Final Results
01 Julio 2003 - 7:50AM
UK Regulatory
RNS Number:0121N
Energy Technique PLC
01 July 2003
Energy Technique Plc
Preliminary Announcement 2003
Chairman's Statement
Overview
In my first Chairman's Statement since my appointment in January 2003, I am
pleased to report the year ended 31 March 2003 has been a successful period for
the group:
- Profit before tax of #0.263 million compared with last year's loss of
#0.635 million.
- Balance sheet gearing has been further reduced to 78% from 118% at the
previous year-end.
- Diffusion Refrigeration and Distribution was formed as a distributor of
branded Panasonic and LG Electronics packaged air conditioning systems,
expanding the Group's market opportunity from #50 million to #500 million.
- The innovative new Nightingale UVGI air filtration product is nearing
commercial launch and has just won the coveted "Air Movement Product of the
year" at the HVAC industry's H & V News Awards 2003.
Group financial performance
Sales of #11.7 million remained at the same level as last year, but operating
profit improved by 37% to #0.369 million.
The Board is very pleased with this result, because the reported operating
profit is stated after charging to profits #0.417 million on research and
development, including in particular the new Nightingale air filtration product,
and #0.258 million start-up operating losses on Diffusion Refrigeration and
Distribution.
Profit before tax is #0.263 million, compared with last year's loss of #0.635
million, which included a loss on the disposal of Benson Heating. Profit before
tax on continuing activities improved by 18%.
Group cash flow
The Group generated a strong cash inflow from operating activities of #0.487
million, resulting in a further reduction in debt to #0.947 million at 31 March
2003, representing a gearing level of 78%. Interest paid was covered 3.5 times
by operating profit.
Working capital continued to be tightly controlled and has remained
substantially unchanged, notwithstanding a planned stock build of #0.285 million
to service the new Panasonic and LG Electronics distribution business.
Capital expenditure on plant, infrastructure, and computer systems amounted to
#0.2 million. This was the first year of a continuing capital expenditure
programme, which has started to redress the many years of under-investment
caused when the Group funded loss-making activities now disposed of.
Dividends
The Board does not recommend payment of a dividend.
Operations
ET Environmental experienced historically high levels of demand for its fan coil
and commercial heating products in the first nine months of the year, but the
air conditioning market took a sudden downturn in January, following the
deferral of certain property developments. This resulted in much lower sales in
the final quarter of the year, and regrettably in May 2003, 25 redundancies were
announced to adjust the cost base down to ongoing expected sales levels.
The formation of Diffusion Refrigeration and Distribution represents the first
steps in broadening the Group's product range with complementary packaged air
conditioning systems. The newly introduced Lifebreath air filtration and
Airtrade acoustics products build on this strategy. This new subsidiary
incurred start-up operating losses of #0.258 million in its first eight months
of trading.
New UVGI air filtration product
In November 2002, the Company was pleased to announce its exciting new
Nightingale UVGI air filtration product, to be produced by a new joint-venture
company, UVGI Systems Limited, owned 55% by the Group and 45% by Suvair Limited.
This rapid response mobile air filtration unit is capable of killing the MRSA
super bug and other airborne pathogens.
The Nightingale UVGI unit has widespread application where there is need to keep
air free of dangerous live bacteria, viruses, and fungal spores, including
hospitals, schools, cruise liners, aircraft, food processing, and military
applications.
The UVGI unit uses a high intensity Ultra Violet Germicidal Irradiation ("UVGI")
filter, which has been designed to control harmful and dangerous airborne
pathogens, such as Anthrax, Tuberculosis, and Staphylococcus aureus, the
causative agent in MRSA. The filtration system is combined with use of high
intensity Ultra Violet light, which inactivates micro organisms by disrupting
their DNA structure.
Tests of a prototype at the Defence Science Technology Laboratory ("Dstl") at
Porton Down, the centre for excellence for the Ministry of Defence, showed that
the UVGI unit captured and/or destroyed more than 99.9% of Bacillus subtilis
spores, a simulant for Anthrax bacteria.
Since November, second generation units have been developed, which will go on
applications testing at an NHS Trust Hospital in December 2003, following
building completion of its new haematology unit. It is also anticipated the
UVGI unit will shortly go on laboratory testing in the United States with
contractors nominated by the Department of Homeland Security.
