TIDMETQ
RNS Number : 2381S
Energy Technique PLC
29 November 2012
Energy Technique Plc
("Energy Technique" or the "Company")
Half-Yearly Report
30 September 2012
Headlines
-- Sales increased by 12 per cent over the corresponding half year to GBP3.67 million;
-- Diffusion's operating profit increased by 18 per cent over
the corresponding half year to GBP176,000;
-- Group profit before tax and an exceptional item, increased by
18 per cent over the corresponding half year to GBP77,000;
-- Strong balance sheet net assets at 30 September 2012 of
GBP1.46 million and cash and cash equivalents of GBP285,000;
-- Diffusion's premium branded fan coils and commercial heating
products fitted into many landmark and prestigious
developments;
-- Energy efficient fan coil development programme under way
with exciting new products expected to be launched in the spring of
2013;
-- Enquiry levels and order intakes are at encouraging levels
and the Board looks forward to a successful second half year,
despite the continuing challenges facing the UK construction
industry.
Chairman's statement
Introduction
I am very pleased to report a continuation of profitable trading
in the half year ended 30 September 2012. Sales increased by 12%
over the corresponding half year to GBP3.67 million, producing an
operating profit for Diffusion of GBP176,000 and a group profit
before tax of GBP77,000, before an exceptional item. This was a
pleasing trading performance, broadly in line with management's
expectations, and achieved in a continuation of challenging trading
conditions in the UK property and construction markets.
Financial performance
Sales in the half year ended 30 September 2012 increased by 12
per cent to GBP3.67 million (2011: GBP3.29 million). Fan coil sales
were particularly strong with sales increasing by 26 per cent to
GBP2.55 million (2011: GBP2.02 million), but commercial heating
sales fell marginally to GBP0.95 million (2011: GBP1.10 million).
The reduction in commercial heating sales was attributed to reduced
market demand from the UK retail sector.
Diffusion's operating profit increased by 18 per cent to
GBP176,000 (2011: GBP149,000), representing an improved operating
profit margin of 4.8 per cent (2011: 4.5 per cent). Overall selling
contribution margins fell marginally in the half year because of a
slightly weaker sales mix, but the overall operating profit margin
was maintained through higher sales levels.
Group profit before tax increased by 18 per cent to GBP77,000,
before an exceptional item of GBP25,000 (2011: GBP65,000) after
charging Central and plc related costs of GBP74,000 (2011:
GBP64,000) and interest of GBP25,000 (2011: GBP20,000). The
exceptional charge of GBP25,000 relates to the costs associated
with the capital reorganisation and reduction approved by the Court
on 19 September 2012. This course of action was necessary to allow
the Company to be able to pay dividends in the future.
Cash flow and net cash
Operating income before changes in working capital was
GBP117,000 (2011; GBP121,000). Working capital absorbed on higher
sales was much smaller this half year at GBP21,000 (2011:
GBP239,000) and after interest charges of GBP25,000 (2011:
GBP20,000), net cash generated by operating activities was
GBP71,000 (2011: cash absorbed GBP138,000). There was no
requirement for any significant capital expenditure in the half
year and cash used in financing activities reduced from June 2012
onwards, following payment of the last installment on the Trumpf
laser cutter.
The Company is soundly financed with strong net assets at 30
September 2012 of GBP1.46 million (2011: GBP1.43 million) and ample
liquidity provided by cash at bank of GBP388,000 (2011:
GBP388,000), together with a modest draw down of GBP103,000 (2011:
GBP350,000) under its invoice discounting facility.
Diffusion
Diffusion's markets did not show any signs of growth in the half
year and selling price pressure remained a market feature. The
Company produced its continued profitability by maintaining
Diffusion's premium branding and pursuing quality projects likely
to return target selling margins, combined with focused business
development activities. Recent investments in sales and marketing
resources, upgrading of the research and development facilities and
capital expenditure on the Trumpf laser cutter have all contributed
to this success.
Diffusion has continued to improve its share of the UK fan coil
market. The growth in fan coil sales is a continued testament to
Diffusion's quality products, engineering excellence and product
innovation. During the half year ended 30 September 2012, Diffusion
has worked on many prestigious developments including Abu Dhabi
Investment Council, Walbrook House, Goldman Sachs, BskyB, 375
Kensington Residential, Jaynes Harbour Barbados, St Marys Axe and
Shard Residential. In 2011, Diffusion appointed a new distributor
in the Republic of Ireland and sales through this distributor have
been an important contributor to fan coil sales.
