26th Mar 2009 07:00
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Press Release |
26 March 2009 |
Inditherm plc
Preliminary Results
Inditherm plc ("Inditherm" or "the Company"), the provider of innovative specialised heating solutions, today reports its Preliminary Results for the 12 months ended 31 December 2008.
Highlights
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Group turnover increased by 7% £1,983k (2007: £1,861k) |
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Gross profit increased by 37% year on year |
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Overheads contained at £1,607k (2007: pre-exceptional costs £1,605k) |
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Net outflow from operating activities of £263k (2007: £1,044k) resulted in year end cash balance of £3,115k (2007: £3,485k) |
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37% improvement in operating loss before exceptional items at £502k (2007: £799k) |
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UK Medical orders grew by over 50% |
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Medical export orders from distributors and overseas partners outside the USA grew by over 40% |
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New products for the pre-cast concrete industry generating interest |
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Further products developed in the Medical and Industrial ranges |
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Marketing Manager for Industrial and Construction business appointed |
Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said:
"Growth of the Medical sector, excluding the USA, remains encouraging, with increasing order flow. We anticipate the same rate of growth in this sector in the year ahead. In the USA we are beginning to see end-user sales and in addition expect to exploit alternative channels to market than Smiths Medical. We continue to believe there is a significant market to develop and exploit but the pace is unlikely to be rapid.
In the Industrial and Construction sectors the change of strategy instigated from the beginning of 2008 has delivered higher margins, albeit on reduced sales. We anticipate that we will now be able to grow sales during the year ahead, with a focus on the sectors where we can offer standardised products and gain repeat business. We have a number of significant Industrial prospects where we hope to see successful conversion over the next six months. This outcome will help shape the direction for the Industrial business.
The world economic situation and global recession is undoubtedly having some impact in slowing the take-up of new projects. This does not affect interest in our technology and solutions, but does inevitably slow down the uptake.
We demonstrated in the first half of 2008 how close the balance is now between profit and loss in the business. In addition, our improved control of margin and cost slowed the rate of cash consumption. This gives us confidence that we can reach break-even with our own resources in the foreseeable future."
- Ends -
For further information, please contact:
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Inditherm plc |
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Nick Bettles, Chief Executive |
Tel: +44 (0) 1709 761000 |
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Ian Smith, Finance Director |
www.indithermplc.com |
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Collins Stewart Europe Limited (Nomad) |
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Hugh Field |
Tel: +44 (0) 207 523 8350 |
Media enquiries:
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Abchurch |
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Sarah Hollins / Simone Alves |
Tel: +44 (0) 207 398 7728 |
Inditherm plc
Chairman's Statement
Overview
Our strategy of targeting higher value-added applications and eliminating unprofitable work resulted in a small net increase in sales but with gross profit 37% higher, year on year. The results for the year have benefited from the sale of launch stocks to Smiths Medical.
Growth of the Medical sector has continued. We have seen end-user sales in the USA, albeit at a slow rate, and this indicates that a market there exists which can be grown.
The redirection and focus in the Industrial sector has delivered the increase in margins sought but with reduced sales as a consequence. Resources have now been put in place to facilitate growth of this sector.
The outcome for the second half was in line with expectations at the Interim stage. The combination of improved margins and contained overheads has resulted in a significantly reduced rate of cash consumed from operating activities compared to 2007 with a year-end cash balance of £3,115k (2007: £3,485k).
Results
Turnover for the year rose by 7% to £1,983k (2007: £1,861k), due to growth in Medical sales including start-up stock for Smiths Medical. This was in line with expectations following the results reported for the first half of the year.
Overheads were kept under control during the year, and were £1,607k (2007: £1,605k before exceptional costs), resulting in a 37% improvement in operating loss before exceptional items at £502k (2007: £799k). With no exceptional costs (2007: £128k) and net interest income of £178k (2007: 213k), the post-tax loss was £283k (2007: £699k).
The year end cash balance was £3,115k (2007: £3,485k), representing a net outflow from operating activities of £263k (2007: £1,044k).
Operations
Medical orders excluding the USA grew by 47% over the previous year. Smiths have not ordered sufficient quantities to maintain their contractual right to exclusivity and the agreement therefore has become non-exclusive in accordance with existing provisions. Additional channels to market in the USA are being actively progressed and national distribution for our neonatal warming range has been secured during 2008. Our export orders from distributors and overseas partners outside the USA grew by over 40% from the previous year, indicating that this area is continuing to develop well. UK orders grew by over 50% with increasing acceptance of our technology in the market. We anticipate that the NICE Guideline on perioperative hypothermia, which was published during the year, will help us to continue this growth.
