Energy Technique Plc
("Energy Technique" or "the Company")
Interim Report
30 September 2008
18 December 2008
Headlines
* Sales in the half year to 30 September 2008 of �4.21 million (2007: �5.57million)
* Profit before tax in the half year to 30 September 2008 of �215,000 (2007:�502,000)
* Net cash generated from operations of �495,000 (2007: �348,000)
* Net positive in hand cash at 30 September 2008 of �1.52 million (2007:�1.25 million)
* Net assets at 30 September 2008 of �2.48 million (2007: �1.94 million)
Chairman's statement
Introduction
I am pleased to report another profit before tax for the half year to 30
September 2008 of �215,000 (2007: �502,000). Whilst market conditions were less
favourable during the first half year, resulting in a reduction in sales
volumes, the Company has remained profitable and cash generative. This is a very
commendable operating performance and is testament to the engineering excellence
of the Company's main operating activity Diffusion Heating &
Cooling ("Diffusion") which makes fan coils and commercial heating products and
to the Company's lean and fit overhead structure.
Diffusion remains a market leader in the manufacture and supply of premium
quality fan coils and commercial heating products to offices, hotels, banks and
retail outlets. Diffusion's unrivalled engineering and development expertise
continues to innovate highly energy efficient products offering sustainability
and lower capital costs. Products are distributed under both the Diffusion and
Energy Technique brand names and are recognised throughout the HVAC sector as
highly engineered, quality products providing leading edge performance and
ultimate energy efficiency.
Group financial performance
Sales in the first half year were �4.21 million (2007: �5.57 million) with
Diffusion generating an operating profit of �331,000 (2007: �561,000),
representing a margin of 8%. Despite substantial increases in commodity prices
affecting the purchase prices of components, selling margins were maintained
through a continual process of supplier performance appraisals, combined with
improved materials handling and logistics control.
After Central and plc costs of �124,000 (2007: �54,000) and net interest income
of �8,000 (2007: �5,000), the Company's profit before tax was �215,000 (2007:
502,000). After a deferred tax charge of �47,000 (2007: nil), profit after tax
amounted to �168,000 (2007: �502,000). The deferred tax charge represents the
utilisation of tax losses.
Cash flow
Energy Technique also produced a strong figure for net cash generated from
operations for the half year of �495,000 (2007: �348,000). This cash flow
derived from both profits and a reduction in working capital of �256,000. At 30
September 2008, the Company had a net positive in-hand bank position of �1.52
million (2007: �1.25 million), with no bank borrowings or similar debt. Energy
Technique is very soundly financed with this level of cash at bank and net
assets at 30 September 2008 of �2.48 million.
Dividends
The Board does not recommend payment of a dividend (2007: �nil). For the present
time, the Board believes it is in the Company's best interests to retain its
strong liquidity for future growth and expansion purposes.
Diffusion Heating & Cooling ("Diffusion")
Diffusion products are to be found in prestigious office developments and in
many of the leading banks, hotels, and retail chains in the UK and Ireland.
During the first half year, Diffusion fan coils were installed into many
prestigious commercial developments including Bankside phases 1, 2 and 3,
Hardman Square, Fenchurch Street, 200 Aldersgate, 30 Eastbourne Terrace and
Queen Anne's Gate. Diffusion's commercial heating products also enjoyed a
successful half year with products installed into sites operated by customers
including Marks & Spencer, Aldi, Primark, Arcadia Group, Boots, Nike, Argos,
Debenhams, and Tesco. Notably, Diffusion was successful in winning a contract to
supply heating products to a group of schools in the North West.
A number of new marketing initiatives have come to fruition in December. We are
pleased to welcome DLA back as an agent for Energy Technique fan coil
products, who have an established track record of generating fan coil orders. In
addition, we are also delighted to be working in collaboration with a leading
Midlands based HVAC supplier, where our aim is to distribute fan coils and
commercial heating products through their customer base.
Diffusion continues its drive to offer customers highly energy efficient
product development:
* Working in conjunction with a leading building controls supplier, many of
Diffusion's commercial heating products are now fitted with its new energy
saving controller, which received the HVAC industry's accolade of the H & V News
Product of the Year Award for 2007.
* The ultimate "green" fan coil has just been launched using an EC/DC motor,
modular construction for maximum flexibility to provide sustainability, reduced
energy consumption, and lower capital costs.
* An air-purifier fan coil fitted with Ecoquest, which uses radiant
ionisation to deliver purified air.
* Grant funding from the South Bank University, allowing the Company access
to and collaboration with an even greater pool of technical and development
resource.