The commercial heating range enjoys the same reputation for
engineering quality as Diffusion's fan coils and customers
particularly like the short lead times, combined with a specialist
bespoke service. Commercial heating sales fell marginally in the
half year, attributed to lower demand from its traditional high
street customer base. Nevertheless, Diffusion's products were
fitted into a number of prestigious projects including Oasis
Academy (Enfield), Serpentine Galley (London), Croydon CURV,
Starbucks (Canary Wharf), Islington Arts & Media College,
Genting Casino (Sheffield), and MTV Studio's (London). A number of
changes have been made to the sales management of commercial
heating sales that are already starting to show through in improved
sales in September and October.
Dividends
The capital reorganisation and reduction was approved by the
Court on 19 September 2012, thereby eliminating the previous
deficit on the Company's distributable reserves. The payment of
fractional entitlements to shareholders arising from the capital
reorganisation will follow as soon as possible after the
announcement of these interim results.
The Board is now pleased to declare an interim dividend of 0.75
pence per share payable on 28 December 2012 to those shareholders
on the register at the close of business on 7 December 2012. The
total cost of this dividend will be GBP25,000. It is the Board's
intention to consider payment of a final dividend at the time of
releasing the audited accounts for the full year ended 31 March
2013.
Current trading and future prospects
The Company is planning to enhance fan coil sales through
product innovation and higher export sales. A new range of highly
energy efficient fan coils is expected to be released in the spring
of 2013 and a number of Middle East projects are being pursued to
improve export sales, but the order lead times on these projects is
turning out to be far longer than originally anticipated.
Diffusion has market leadership and a high quality reputation
allowing for the successful pursuit of major commercial projects.
We continue to experience high levels of enquiries at the premium
end of the market, including the high-end residential sector,
together with an improved order book. Sales in October were in line
with management's expectations. Whilst it is too early to predict
the outturn for the remainder of the current year ending 31 March
2013, there is presently cause for optimism.
Walter Goldsmith
Chairman
28 November 2012
Contacts:
Energy Technique Plc: 020 8783 0033
Walter Goldsmith, Chairman
Leigh Stimpson, Managing Director
finnCap (Nominated Adviser): 020 7220 0500
Ed Frisby/Ben Thompson
Consolidated statement of comprehensive income
For the six months ended 30 September 2012
6 months 6 months Year
to to to
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
----------------------------------- ------------- ------------- ---------
CONTINUING OPERATIONS
Revenue 3,670 3,289 7,093
Cost of sales (2,668) (2,341) (5,102)
----------------------------------- ------------- ------------- ---------
Gross profit 1,002 948 1,991
Distribution costs (706) (662) (1,383)
Administration expenses (219) (201) (395)
Operating profit
----------------------------------- ------------- ------------- ---------
Before exceptional items 102 85 213
Exceptional items (25) - -
----------------------------------- ------------- ------------- ---------
77 85 213
Finance costs (net) (25) (20) (40)
----------------------------------- ------------- ------------- ---------
Profit before taxation 52 65 173
Taxation (12) - (25)
----------------------------------- ------------- ------------- ---------
Profit for the financial period
from Continuing Operations 40 65 148
DISCONTINUED OPERATIONS
Profitable attributable to
Discontinued Operations - - 12
Total comprehensive income
for the period 40 65 160
----------------------------------- ------------- ------------- ---------
Earnings per share:
Before exceptional item 2.1p 2.0p 4.8p
Basic and diluted 1.2p 2.0p 4.8p
Basic and diluted from Continuing
Operations 1.2p 2.0p 4.5p
----------------------------------- ------------- ------------- ---------
There are no other recognised gains or losses other than as
recorded in the consolidated statement of comprehensive income for
the period.