Sales effort in the Industrial markets in 2008 focused on business rationalisation rather than growth following a reassessment of future potential for profitable growth. The desired increase in margins has been achieved with the potential for further progress in that area. We are continuing to pursue the strategy of focus on market sectors where the value of Inditherm has been established and where we can deliver standard products and gain repeat business. This is showing some early signs of success.
Commercial exploitation of our technology in the pre-cast concrete industry was modest during the year; however we have now managed to develop a number of standard products that are starting to generate growing interest. A clear value proposition for customers in the pre-cast concrete market has now been established and should allow us to begin to develop this sector during the year ahead.
The football pitch heating at the new Aston Villa training ground was completed in 2008. The club staff have expressed their satisfaction with the performance, particularly during the protracted cold spell around the turn of the year. The margins realised in this business area have been unsatisfactory and any future projects will only be undertaken if they can be priced to make a sufficient contribution.
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 2008 and the Board does not expect to declare a dividend during the Company's continuing development.
Management
We further strengthened our management team with the appointment of a Marketing Manager for the Industrial and Construction businesses at the end of 2008.
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
Growth of the Medical sector, excluding the USA, remains encouraging, with increasing order flow. We anticipate the same rate of growth in this sector in the year ahead. In the USA, we are beginning to see end-user sales and in addition expect to exploit alternative channels to market than Smiths Medical. We continue to believe there is a significant market to develop and exploit but the pace is unlikely to be rapid.
In the Industrial and Construction sectors the change of strategy instigated from the beginning of 2008 has delivered higher margins, albeit on reduced sales. We anticipate that we will now be able to grow sales during the year ahead, with a focus on the sectors where we can offer standardised products and gain repeat business. We have a number of significant Industrial prospects where we hope to see successful conversion over the next six months. This outcome will help shape the direction for the Industrial business.
The world economic situation and global recession is undoubtedly having some impact in slowing the take-up of new projects. This does not affect interest in our technology and solutions, but does inevitably slow down the uptake.
We demonstrated in the first half of 2008 how close the balance is now between profit and loss in the business. In addition, our improved control of margin and cost slowed the rate of cash consumption. This gives us confidence that we can reach break-even with our own resources in the foreseeable future.
Mark Abrahams
Chairman
26 March 2009
Inditherm plc
Chief Executive's Review
Overview
The Company saw modest sales growth during 2008 at 7%, however operating losses were reduced by over 40% due to the improved margins achieved and containment of overhead costs.
Order intake in the Medical sector outside the USA grew by 47%, but there were negligible orders received from the Smiths Medical due to them using up their start-up stock.
Despite a fall in sales as our Industrial market activities have been realigned, percentage margins from this sector have increased and give us a platform to drive forward in 2009.
Sales and marketing
In the Medical sector orders for our CosyTherm neonatal warming systems more than doubled the levels achieved in 2007 as the product has become more established outside the UK. A distribution agreement for this range in the USA has been signed and initial stocks were delivered towards the end of 2008. Following promotional activity in the second half of 2008 a significant amount of interest has been generated in the USA market, with over 100 requests for clinical evaluation.
The UK market for operating theatre patient warming systems showed over 50% year-on-year order growth, as acceptance of our technology as an alternative to traditional methods continues to spread. The NICE guideline on this subject, issued during 2008, has further stimulated customers to look at this clinical area and there has been an increasing flow of enquiries generated as a result. The NICE report includes recommendations that would require two and a half times the number of NHS patients to be warmed, significantly increasing the cost benefits of switching from traditional disposable products to Inditherm. This looks set to further accelerate uptake in the UK market during 2009.
Smiths Medical's end-user sales in the USA market during the year were disappointing, and have been supplied out of their start-up stock. They have not met the contractual targets and therefore the distribution agreement has reverted to a non-exclusive basis. Discussions with partners who can provide parallel or alternative routes to market for our operating room product range are well progressed and should allow the company to move forward in the USA market in the year ahead.
In addition to our change in strategic focus for the Industrial business, the organisation has been rationalised and strengthened during the year, involving significant changes to the sales team. We have recruited an Operations Manager to ensure that maximum efficiency is obtained in manufacturing and improved control of larger customer projects is implemented. A Marketing Manager has been appointed to drive forward sales growth in both the Industrial and Construction sectors and ensure that the strategic objectives are met.