The production facility at West Molesey has just been re-equipped with a new
Laser cutting machine in December 2008 costing in excess of �300,000. This state
of the art machinery provides high tech fully automated production capability in
the sheet metal shop and will reduce unit costs of production through a
combination of both reduced materials usage and increased labour efficiency.
This capital expenditure forms part of the continuing production facility
upgrades, which included a new test facility in 2007 and is all aimed at
maintaining Diffusion's leading edge.
Business strategy
The Board recognises the wider challenges arising from current market trends
towards lower building energy consumption and its aim is therefore to expand,
both organically and through acquisition, to become a much broader based provider
of building energy management solutions to the HVAC sector.
Current trading and prospects
Sales in October and November of the current year were in line with management's
expectations. The Company's cost base remains lean and fit.
James W Lugg
Chairman
17 December 2008
Contacts:
Energy Technique Plc: 020 8783 0033
James Lugg, Chairman and CEO
Rob Unsworth, Company Secretary
Blomfield Corporate Finance Limited (Nominated Adviser): 020 7489 4500
Ian Fenn
Ben Jeynes
Consolidated income statement
For the six months ended 30 September 2008
6 months to 6 months to Year to
30 September 30 September 31 March
2008 2007 2008
Unaudited Unaudited Audited
�000 �000 �000
CONTINUING OPERATIONS
Revenue 4,209 5,575 9,189
Cost of sales (2,850) (3,942) (6,578)
____________________________________
Gross profit 1,359 1,633 2,611
Distribution costs (681) (878) (1,549)
Operating costs (471) (248) (495)
____________________________________
Operating profit 207 507 567
Financial income (net) 8 (5) 8
____________________________________
Profit before taxation 215 502 575
____________________________________
Taxation (47) - 353
____________________________________
Profit for the financial period from Continuing Operations 168 502 928
====================================
DISCONTINUED OPERATIONS
Loss attributable to Discontinued Operations - - (48)
____________________________________
Profit for the year 168 502 880
====================================
Earnings per share:
Basic 0.50p 1.51p 2.64p
Diluted 0.50p 1.51p 2.64p
There are no other recognised gains or losses other than as recorded in the
profit and loss account for the period.
Consolidated balance sheet
At 30 September 2008
30 September 30 September 31 March
2008 2007 2008
Unaudited Unaudited Audited
�000 �000 �000
ASSETS
Non-current assets
Property, plant and equipment 126 125 142
Deferred tax asset 306 - 353
____________________________________
Total non-current assets 432 125 495
Current assets
Inventories 750 876 814
Trade and other receivables 1,467 1,801 1,357
Cash and cash equivalents 1,524 1,251 1,037
____________________________________
Total current assets 3,741 3,928 3,208
____________________________________
Total assets 4,173 4,053 3,703
____________________________________
LIABILITIES
Current liabilities
Trade and other payables (1,530) (1,903) (1,229)
Tax liabilities (161) (214) (160)
____________________________________
Total current liabilities (1,691) (2,117) (1,389)
____________________________________
Total liabilities (1,691) (2,117) (1,389)
____________________________________
Net assets 2,482 1,936 2,314
====================================
EQUITY
Equity attributable to equity holders
Share capital 4,351 4,351 4,351
Share premium account 3,399 3,399 3,399
Other reserves 7,449 7,449 7,449
Retained earnings (12,717) (13,263) (12,885)
____________________________________
Total equity 2,482 1,936 2,314
====================================
Consolidated statement of changes in equity
Share premium Other Retained
Share capital account reserves earnings Total
�000 �000 �000 �000 �000
Half year ended 30 September 2008- Unaudited
At 1 April 2008 4,351 3,399 7,449 (12,885) 2,314
Total recognised income - - - 168 168
_______________________________________________________
At 30 September 2008 4,351 3,399 7,449 (12,717) 2,482
=======================================================
Half year ended 30 September 2007- Unaudited
At 1 April 2007 4,351 3,399 7,449 (13,765) 1,434
Total recognised income - - - 502 502
_______________________________________________________
At 30 September 2007 4,351 3,399 7,449 (13,263) 1,936
=======================================================
Year ended 31 March 2008- Audited
At 1 April 2007 4,351 3,399 7,449 (13,765) 1,434
Total recognised income - - - 880 880
_______________________________________________________
At 31 March 2008 4,351 3,399 7,449 (12,885) 2,314
=======================================================
Consolidated cash flow statement
For the six months ended 30 September 2008
6 months to 6 months to Year to
30 September 2008 30 September 2007 31 March 2008
Unaudited Unaudited Audited
�000 �000 �000
Cash flows from operating activities
Profit before taxation 215 502 527
Finance costs (net) (8) 5 (8)
Depreciation 32 34 68
____________________________________________
Operating income before changes in working capital 239 541 587
____________________________________________
Decrease/(increase) in inventories 64 (28) 34
(Increase)/decrease in receivables (110) (152) 292
