TIDMETQ
RNS Number : 9098Q
Energy Technique PLC
21 October 2013
Energy Technique Plc
("Energy Technique" or the "Company")
Half-Yearly Report
For the 6 months to 30 September 2013
Headlines
-- Sales increased by 20 per cent over the corresponding half year to GBP4.40 million;
-- Diffusion trading business increased operating profit by 85
per cent over the corresponding half year to GBP326,000;
-- Group profit before tax increased by 162 per cent over the
corresponding half year to GBP202,000;
-- Buy-back of 470,000 shares completed from the then major shareholder, Elsina Limited;
-- Strong balance sheet net assets at 30 September 2013 of
GBP1.47 million and net cash of GBP541,000;
-- Diffusion's premium branded fan coils and commercial heating
products continue to be fitted into many landmark and prestigious
property developments;
-- New ECO 270 fan coil range has class leading energy
efficiency and is gaining increasing market traction;
-- Enquiry levels and order intakes continue to improve and with
M & E consultants currently experiencing high workloads, the
Board believes this will translate into a successful second half
year.
Chairman's statement
Introduction
I am very pleased to report a significant improvement in profit
for the half year ended 30 September 2013. Sales increased by 20
per cent over the corresponding half year to GBP4.40 million,
producing a substantially improved operating profit for the
Diffusion trading business of GBP326,000 and a group profit before
tax of GBP202,000. This represents a solid set of trading results
ahead of management's expectations.
Financial performance
Sales in the half year ended 30 September 2013 increased by 20
per cent to GBP4.40 million (2012: GBP3.67 million). Fan coil sales
were particularly strong with sales increasing by 32 per cent to
GBP3.36 million (2012: GBP2.55 million), but commercial heating
sales fell marginally to GBP0.85 million (2012: GBP0.95 million).
High fan coil sales were attributed to a number of large commercial
and high-end residential projects. The absence of growth in
commercial heating sales was in line with a continuation of
difficult trading conditions on the UK high street, but increased
fan coil sales compensated for this reduction.
Diffusion's operating profit increased by 85 per cent to
GBP326,000 (2012: GBP176,000), representing an improved operating
profit margin of 7.4 per cent (2012: 4.8 per cent), equivalent to a
return on capital employed of 21 per cent for the half-year.
Despite market pressure, overall selling contribution margins
remained stable due to continued lean manufacturing methods and
practices. Diffusion's relatively high operational gearing means
the sales increases flowed substantially through to bottom line
operating profit.
Group profit before tax increased by 162 per cent to GBP202,000
(2012: GBP77,000) after charging Central and plc related costs of
GBP96,000 (2012: GBP74,000) and interest of GBP28,000 (2012:
GBP25,000). Central and plc costs include a non-cash share option
charge of GBP6,000 and interest costs include notional interest
charges of GBP10,000 (2012: GBP9,000) relating to the unwinding of
a provision set up at 31 March 2010. The taxation charge of
GBP42,000 (2012: GBP12,000) represents non-cash deferred tax.
Cash flow and net cash
Net cash generated by operations increased by 116 per cent to
GBP207,000 (2012: GBP96,000). There was a net investment in working
capital of GBP38,000 (2012: GBP21,000), caused primarily by the
GBP1.20 million DeVere high-end residential project being delivered
over a short time period. Working capital is expected to return to
normal levels by December time, thereby reversing this short-term
cash outflow. There was no requirement for any significant capital
expenditure in the half-year.
Immediately after the general meeting on 16 May 2013, the
Company completed the first phase of the share buy-back proposals
approved by shareholders, with 470,000 shares bought back and
cancelled from its then principal shareholder, Elsina Limited, at a
cost of GBP200,000. This resulted in net cash reducing to
GBP541,000 at 30 September 2013 (31 March 2013: GBP590,000). The
Company remains soundly financed with strong net assets at 30
September 2013 of GBP1.47 million (2012: GBP1.46 million) and ample
liquidity provided by net cash of GBP541,000, together with undrawn
availability under its invoice discounting facility of
GBP650,000.
Diffusion
Diffusion's sales and marketing team took advantage of an
improving UK fan coil market and this resulted in a 32 per cent
growth in fan coil sales. Diffusion is renowned for product
innovation, engineering excellence and quality products with long
service lives. The new ECO 270 fan coil range is an innovative new
product offering up to 25% energy savings with no increase in
capital cost. This product is gaining increasing market traction
and the Board believes its sales will continue to grow.