Consolidated statement of financial position
At 30 September 2012
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Intangible assets 25 25 25
Plant and equipment 308 294 336
Deferred tax asset 268 305 280
Total non-current assets 601 624 641
Current assets
Inventories 762 722 673
Trade and other receivables 1,351 1,372 1,382
Cash 388 388 393
Total current assets 2,501 2,482 2,448
Total assets 3,102 3,106 3,089
------------------------------- ------------- ------------- ---------
LIABILITIES
Current liabilities
Trade and other payables (1,238) (1,102) (1,205)
Current tax liabilities (162) (164) (160)
Hire purchase obligations (11) (65) (27)
Invoice discounting (103) (350) (156)
Total current liabilities (1,514) (1,681) (1,548)
Non-current liabilities
Hire purchase obligations (16) - (22)
Provisions (112) - (110)
Total liabilities (1,642) (1,681) (1,680)
------------------------------- ------------- ------------- ---------
Net assets 1,460 1,425 1,409
------------------------------- ------------- ------------- ---------
EQUITY
Equity attributable to equity
holders
Issued capital 333 7,773 7,773
Other reserves - 7,449 7,449
Retained earnings 1,127 (13,797) (13,813)
------------------------------- ------------- ------------- ---------
Total equity 1,460 1,425 1,409
------------------------------- ------------- ------------- ---------
Consolidated statement of changes in equity
Share Other
premium Retained
Share account reserves Total
capital earnings
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- --------- ---------- --------- --------- -------
Half year ended 30 September
2012 - Unaudited
At 1 April 2012 4,351 3,422 7,449 (13,813) 1,409
Capital reorganisation
and reduction (4,018) (3,422) (2,336) 9,776 -
Reclassifications - - (5,113) 5,113 -
Total comprehensive income - - - 40 40
Sale of Treasury Shares - - - 11 11
At 30 September 2012 333 - - 1,127 1,460
------------------------------- --------- ---------- --------- --------- -------
Half year ended 30 September
2011 - Unaudited
At 1 April 2011 4,351 3,422 7,449 (13,862) 1,360
Total comprehensive income - - - 65 65
At 30 September 2011 4,351 3,422 7,449 (13,797) 1,425
------------------------------- --------- ---------- --------- --------- -------
Year ended 31 March 2012
- Audited
At 1 April 2011 (as restated) 4,351 3,422 7,449 (13,973) 1,249
Total comprehensive income - - - 160 160
At 31 March 2012 4,351 3,422 7,449 (13,813) 1,409
------------------------------- --------- ---------- --------- --------- -------
Consolidated cash flow statement
For the six months ended 30 September 2012
6 months 6 months Year
to to to
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
--------------------------------------- -------------- -------------- ----------
Cash flows from operating activities
Profit before taxation 52 65 185
Profit on disposal of SIAS FM - - (12)
Finance costs (net) 25 20 40
Depreciation 40 36 71
--------------------------------------- -------------- -------------- ----------
Operating income before changes
in working capital 117 121 284
(Increase)/decrease in inventories (89) 23 72
Reduction/(increase) in trade
and other receivables 31 (235) (245)
Increase/(decrease) in trade
and other payables 37 (27) 71
--------------------------------------- -------------- -------------- ----------
Cash generated/(absorbed) by
operations 96 (118) 182
--------------------------------------- -------------- -------------- ----------
Finance costs (net) (25) (20) (40)
--------------------------------------- -------------- -------------- ----------
Net cash generated/(absorbed)
by operating activities 71 (138) 142
--------------------------------------- -------------- -------------- ----------
Cash flows from investing activities:
Purchase of plant and equipment (12) (5) (84)
Disposal of plant and equipment - - 2
Disposal of SIAS FM- additional
consideration - - 12
Net cash used in investing activities (12) (5) (70)
--------------------------------------- -------------- -------------- ----------
Cash flows from financing activities:
Receipts under hire purchase
agreements - - 38
Repayments under hire purchase
obligations (22) (47) (101)
Sale of Treasury Shares 11 - -
--------------------------------------- -------------- -------------- ----------
Net cash used in financing activities (11) (47) (63)
--------------------------------------- -------------- -------------- ----------
Net increase/(reduction) in
cash and cash equivalents 48 (190) 9
Cash and cash equivalents at
beginning of period 237 228 228
Cash and cash equivalents at
end of period 285 38 237
--------------------------------------- -------------- -------------- ----------
Consolidated segmental analysis
For the six months ended 30 September 2012
6 months 6 months Year
to to to
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
------------------------------------------- ------------- ------------- ---------
CONTINUING OPERATIONS
Revenue
United Kingdom 3,398 3,061 6,248
Rest of Europe 228 208 792
Rest of World 44 20 53
------------------------------------------- ------------- ------------- ---------
3,670 3,289 7,093
------------------------------------------- ------------- ------------- ---------
Operating profit
Diffusion 176 149 343
Central and plc costs
------------------------------------------- ------------- ------------- ---------
Before exceptional item (74) (64) (130)
Exceptional item- capital reorganisation (25) - -
and reduction costs
------------------------------------------- ------------- ------------- ---------
After exceptional item (99) (64) (130)
Operating profit 77 85 213
Interest (net) (25) (20) (40)
------------------------------------------- ------------- ------------- ---------