In the Construction sector we have not promoted our technology aggressively in 2008 whilst we have developed robust products, suited to the harsh user environment. We have introduced a number of standard products during the year, which are making it easier to demonstrate the benefits offered by Inditherm technology, particularly in the precast concrete markets. We are in negotiation with a growing number of customers who are looking at implementation of Inditherm heating in their processes and believe that this market will show progress during the coming year. We hope that the recent Sustainability Award received by Inditherm from the British Precast Association will help to highlight the advantages our technology can offer in this application.
Product development
A number of new products have been developed during the year to add to our Medical product range and these will be launched during the first quarter of 2009. These will improve our growth potential, particularly in the neonatal markets.
An advanced neonatal cot for use in Special Care Baby Units has been designed, which integrates with our CosyTherm warming range. This provides additional opportunities for growth with a customer base where we are already becoming well known and respected. This fills a market niche where there are a limited number of competing products.
We have identified a new application for our SpeedHeat heat therapy system to deliver warming during chemotherapy treatment. The product has been adapted to meet the clinical needs for this treatment. The market development is still in its early stages, but indications are that this could generate a valuable revenue stream that will help to underpin our historic medical growth rates.
Two new technological additions have been implemented within our Industrial product ranges that will give us further advantages, particularly in the process industry applications. One delivers advanced monitoring of process conditions using a bus-based system and allows the customer to have precise control that is not possible with other technologies. The second is a novel insulation and cladding method that is attracting particular interest from some of the major food and confectionery businesses. We believe these will be enabling technologies that will add to the benefits customers can derive from using Inditherm products and thus help increase our conversion rates.
Further work has been directed at increasing the number of standard products for the industrial and construction markets. This should help us to deliver our strategic goals of higher margins and repeat business.
Operations
Following the appointment of our new Operations Manager during the first half of the year, we have been focussed on improving efficiency and better project management, to support the drive for higher margins particularly in the industrial area. We continue to be perceived by our customers as delivering high quality products and service.
With the growing demand for medical products we have adapted our manufacturing philosophy and can now typically offer products from stock to ensure optimum turn-round on orders. The improved response time, which flows from production standardisation achieved, has been well received by our distributor network.
Outlook
Growth in the Medical markets has continued during 2008, and it is anticipated that this will progress further in the year ahead. Significant focus will be placed on driving forward business in the USA but we will no longer depend on Smiths Medical alone. Profitability in this sector is expected to remain good and we will devote our energy to achieving faster growth wherever possible.
The improved margins we are realising from our Industrial products put us in a much better position to make this area of the business profitable. We believe that some further progress on margins can be achieved in the year ahead. With a stronger team in place we anticipate that we can now start to grow sales again during 2009.
We believe that the business is now in a position to exploit opportunities in the Construction sector, although this is still in the early stages of commercial implementation. Focus will be directed primarily on the pre-cast concrete sector.
Nick Bettles
Chief Executive
26 March 2009
Preliminary announcement of results for the year ended 31 December 2008
Consolidated Income Statement
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2008 |
2007 |
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Note |
£'000 |
£'000 |
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Turnover |
1,983 |
1,861 |
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Cost of sales |
(878) |
(1,055) |
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Gross profit |
1,105 |
806 |
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Administrative expenses |
2 |
(1,607) |
(1,733) |
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Operating loss before exceptional items |
(502) |
(799) |
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Exceptional administrative expenses |
2 |
- |
(128) |
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Operating loss |
(502) |
(927) |
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Finance income |
179 |
215 |
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Finance costs |
(1) |
(2) |
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Loss on ordinary activities before taxation |
(324) |
(714) |
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Taxation credit from loss on ordinary activities |
41 |
15 |
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Deficit for the year attributable to equity holders |
(283) |
(699) |
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Loss per share - basic and diluted |
3 |
(0.6p) |
(1.4p) |
All amounts relate to continuing activities.
