Friday, September 26, 2014

News: Inditherm looks abroad as NHS slowdown hits profits

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Innovative Rotherham company, Inditherm, has reported a loss in the first half of the financial year with a significant fall in orders in the UK medical market.

Manvers-based Inditherm has developed products using low voltage carbon polymer technology to provide heat. Its systems are used for patients undergoing operations which carry risk of inadvertent hypothermia and in neonatal wards.

In the six months ended June 30 2014, the AIM-listed firm reported that revenue was similar to the same period in 2013 - £998k compared to £1m - but ultimately Inditherm posted a loss of £173k, compared to a profit of £4k in the same period last year.

Trading levels in the Medical business in the first half of 2014 were down 20% on the same period in 2013, without the previous year's benefit of large NHS orders and projects carried over from 2012.

Many forward thinking NHS Trusts in England have adopted the technology but financial pressures and uncertainties in the sector has slowed Inditherm's penetration.

Case studies show that Inditherm products can help prevent perioperative hypothermia and in turn reduce infection rates, use of blood products, recovery times and mortality. They also show that Trusts can make substantial cost savings whilst maintaining, or in some cases improving, patient care. The NHS in England alone could save an estimated £15m per annum if forced air warming was replaced by Inditherm's mattress for eligible procedures in most of the 3,030 operating theatres.

In a report to the stock exhnage, Inditherm said: "We have not enjoyed the benefit of the more substantial projects seen in 2013, including some delayed from 2012, and as a consequence our UK Medical orders fell significantly. UK Medical sales, excluding ATOM [Japanese incubator products sold by Inditherm], represented 41% of our Medical business (2013: 64%). This reflects continuing uncertainty in the NHS, particularly characterised by severe constraints on capital budgets, but with interest in our products sustained and prospects at a similar level to last year."

Last year, the firm decided to support the development of the export markets, with extra focus and direction applied towards territories with the greatest potential. With extra resources, encouraging sales growth has been seen in the Medical export business in the first half of 2014, up 30% on the same period last year. "This has been underpinned by stronger performance in the Asia-Pacific region, including start-up stocks for a partner in Japan who will promote our operating room products under their own brand. Our increased resources in this area are adding focus to our export activities; we have taken steps to start identifying partners for the Latin America markets and to look for ways to strengthen our presence where we have underperforming distribution channels."

Mark Abrahams, chairman of Inditherm, said: "Whilst the performance of the first half has been disappointing, albeit expected, we can now see a slowly improving trend in customer enquiries. Given the increased conversion times and the change in business mix towards export, it is likely that gross margins will remain at a healthy but lower level than last year. This will inevitably defer our ability to deliver profitable growth.

"Accordingly, we are stepping up our efforts to identify strategic options capable of accelerating our prospects of delivering shareholder value."

Inditherm website

Images: Inditherm

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