivables | 5 | 18 | ||
Decrease in trade and other payables | - | (7) | ||
Decrease in provisions | - | (5) | ||
Interest received | 10 | 8 | ||
Tax refund | 32 | 74 | ||
Net cash outflow from operating activities - continuing operations | (57) | (318) | ||
Net cash outflow from operating activities - discontinued operations | - | (49) | ||
Cash flow from Investing activities - continuing operations | ||||
Purchase of property, plant and equipment | (7) | (21) | ||
Capitalised development costs | (13) | (3) | ||
Sale of property, plant and equipment | 4 | - | ||
Net cash used in investing activities - continuing operations | (16) | (24) | ||
Net cash used in investing activities - discontinued operations | - | - | ||
Net decrease in cash and cash equivalents | (73) | (391) | ||
Cash and cash equivalents at the beginning of the period | 1,701 | 2,092 | ||
Cash and cash equivalents at the end of the period | 1,628 | 1,701 | ||
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 2011. 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 2011 will be sent to the shareholders today. The preliminary results were approved by the Board on 29 March 2012.
The Annual Report and Financial Statements for the year ended 31 December 2010, 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
| Continuing/Discontinued operations
Continuing activities as defined in these financial statements is in accordance with the provisions of IFRS 5 Non-current assets held for sale and discontinued operations.
On 13 December 2010, Inditherm plc transferred the Process Solutions business to the ADI Group (ADI). Under this exclusive distribution agreement, Inditherm continues to make heating pads with ADI taking responsibility for all sales, marketing, design, installation and project management. Inditherm retained all activity related to their other Industrial products, including Intermediate Bulk Container (IBC), drum and cylinder heating systems.
The following analyses the result of the continuing/discontinued operations for the periods:
The discontinued operations were only a 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.
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3 |
The calculations of loss per ordinary share are based on a weighted average of 51,112,581 (2010: 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 £108k (2010: £488k).
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 £108k (2010:£382k).
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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 2011 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 2011 Annual Report and Financial Statements will be available on the company's website http://www.inditherm.com today.
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