TIDMETQ
RNS Number : 5239W
Energy Technique PLC
10 November 2014
Energy Technique Plc
("Energy Technique" or the "Company")
Half-Year Report
30 September 2014
Headlines
-- Sales increased by 24% over the corresponding half-year to GBP5.44 million;
-- Operating profit of Diffusion increased by 93% over the
corresponding half-year to GBP630,000;
-- Group profit before tax increased by 127% over the
corresponding half-year to GBP459,000;
-- EPS increased by 180% over the corresponding half-year to 15.1 pence per share;
-- Strong net cash equivalents at 30 September 2014 of GBP1.19
million and net assets of GBP1.91 million;
-- Enquiries and order intakes are at high levels and with
M&E consultants experiencing high workloads, the Board believes
this will translate into another year of growth for the year ending
31 March 2015.
Chairman's statement
Introduction
I am very pleased to report a continuation of profit improvement
for the half-year ended 30 September 2014. Sales increased by 24%
over the corresponding half-year to GBP5.44 million, producing a
substantial improvement in both operating profit of Diffusion to
GBP630,000 (2013: GBP326,000) and of group profit before tax to
GBP459,000 (GBP202,000). This represents another solid set of
trading results ahead of management's expectations.
Financial performance
Sales in the half-year ended 30 September 2014 increased by 24%
to GBP5.44 million (2013: GBP4.40 million). Fan coils generated
this sales growth, increasing by 30% to GBP4.36 million (2013:
GBP3.36 million), attributed to a combination of improving UK fan
coil market conditions and to Diffusion's premium branded product
offering. Sales of the smaller commercial heating range fell
marginally to GBP0.78 million (2013: GBP0.85 million), consistent
with continued difficult trading conditions on the UK high
street.
Diffusion's relatively high operational gearing resulted in
sales increases flowing substantially through to bottom line
operating profit. Diffusion's operating profit increased by 93% to
GBP630,000 (2013: GBP326,000), representing an improved operating
profit margin of 11.6% (2013: 7.4%). Despite market pressures,
overall selling contribution margins remained stable due to
continued lean manufacturing methods.
Group profit before tax increased by 127% to GBP459,000 (2013:
GBP202,000) after charging Central costs of GBP150,000 (2013:
GBP96,000) and interest of GBP21,000 (2013: GBP28,000). Interest
costs include notional charges of GBP11,000 (2013: GBP10,000)
relating to the unwinding of a provision set up at 31 March 2010.
The taxation charge of GBP98,000 (2013: GBP42,000) represents
non-cash deferred tax.
Diffusion's operating performance
This is the fourth successive year of sales and profit growth
for Diffusion, with fan coils providing the current growth driver.
With its leading edge product offering, Diffusion is benefiting
from improving UK fan coil market conditions, resulting in a 30%
growth in fan coil sales in the half-year. The ECO 270 fan coil
range offers 25% energy savings for no additional capital cost, has
continued to gain increased market traction and the Board believes
its sales will continue to grow in the future.
Diffusion fan coils were supplied into continuing phases of all
three of the current London skyline developments of the Shard,
Cheesegrater and Walkie-Talkie. In total, fan coils were supplied
into over 200 different projects during the half-year, including
other large developments at London Bridge Place, Hyde Park Hayes,
207-211 Old Street, American Express and Park House.
Following on from its initial success at No. 1 Hyde Park in
London, Diffusion continued to supply fan coils into other high-end
residential developments in the half-year, including Tideway
Riverlight, No.1 Tower Bridge and Holland Green. The Board views
Diffusion's successful entry into the high-end residential sector
as a major growth driver for the future.
Commercial heating sales fell marginally in the half-year ended
30 September 2014, due to continuing difficult trading conditions
on the UK high street, but order intakes are now improving, albeit
slowly. Commercial heating products were fitted into many
prestigious sites during the half-year, including Superdry Hamburg,
H&M Dublin, Ampersands Hotel London, Lanesborough Hotel London,
Chelmsford Racecourse, Nike Taplow and two Marks & Spencer
stores in Paris.
Cash flow and net cash
The high profit levels resulted in net cash generated by
operations of GBP399,000 (2013: 207,000). There was a short-term
increase in stocks in the half-year, but this is expected to
reverse by the year-end. There was no requirement for any
significant capital expenditure in the half-year.
The Company remains soundly financed with net assets at 30
September 2014 of GBP1.91 million (31 March 2014: GBP1.59 million)
and ample liquidity provided by net cash of GBP1.19 million (31
March 2014: GBP873,000). The previous invoice financing facility is
suspended, as the Company's net cash can now accommodate short-term
working capital variations.