High fan coil sales were achieved from a number of large
developments. During the half-year, fan coils were delivered to
over 150 projects including large commercial developments at 71
Queen Victoria Street, 3 Merchant Square, Tideway Riverlight, 20
Fenchurch, 3-10 Finsbury Square and Fitzroy Place, together with
the high-end residential development at DeVere Gardens. The Board
views Diffusion's successful entry into the high-end residential
sector four years ago as a major growth driver for the future.
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 due to a
continuation of difficult trading conditions on the UK high street,
but enquiries and order intakes have recently started to improve.
Diffusion's products were fitted into prestigious sites including
The White Company, Fat Face, BMW Nottingham, Primark, Mayflower
Theatre Southampton, Forever 21, Marks & Spencer, H&M and
Sainsbury's.
Dividends
Fractional entitlements to shareholders arising out of the
capital reorganisation in 2012 were paid to shareholders on 16
August 2013.
The Board is now pleased to declare an interim dividend of 0.75
pence per share payable on 29 November 2013 to those shareholders
on the register at the close of business on 1 November 2013.
Current trading and future prospects
M & E consultants are currently experiencing improved
activity levels and this is expected to provide sales growth
opportunities for Diffusion between nine and twelve months
thereafter. The Company is well placed to benefit from this,
particularly with its new ECO 270 range of energy efficient fan
coils.
Diffusion has market leadership and a renowned reputation
allowing for the successful pursuit of major commercial and
high-end residential projects. We are experiencing high levels of
fan coil enquiries and improving commercial heating enquires,
together with an improved order book. Whilst it is too early to
predict the outturn for the remainder of the current year ending 31
March 2014, the Board believes this will translate into a
successful second half year.
Walter Goldsmith
Chairman
21 October 2013
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 2013
6 months 6 months Year
to to to
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
--------------------------------- ------------- ------------- ---------
Revenue 4,397 3,670 7,550
Cost of sales (3,141) (2,668) (5,506)
--------------------------------- ------------- ------------- ---------
Gross profit 1,256 1,002 2,044
Distribution costs (781) (706) (1,381)
Administration expenses (245) (194) (421)
--------------------------------- ------------- ------------- ---------
Operating profit 230 102 242
Finance costs (net) (28) (25) (42)
--------------------------------- ------------- ------------- ---------
Profit before taxation 202 77 200
Taxation (42) (12) (39)
--------------------------------- ------------- ------------- ---------
Profit for the financial period 160 65 161
Earnings per share:
Basic 5.4p 1.9p 4.8p
Fully diluted 5.2p 1.9p 4.8p
--------------------------------- ------------- ------------- ---------
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 2013
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Intangible assets 25 25 25
Plant and equipment 265 308 284
Deferred tax asset 199 268 241
Total non-current assets 489 601 550
Current assets
Inventories 896 762 788
Trade and other receivables 1,491 1,351 1,526
Cash 541 388 590
Total current assets 2,928 2,501 2,904
Total assets 3,417 3,102 3,454
------------------------------- ------------- ------------- ---------
LIABILITIES
Current liabilities
Trade and other payables (1,596) (1,238) (1,578)
Current tax liabilities (227) (162) (212)
Hire purchase obligations (12) (11) (12)
Invoice discounting - (103) -
Total current liabilities (1,835) (1,514) (1,802)
Non-current liabilities
Hire purchase obligations (4) (16) (10)
Provisions (113) (112) (111)
Total liabilities (1,952) (1,642) (1,923)
------------------------------- ------------- ------------- ---------
Net assets 1,465 1,460 1,531
------------------------------- ------------- ------------- ---------
EQUITY
Equity attributable to equity
holders
Issued capital 286 333 333
Other reserves 47 - -
Retained earnings 1,132 1,127 1,198
------------------------------- ------------- ------------- ---------
Total equity 1,465 1,460 1,531
------------------------------- ------------- ------------- ---------
Consolidated statement of changes in equity
Share
Share premium Other Retained
capital account reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ --------- --------- ---------- ---------- --------
Half year ended 30 September
2013 - Unaudited
At 1 April 2013 333 - - 1,198 1,531
Share buy-back (47) - 47 (200) (200)
Share options - - - 6 6
Dividends paid - - - (21) (21)
Comprehensive income - - - 160 160
Share buy-back costs - - - (11) (11)
286 - 47 1,132 1,465
------------------------------ --------- --------- ---------- ---------- --------
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 -
Sale of Treasury Shares - - - 11 11
Comprehensive income - - - 65 65