Preliminary announcement of results for the year ended 31 December 2008
Consolidated Statement of Changes in Shareholders' Equity
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Share |
Share based |
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Share |
premium |
payment |
Retained |
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capital |
account |
reserve* |
earnings |
Total |
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£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
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At 1 January 2007 |
211 |
7,423 |
110 |
(6,037) |
1,707 |
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Loss for the year |
- |
- |
- |
(699) |
(699) |
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Issue of shares |
300 |
2,700 |
- |
- |
3,000 |
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Expenses of share issue |
- |
(194) |
- |
- |
(194) |
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At 31 December 2007 |
511 |
9,929 |
110 |
(6,736) |
3,814 |
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Loss for the year |
- |
- |
12 |
(283) |
(271) |
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At 31 December 2008 |
511 |
9,929 |
122 |
(7,019) |
3,543 |
*Upon floatation of the company on 11 December 2001, 103,770 share options were granted at 48.5p (a discount of 50% to the then market price). The £50k non-cash cost was charged to the share premium account and was credited to an "Other reserve" and is now presented within the Share based payment reserve.
Preliminary announcement of results for the year ended 31 December 2008
Consolidated Balance Sheet
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2008 |
2007 |
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£'000 |
£'000 |
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Assets |
||||
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Non-current assets |
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Property, plant and equipment |
115 |
162 |
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Intangible assets |
92 |
15 |
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207 |
177 |
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Current assets |
||||
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Inventories |
175 |
192 |
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Trade and other receivables |
317 |
597 |
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Tax recoverable |
40 |
39 |
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Cash and cash equivalents |
3,115 |
3,485 |
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3,647 |
4,313 |
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Liabilities |
||||
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Current liabilities |
||||
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Trade and other payables |
(311) |
(622) |
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|
(311) |
(622) |
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Net current assets |
3,336 |
3,691 |
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Non-current liabilities |
||||
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Provisions for liabilities and charges |
- |
(54) |
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Net assets |
3,543 |
3,814 |
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Shareholders' equity |
||||
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Called up share capital |
511 |
511 |
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Share premium account |
9,929 |
9,929 |
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Share based payment reserve |
122 |
110 |
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Retained earnings |
(7,019) |
(6,736) |
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Total equity |
3,543 |
3,814 |
Preliminary announcement of results for the year ended 31 December 2008
Consolidated Cash Flow Statement
|
Group and company |
2008 |
2007 |
||
|
£'000 |
£'000 |
|||
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Cash flow from operating activities |
||||
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Cash used in operations |
(481) |
(1,257) |
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Interest received |
179 |
215 |
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Interest paid |
(1) |
(2) |
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Taxation |
40 |
- |
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Net cash outflow from operating activities |
(263) |
(1,044) |
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Cash flow from investing activities |
||||
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Purchase of property, plant and equipment |
(17) |
(25) |
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Capitalised development costs |
(91) |
- |
||
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Sale of property, plant and equipment |
1 |
1 |
||
|
Net cash used in investing activities |
(107) |
(24) |
||
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Cash flow from financing activities |
||||
|
Issue of shares |
- |
3,000 |
||
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Share Issue expenses |
- |
(194) |
||
|
Net cash generated from financing activities |
- |
2,806 |
||
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Net (decrease)/increase in cash and cash equivalents |
(370) |
1,738 |
||
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Cash and cash equivalents at the beginning of the year |
3,485 |
1,747 |
||
|
Cash and cash equivalents at the end of the year |
3,115 |
3,485 |
Preliminary announcement of results for the year ended 31 December 2008
Reconciliation of Operating Loss to Cash used in Operations
|
2008 |
2007 |
|||
|
£'000 |
£'000 |
|||
|
Operating loss |
(502) |
(927) |
||
|
Profit on disposal of property, plant and equipment |
(1) |
(1) |
||
|
Depreciation and amortisation |
78 |
86 |
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|
Share based payments |
12 |
- |
||
|
Decrease/(increase) in inventories |
17 |
(71) |
||
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Decrease/(increase) in trade and other receivables |
280 |
(330) |
||
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(Decrease)/Increase in trade and other payables |
(311) |
39 |
||
|
Decrease in provisions |
(54) |
(53) |
||
|
Net cash used in operations |
(481) |
(1,257) |
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NOTES
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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 2008. The statutory accounts for the year ended 31 December 2008 will be sent to the shareholders shortly. The preliminary results were approved by the Board on 26 March 2009. The statutory accounts for the year ended 31 December 2007, 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. |
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2 |
The exceptional administrative expenses of £128k consist of compensation for loss of office and associated costs for Richard Harpum the former CEO of the company. |
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3 |
The calculation of loss per ordinary share is based on losses of £283k (2007: £699k) and on a weighted average of 51,112,581 (2007: 49,821,862) ordinary shares in issue during the year. The share options are anti-dilutive due to the loss in the year. |
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4 |
Copies of the 2008 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. |
Related Shares:
Inspiration Hlt