Dividends
The Board is pleased to declare a 100% increase in the interim
dividend to 1.50 pence per share (2013: 0.75 pence per share),
payable on 12 December 2014 to those shareholders on the register
at the close of business on 21 November 2014.
Business strategy
The Board's stated strategy is to continue building shareholder
value by growing Diffusion's sales and profits organically. A good
measure of this objective was achieved in the year ended 31 March
2014 and further progress has been made in the half-year ended 30
September 2014. The share price has increased more than six fold
between 31 March 2013 and its current level of GBP3.27 on 7
November 2014.
The Board has identified the granting of franchises into
overseas territories as a potential additional growth driver. At
the end of October 2014, Diffusion exhibited at the major HVACR
Exhibition 2014 in Indonesia and it has also advertised for
franchisees in a number of leading overseas trade publications. The
results of these and other initiatives are being evaluated.
Once the Board has fully achieved its ongoing organic growth
objective, then it would seek a strategic partnership to realise
shareholder value. In the meantime, the Board will not be
distracted from this organic growth strategy by evaluating
acquisitions.
Current trading and prospects
Trading in the half-year ended 30 September 2014 has laid the
foundations for a very successful year ending 31 March 2015.
M&E consultants continue to experience improved activity levels
and this is providing sales momentum and growth opportunities.
Diffusion is ideally placed to benefit from this, with its ECO 270
range of energy efficient fan coils gaining increasing market
traction.
An additional organic growth driver is being evaluated of
granting franchises in overseas territories. It is too early to
predict the outcome of this initiative, but it is important to
emphasise that this proposition involves negligible downside
financial risk.
We are experiencing high levels of fan coil enquiries and
improving commercial heating enquiries, 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 2015, the Board looks
forward to another successful year of growth.
Walter Goldsmith
Chairman
7 November 2014
Contacts:
Energy Technique Plc: 020 8783 0033
Walter Goldsmith, Chairman
Leigh Stimpson, Chief Executive
finnCap (Nominated Adviser): 020 7220 0500
Ed Frisby/Ben Thompson
Consolidated statement of comprehensive income
For the six months ended 30 September 2014
6 months 6 months
to to Year to
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
--------------------------------- -------------- -------------- ---------
Revenue 5,443 4,397 9,565
Cost of sales (3,696) (3,141) (6,617)
--------------------------------- -------------- -------------- ---------
Gross profit 1,747 1,256 2,948
Distribution costs (927) (781) (1,710)
Administration expenses (340) (245) (542)
--------------------------------- -------------- -------------- ---------
Operating profit 480 230 696
Finance costs (net) (21) (28) (47)
--------------------------------- -------------- -------------- ---------
Profit before taxation 459 202 649
Taxation (98) (42) (143)
--------------------------------- -------------- -------------- ---------
Profit for the financial period 361 160 506
Earnings per share:
Basic 15.1p 5.4p 18.0p
Fully diluted 13.5p 5.2p 16.8p
--------------------------------- -------------- -------------- ---------
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 2014
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
--------------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Intangible assets 25 25 25
Plant and equipment 231 265 240
Deferred tax asset - 199 98
Total non-current assets 256 489 363
Current assets
Inventories 860 896 771
Trade and other receivables 1,833 1,491 1,752
Cash 1,190 541 873
Total current assets 3,883 2,928 3,396
Total assets 4,139 3,417 3,759
--------------------------------------- ------------- ------------- ---------
LIABILITIES
Current liabilities
Trade and other payables (1,842) (1,596) (1,826)
Current tax liabilities (262) (227) (213)
Hire purchase obligations (4) (12) (10)
Total current liabilities (2,108) (1,835) (2,049)
Non-current liabilities
Hire purchase obligations - (4) -
Provisions (117) (113) (115)
Total liabilities (2,225) (1,952) (2,164)
--------------------------------------- ------------- ------------- ---------
Net assets 1,914 1,465 1,595
--------------------------------------- ------------- ------------- ---------
EQUITY
Equity attributable to equity holders
Issued capital 239 286 239
Other reserves 94 47 94
Retained earnings 1,581 1,132 1,262
--------------------------------------- ------------- ------------- ---------
Total equity 1,914 1,465 1,595
--------------------------------------- ------------- ------------- ---------
Consolidated statement of changes in equity
Share Other Retained
capital reserves earnings Total
GBP000 GBP000 GBP000 GBP000
------------------------------------ --------- ---------- ---------- --------
Half year ended 30 September
2014 - Unaudited