Share reorganisation
costs - - - (25) (25)
At 30 September 2012 333 - - 1,127 1,460
------------------------------ --------- --------- ---------- ---------- --------
Year ended 31 March 2013
- Audited
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 -
Sale of Treasury Shares - - - 11 11
Share options - - - 4 4
Dividends paid - - - (25) (25)
Comprehensive income - - - 161 161
Share reorganisation
costs - - - (29) (29)
At 31 March 2013 333 - - 1,198 1,531
------------------------------ --------- --------- ---------- ---------- --------
Consolidated cash flow statement
For the six months ended 30 September 2013
6 months 6 months Year
to to to
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
--------------------------------------- -------------- -------------- ----------
Cash flows from operating activities
Profit before taxation 202 77 200
Finance costs (net) 28 25 42
Depreciation 37 40 79
Share option charge 6 - 4
--------------------------------------- -------------- -------------- ----------
Operating income before changes
in working capital 273 142 325
Increase in inventories (108) (89) (115)
Reduction/(increase) in trade
and other receivables 35 31 (144)
Increase in trade and other
payables 35 37 426
--------------------------------------- -------------- -------------- ----------
Cash generated by operations 235 121 492
--------------------------------------- -------------- -------------- ----------
Finance costs (net) (28) (25) (42)
--------------------------------------- -------------- -------------- ----------
Net cash generated by operating
activities 207 96 450
--------------------------------------- -------------- -------------- ----------
Cash flows from investing activities:
Purchase of plant and equipment (18) (12) (27)
Net cash used in investing
activities (18) (12) (27)
--------------------------------------- -------------- -------------- ----------
Cash flows from financing activities:
Repayments under hire purchase
obligations (6) (22) (27)
Dividends (21) - (25)
Sale of Treasury Shares - 11 11
Share reorganisation costs (11) (25) (29)
Share buy-back (200) - -
--------------------------------------- -------------- -------------- ----------
Net cash used in financing
activities (238) (36) (70)
--------------------------------------- -------------- -------------- ----------
Net (reduction)/increase in
cash and cash equivalents (49) 48 353
Cash and cash equivalents at
beginning of period 590 237 237
Cash and cash equivalents at
end of period 541 285 590
--------------------------------------- -------------- -------------- ----------
Consolidated segmental analysis
For the six months ended 30 September 2013
6 months 6 months Year
to to to
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------- ---------
Revenue
United Kingdom 4,206 3,398 7,056
Europe 178 228 371
Middle East 13 44 123
-------------------------------------- ------------- ------------- ---------
4,397 3,670 7,550
-------------------------------------- ------------- ------------- ---------
Operating profit
Diffusion 326 176 406
Central and plc costs (96) (74) (164)
Operating profit 230 102 242
Interest (net) (28) (25) (42)
-------------------------------------- ------------- ------------- ---------
Profit before tax 202 77 200
Income tax charge (42) (12) (39)
-------------------------------------- ------------- ------------- ---------
Profit for the period on Continuing
Operations 160 65 161
-------------------------------------- ------------- ------------- ---------
Notes to the consolidated interim report
For the six months ended 30 September 2013
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.
6 months 6 months Year
to to to
30 September 30 September 31 March
2013 2012 2013
Unaudited Unaudited Audited
Pence Pence Pence
Basic and diluted earnings
per share
Basic 5.4p 1.9p 4.8p
Fully diluted 5.2p 1.9p 4.8p
GBP000 GBP000 GBP000
------------------------------ ------------- ------------- ----------
Profit for the financial
period after taxation 160 65 161
No. No. No.
------------------------------ ------------- ------------- ----------
Weighted average number
of ordinary shares in issue 2,976,725 3,316,692 3,323,572
------------------------------ ------------- ------------- ----------
Weighted average number
of ordinary shares on a
diluted basis 3,088,025 3,316,692 3,328,103
------------------------------ ------------- ------------- ----------
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 2013 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 renowned for highly
engineered, quality products, providing leading edge performance
and low energy efficiency, which have been fitted into projects
including No 1 Hyde Park, the Walkie-Talkie, Heathrow T2, Abu Dhabi
Investment Council, the Cheese Grater, the Shard and DeVere
Gardens.
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, Grosvenor Estates,
Stanhope Properties, Marks & Spencer, Boots, City Inn Hotels,
Sainsbury's and Tesco. 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
END
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