Directors
The Board is saddened to report the ill health of Steve McNeice, the Group
Finance Director and Company Secretary. The Board wishes Steve a speedy
recovery.
Geoffrey Dart stepped down as Chairman and from the Board on 28 January 2003.
Paul Barham resigned from the Board on 18 March 2003. I would like to thank
them both for their contribution to the restructuring of Energy Technique plc
over the past two years.
Gerard Thompson was appointed to the Board on 26 March 2003 as a non-executive
director. He brings significant experience to the Board in finance and
technology development.
Robert Unsworth was re-appointed to the Board on 1 July 2003 as an executive
director, responsible for finance and company secretarial matters during Steve
McNeice's absence.
Management and employees
On behalf of the Board, I would like to thank all employees for their continued
hard work, dedication and commitment during the year, and particularly during
the current testing market conditions.
Current trading and prospects
The Group incurred a loss in April and May due to redundancy costs incurred in
May and to very low sales levels, particularly in April. The low sales were
attributed to significantly reduced market demand facing the air conditioning
sector. However, sales in May recovered and this has continued into June. The
current order book, enquiry levels and outlook are now much more encouraging
than in the early part of 2003 and the Board remains optimistic about the
Group's prospects.
Since November the Board has explored many potential opportunities for marketing
and further developing the exciting new Nightingale UVGI air filtration unit,
and a number of these are turning into potential business opportunities. The
UVGI product has the potential for improving the Group's financial performance,
and the Board is exploring opportunities for raising the capital necessary to
fully exploit the potential of the UVGI product. The Board expects to make
further announcements updating shareholders on this and other UVGI developments
in due course.
Graham R Mackenzie
Chairman
Group profit and loss account
for the year ended 31 March 2003
2003 2002
#000 #000
Turnover
Continuing 11,704 11,716
Discontinued - 350
11,704 12,066
Cost of sales (7,884) (8,684)
Gross profit 3,820 3,382
Distribution costs (2,388) (1,877)
Administrative expenses (1,063) (1,140)
Operating profit
Continuing 369 439
Discontinued - (74)
Before exceptional items 369 365
Exceptional items: continuing - (95)
369 270
Non operating exceptional items
Loss on disposal of businesses - (777)
Profit/(loss) before interest 369 (507)
Interest payable (106) (128)
Profit/(loss) on ordinary activities before taxation 263 (635)
Tax on profit/(loss) on ordinary activities - -
Profit/(loss) for the financial year 263 (635)
Dividends on equity shares - -
Transfer to/(from) reserves 263 (635)
Earnings/(loss) per share:
Basic 0.36p (0.97)p
Diluted 0.31p (0.97)p
Before exceptional items 0.36p 0.36p
Continuing operations 0.36p 0.34p
There are no other recognised gains or losses other than as recorded in the
profit and loss account for the year.
Group balance sheet
at 31 March 2003 31 March 31 March
2003 2002
#000 #000
Fixed assets
Intangible assets - -
Tangible assets 401 352
Investments 514 514
915 866
Current assets
Stocks 1,040 724
Debtors 2,153 2,640
Cash at bank 186 199
3,379 3,563
Creditors - amounts falling due within one year (2,949) (3,312)
Net current assets 430 251
Total assets less current liabilities 1,345 1,117
Creditors - amounts falling due after more than one year (129) (164)
Provisions for liabilities and charges - -
1,216 953
Capital and reserves
Called up share capital 731 731
Share premium account 1,557 1,557
Other reserves 7,449 7,449
Profit and loss account (8,521) (8,784)
Equity shareholders' funds 1,216 953
Reconciliation of movements in shareholders' funds
for the year ended 31 March 2003
Group
2003 2002
#000 #000
Profit/(loss) for the financial year 263 (635)
Issue of ordinary shares - 387
Increase in share premium account - 500
Movements in shareholders' funds 263 252
953 701
Shareholders' funds at beginning of year
Shareholders' funds at end of year 1,216 953
There are no other recognised gains or losses other than as recorded in the
profit and loss account for the year.