At 1 April 2014 239 94 1,262 1,595
Share options - - 6 6
Dividends paid - - (48) (48)
Comprehensive income - - 361 361
At 30 September 2014 239 94 1,581 1,914
------------------------------------ --------- ---------- ---------- --------
Half year ended 30 September
2013 - Unaudited
At 1 April 2013 333 - 1,198 1,531
Share options - - 6 6
Dividends paid - - (21) (21)
Comprehensive income - - 160 160
Share reorganisation costs - - (11) (11)
Share buy-backs (47) 47 (200) (200)
At 30 September 2013 286 47 1,132 1,465
------------------------------------ --------- ---------- ---------- --------
Year ended 31 March 2014 - Audited
At 1 April 2013 333 - 1,198 1,531
Share options - - 12 12
Dividends paid - - (43) (43)
Comprehensive income - - 506 506
Share reorganisation costs - - (11) (11)
Share buy-backs (94) 94 (400) (400)
At 31 March 2014 239 94 1,262 1,595
------------------------------------ --------- ---------- ---------- --------
Consolidated cash flow statement
For the six months ended 30 September 2014
6 months 6 months Year to
to to 31 March
30 September 30 September 2014
2014 2013 Audited
Unaudited Unaudited GBP000
GBP000 GBP000
-------------------------------------------- -------------- -------------- ----------
Cash flows from operating activities
Profit before taxation 459 202 649
Finance costs (net) 21 28 47
Depreciation 40 37 79
Share option charge 6 6 12
-------------------------------------------- -------------- -------------- ----------
Operating income before changes in working
capital 526 273 787
(Increase)/reduction in inventories (89) (108) 17
(Increase)/reduction in trade and other
receivables (81) 35 (226)
Increase in trade and other payables 64 35 253
-------------------------------------------- -------------- -------------- ----------
Cash generated by operations 420 235 831
Finance costs (net) (21) (28) (47)
-------------------------------------------- -------------- -------------- ----------
Net cash generated by operating activities 399 207 784
-------------------------------------------- -------------- -------------- ----------
Cash flows from investing activities
Purchase of plant and equipment (28) (18) (35)
Net cash used in investing activities (28) (18) (35)
-------------------------------------------- -------------- -------------- ----------
Cash flows from financing activities
Repayments under hire purchase obligations (6) (6) (12)
Dividends (48) (21) (43)
Share reorganisation costs - (11) (11)
Share buy-backs - (200) (400)
-------------------------------------------- -------------- -------------- ----------
Net cash used in financing activities (54) (238) (466)
-------------------------------------------- -------------- -------------- ----------
Net increase/(reduction) in cash and
cash equivalents 317 (49) 283
Cash and cash equivalents at beginning
of period 873 590 590
Cash and cash equivalents at end of period 1,190 541 873
-------------------------------------------- -------------- -------------- ----------
Consolidated segmental analysis
For the six months ended 30 September 2014
6 months 6 months
to to Year to
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
-------------------------------------- -------------- -------------- ---------
Revenue
United Kingdom 5,085 4,206 8,997
Europe 358 178 555
Middle East - 13 13
-------------------------------------- -------------- -------------- ---------
5,443 4,397 9,565
-------------------------------------- -------------- -------------- ---------
Operating profit
Diffusion 630 326 906
Central costs (150) (96) (210)
Operating profit 480 230 696
Interest (net) (21) (28) (47)
-------------------------------------- -------------- -------------- ---------
Profit before tax 459 202 649
Income tax charge (98) (42) (143)
-------------------------------------- -------------- -------------- ---------
Profit for the period on Continuing
Operations 361 160 506
-------------------------------------- -------------- -------------- ---------
Notes to the consolidated interim report
For the six months ended 30 September 2014
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
to to Year to
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
Pence Pence Pence
------------------------------------- -------------- -------------- ----------
Basic and diluted earnings per
share
Basic 15.1 5.4 18.0
Fully diluted 13.5 5.2 16.8
GBP000 GBP000 GBP000
------------------------------------- -------------- -------------- ----------
Profit for the financial period
after taxation 361 160 506
No. No. No.
------------------------------------- -------------- -------------- ----------
Weighted average number of ordinary
shares in issue 2,390,516 2,976,725 2,817,379
Weighted average number of ordinary
shares on a diluted basis 2,666,624 3,088,025 3,013,951
------------------------------------- -------------- -------------- ----------
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 2014 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 Cheesegrater, 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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