Increase/(decrease) in payables 302 (13) (741)
____________________________________________
Cash generated from operations 495 348 172
____________________________________________
Finance costs (14) (5) (29)
____________________________________________
Net cash generated from operating activities 481 343 143
============================================
Cash flows from investing activities
Interest received 22 - 37
Purchase of property, plant and equipment (16) (4) (55)
____________________________________________
Net cash generated from/(used in) investing activities 6 (4) (18)
____________________________________________
Cash flows from financing activities
Issue of share capital - - -
Repayment of debt - - -
____________________________________________
Net cash generated from financing activities - - -
============================================
Net increase in cash and cash equivalents 487 339 125
Cash and cash equivalents at beginning of period 1,037 912 912
____________________________________________
Cash and cash equivalents at end of period 1,524 1,251 1,037
============================================
Consolidated segmental analysis
For the six months ended 30 September 2008
6 months to 6 months to Year to
30 September 30 September 31 March
2008 2007 2008
Unaudited Unaudited Audited
�000 �000 �000
Revenue
Diffusion Heating and Cooling:
United Kingdom 4,137 4,910 8,244
Rest of Europe 72 484 764
Rest of World - 181 181
____________________________________
4,209 5,575 9,189
====================================
CONTINUING OPERATIONS
Diffusion Heating and Cooling 331 561 732
Central and plc costs (124) (54) (165)
____________________________________
Operating profit 207 507 567
Interest (net) 8 (5) 8
____________________________________
Profit before tax 215 502 575
Deferred tax (charge)/credit (47) - 353
____________________________________
Profit for the year Continuing Operations 168 502 928
====================================
DISCONTINUED OPERATIONS
Operating loss before and after taxation - - (48)
____________________________________
____________________________________
Consolidated profit for the period 168 502 880
====================================
Notes to the consolidated interim report
For the six months ended 30 September 2008
1.GENERAL INFORMATION
Energy Technique Plc is a public limited company ("the Company") incorporated
in the United Kingdom under the Companies Act 1985 (registration number 13273).
The Company is domiciled in the United Kingdom and its registered address is 47
Central Avenue, West Molesey, Surrey KT8 2QZ. The Company's Ordinary Shares are
traded on the AIM market of the London Stock Exchange.
2.BASIS OF PREPARATION
Energy Technique Plc has adopted International Financial Reporting Standards
("IFRS") as adopted by the European Union with effect from 1 April 2006. The
financial statements are presented in sterling and all values are rounded to
the nearest thousand pounds (�000) except when otherwise indicated. The same
accounting policies and methods of computation are followed in the interim
report as compared with the most recent annual financial statements.
3.REPORTING UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS
As permitted, the Group has chosen not to adopt IAS 34 "Interim Financial
Statements" in preparing these interim financial statements and therefore the
interim financial information is not in full compliance with IFRS.
4.EARNINGS PER SHARE
The earnings per share calculations have been arrived at by reference to the
following earnings and weighted average number of shares in issue during the
period.
6 months to 6 months to Year to
30 September 30 September 31 March
2008 2007 2008
Unaudited Unaudited Audited
Basic and diluted earnings per share Pence Pence Pence
Continuing Operations 0.50 1.51 2.79
Discontinued Operations - - (0.15)
____________________________________
0.50 1.51 2.64
====================================
�000 �000 �000
Profit for the financial period after taxation
Continuing Operations 168 502 928
Discontinued Operations - - 48
____________________________________
168 502 880
====================================
No. No. No.
Weighted average number of shares in issue 33,305,160 33,305,160 33,305,160
____________________________________
Weighted average number of shares on a diluted basis 33,305,160 33,305,160 33,305,160
____________________________________
5.OTHER INFORMATION
The interim financial statements do not constitute statutory accounts as
defined by Section 240 of the Companies Act 1985. The financial information
for the year ended 31 March 2008 has been extracted from the statutory
financial statements for the Group for that period . These published financial
statements in a form consistent with UK GAAP were reported on by the auditors
without qualification or an emphasis of matter reference and did not include a
statement under Section 237(2) or (3) of the Companies Act 1985 and have been
delivered to the Registrar of Companies.
6.POSTING TO SHAREHOLDERS
In an effort to further reduce costs and in accordance with the AIM
regulations, this Interim Report will be announced on the Regulatory
Information Service and published on the Company's website, www.diffusion-
group.co.uk, but it will not be posted to shareholders.
-END-
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