Group cash flow statement
for the year ended 31 March 2003
2003 2002
#000 #000
Cash inflow from operating activities 487 478
Returns on investment and servicing of (106) (128)
finance
Capital expenditure and financial investment (142) (72)
Expenditure on intangible assets (30) -
Cash inflow before financing 209 278
Financing:
Issue of share capital - 373
Increase/(reduction) in debt 14 (628)
Increase in cash during year 223 23
Reconciliation of net cash flow to movement in net debt
2003 2002
#000 #000
Increase in cash in year 223 23
(Increase)/reduction in debt (14) 628
Change in net debt resulting from cash flows 209 651
Disposal of finance leases - 4
New finance leases (26) -
Reduction in net debt 183 655
Net debt at start of year (1,130) (1,785)
Net debt at end of year (947) (1,130)
Reconciliation of operating profit to operating cash flows
2003 2002
#000 #000
Operating profit 369 270
Depreciation and amortisation 149 128
Stocks (316) (107)
Debtors 487 256
Creditors (202) (69)
487 478
Notes to the accounts
1. Accounting policies
The financial information set out above has been prepared using accounting
policies consistent with 2002.
2.Basis of preparation
The financial information for the year ended 31 March 2003 and 2002 set out
above does not constitute statutory accounts within the meaning of section 240
of the Companies Act 1985. The information has been extracted from the
statutory accounts of Energy Technique plc for the year ended 31 March 2003,
which have not yet been filed with the Registrar of Companies. Statutory
accounts for the year ended 31 March 2002 have been delivered to the Registrar
of Companies. Statutory accounts for the year ended 31 March 2003 were approved
by the Board of Directors on 1 July 2003, are audited and will be delivered to
the Registrar of Companies following the Annual General Meeting on 24 September
2003.
The Company's auditors, Milsted Langdon, have reported on the 2003 and 2002
accounts under section 235(1) of the Companies Act 1985. Those reports were not
qualified within the meaning of section 235(2) of the Companies Act 1985 and did
not contain statements made under section 237(2) and 237(3) of the Companies Act
1985.
3. Segmental analysis
Turnover Operating profit/ Operating net
(loss) assets
2003 2002 2003 2002 2003 2002
#000 #000 #000 #000 #000 #000
ET Environmental 10,930 11,716 883 776 1,409 1,677
Diffusion Refrigeration &
Distribution
774 - (258) - 326 -
Central and Plc costs
Before exceptional items - - (256) (337) - -
Exceptional items - - - (95) - -
- - (256) (432) 428 605
Continuing operations 11,704 11,716 369 344 2,163 2,282
Discontinued operations - 350 - (74) - -
11,704 12,066 369 270 2,163 2,282
Borrowings (947) (1,329)
Taxation - -
1,216 953
4. Exceptional items
There were no exceptional items in 2003. In 2002 the exceptional items related
to redundancy costs and losses on the disposal of Benson Heating.
5. Earnings/(loss) per share
The earnings/(loss) per share calculations have been arrived at by reference to
the following earnings and weighted average number of shares in issue during the
year.
2003 2002
#000 #000
Basic
Profit/(loss) after tax 263 (635)
Before exceptional items
Operating profit 369 365
Interest payable (106) (128)
Tax payable - -
Profit after tax 263 237
Continuing operations
Operating profit after exceptional items 369 344
Interest payable (106) (122)
Tax payable - -
Profit after tax 263 222
No No
Weighted average number of shares in issue 73,075,456 65,222,670
Weighted average number of shares on a diluted basis 84,828,723 65,222,670
The above calculations have been prepared to indicate the earnings of the
Company after non-recurring items. Share options outstanding did not have a
dilution effect in 2002.
6. Posting of Report and Accounts
The 2003 Report and Accounts will be posted to shareholders on 18 July 2003.
Contacts:
Allan Piper, First City Financial Public Relations: 020 7436 7486
07050 203304
Graham Mackenzie, Chairman, Energy Technique plc: 07901 550577
Leigh Stimpson, Managing Director, Energy Technique plc: 07919 214882
Rob Unsworth, Finance Director, Energy Technique plc: 0208 783 0033
This information is provided by RNS
The company news service from the London Stock Exchange
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