Profit before tax 52 65 173
Income tax charge (12) - (25)
------------------------------------------- ------------- ------------- ---------
Profit for the period on Continuing
Operations 40 65 148
------------------------------------------- ------------- ------------- ---------
DISCONTINUED OPERATIONS- SIAS
FM LIMITED
Revenue - - -
------------------------------------------- ------------- ------------- ---------
Operating profit - - 12
Interest charge - - -
------------------------------------------- ------------- ------------- ---------
Profit before tax - - 12
Income tax charge - - -
------------------------------------------- ------------- ------------- ---------
Profit for the period on Discontinued
Operations - - 12
------------------------------------------- ------------- ------------- ---------
Consolidated revenue 3,670 3,289 7,093
------------------------------------------- ------------- ------------- ---------
Consolidated profit for the
period 40 65 160
------------------------------------------- ------------- ------------- ---------
Notes to the consolidated interim report
For the six months ended 30 September 2012
1. GENERAL INFORMATION
Energy Technique Plc ("the Company") is a public limited company
incorporated in the United Kingdom (registration number 13273). The
Company is domiciled in the United Kingdom and its registered
office 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. The
financial statements are presented in sterling and all values are
rounded to the nearest thousand pounds (GBP000) except when
otherwise indicated. The accounting policies and methods of
computation used in the preparation and presentation of this
half-yearly report are in a form consistent with that which will be
adopted in the Company's annual accounts.
3. REPORTING UNDER INTERNATIONAL REPORTING STANDARDS
As permitted, the Company has chosen not to adopt IAS 34
"Interim Financial Statements" in preparing these half-yearly
financial statements and therefore the half-yearly 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. The average number of shares in
issue has been adjusted for the capital reorganisation approved at
a General Meeting of shareholders on 16 August 2012.
6 months 6 months Year
to to to
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
Pence Pence Pence
Basic and diluted earnings
per share
Before exceptional item 2.1 2.0 4.5
Continuing Operations 1.2 2.0 4.5
Discontinued Operations - - 0.3
------------------------------- ------------- ------------- ----------
1.2 2.0 4.8
------------------------------- ------------- ------------- ----------
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ----------
Profit for the financial
period after taxation
Before exceptional item 71 65 148
Continuing Operations 40 65 148
Discontinued Operations - - 12
------------------------------- ------------- ------------- ----------
40 65 160
------------------------------- ------------- ------------- ----------
No. No.
------------------------------- ------------- ------------- ----------
Weighted average number of
ordinary shares in issue 3,316,692 3,312,016 3,312,016
------------------------------- ------------- ------------- ----------
Weighted average number of
ordinary shares on a diluted
basis 3,316,692 3,312,016 3,312,016
------------------------------- ------------- ------------- ----------
5. OTHER INFORMATION
The half-yearly financial statements do not constitute statutory
accounts as defined by Section 434 of the Companies Act 2006. It
does not therefore include all the information and disclosures
required in the annual financial statements. The financial
information for the year ended 31 March 2012 has been extracted
from the statutory financial statements for the Company for that
period. These published financial statements prepared in a form
consistent with International Financial Reporting Standards, as
adopted by the European Union, were reported on by the auditors
without qualification or an emphasis of matter reference and did
not include a statement under Section 498(2) or (3) of the
Companies Act 2006 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 Rules for Companies, this half-yearly report will be announced
on a Regulatory Information Service and published on the Company's
website, www.diffusion-group.co.uk, but it will not be posted to
shareholders.
NOTES TO EDITORS
With over 50 years in the Heating & Ventilation ("HVAC")
industry, Energy Technique's operating company Diffusion, is one of
the oldest and most established manufacturers of HVAC products in
the UK. Diffusion is a market leader in the manufacture of premium
quality fan coils and commercial heating products. The Diffusion
and Energy Technique brand names are recognised as highly
engineered, quality products, providing leading edge performance
and energy efficiency, which have been fitted into projects
including the Shard and No 1 Hyde Park.
Diffusion has been involved with many challenging and
prestigious projects across a spectrum of sectors including hotels,
commercial offices, retail, schools, hospitals, and residential.
Diffusion has established excellent working relationships with many
blue chip clients including Land Securities, Marks & Spencer,
Boots, City Inn Hotels, Stanhope Properties and many more. All
products are designed, developed and manufactured at Diffusion's
30,000 sq. ft. manufacturing facility in West Molesey, Surrey,
offering the best possible products, designed specifically to meet
customers' bespoke requirements.
This information is provided by RNS
The company news service from the London Stock Exchange
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