• NICE Supports Inditherm Patient Warming
• LifeStart neonatal resuscitation unit launched to support Delayed Cord Clamping
• Four more NHS Trusts convert to Inditherm

Inditherm plc ("Inditherm" or "the Company") , the provider of innovative heating solutions, today reports its Preliminary Results for the 12 months ended 31 December 2006.

Summary

Commenting on the outlook, Mark Abrahams, Chairman of Inditherm, said:

"We have had a strong start to 2007, with a solid order book. Our primary goal going forward is to reach break-even. Based upon our current prospects, I am encouraged that this can be achieved."

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Introduction

2006 was a year of transformation for Inditherm. Following the introduction of our focused strategy to expand in the Industrial, Medical and Construction sectors, emphasising larger projects, the first signs of success started to emerge. The signing of the supply agreement with Smiths Medical, significant orders for industrial process plants and a major pre-cast concreting project, provided further encouragement.

The year culminated with the launch in December of a re-financing and strengthening of the Balance Sheet (which was approved by the shareholders at an Extraordinary General Meeting on 12 January 2007 ) by way of a Placing of 30,000,000 new Ordinary Shares at a price of 10 pence per Placing Share . Following completion of the Placing, the issued share capital of the Company increased to 51,112,581 Ordinary Shares and the Group's resources increased to £4,567k immediately after the Placing.

Results

Turnover for the year rose by 51% to £1,564k (2005: £1,035k), mainly due to growth in both Medical and Industrial sales. Orders received maintained the 71% growth rate reported in the first half year.

The Industrial business showed continued growth in sales of 31%, which was mainly driven by the successful introduction of our new modular pipework system, accompanied by large tank heating installations. During the year we received several larger orders for these systems from well-known confectionary and food manufacturers. The value drivers for these systems are substantial energy reductions, hygiene benefits and more rapid installation. Following a slow start, towards the year end we saw an encouraging increase in work for UK water utilities through the current Asset Management Programme (AMP4).

The Medical business grew by 146%, with 165% orders growth, helped at the year end by a stock order from Smiths Medical. Purchases by the NHS improved and the addition of 8 new overseas distributors contributed to the sustained growth in exports. The new CosyTherm neo-natal warming product, launched towards the end of 2005, has been well received in the market and sales are growing.

The Construction business made steady progress and obtained a large order for precast concrete curing blankets. This demonstrated significant benefits for the customer, including the ability to reduce the cement content of the concrete. The project has acted as a valuable reference for other precast manufacturers.

The cost base was reduced by 10% during the year, with all expenditure being tightly controlled. Overheads before exceptional costs were £1,571k (2005: £1,739k), resulting in an operating loss before exceptional costs of £1,087k (2005: £1,402k). After restructuring and exceptional costs of £152k (2005: £50k) and net interest income of £83k (2005: £138k), the post-tax loss was £1,132k (2005: £1,279k).

The year end cash balance was £1,747k (2005: £2,363k). The cash placing on 15 January 2007 raised a further £2.8 million net of expenses. We believe that the Company has sufficient funds to meet our current and medium term needs.

Dividends

Employees

Following the recent surge in quotation activity and orders, we have responded by promoting a number of sales and operations people, followed by a recruitment programme designed to maintain our growth momentum.

On behalf of the Board, I thank all our staff most sincerely for their continued support.

Outlook

During recent months we have seen an encouraging increase in the level of enquiries and orders. The order book at the start of the year has given us a strong start and order intake for the first quarter of 2007 is up more than 40%.

Our industrial solutions are now well proven and have been embraced by several key customers as the way forward for process heating, mainly due to the energy saving and hygiene benefits.

The supply contract with Smiths Medical is expected to drive growth in our Medical business and will supplement the growth anticipated from both domestic and export sales of patient warming and neonatal products.

The Construction business is now well-established and there is growing interest in our concrete curing products. The two year project funded by the European FP6 CRAFT grant, previously reported, is yielding excellent results, as well as orders from consortium partners.

Our initial goal going forward is to reach break-even. Based upon current prospects, I am encouraged that this can be achieved.

Mark Abrahams
Chairman
29 March 2007

Chief Executive's Review

Overview

During 2006 we focused on achieving top line growth, whilst keeping costs and cash outflow under control. We continued to focus on our three main business segments of Industrial, Medical and Construction, adding new products and systems, and gaining credibility as a solutions provider with a number of major international customers.

The supply agreement with Smiths Medical is a major endorsement of our patient warming technology and provides the platform for substantial growth in our Medical business during 2007.

The cash placing has given us the opportunity to invest in additional sales and technical resources and means that we can accelerate the growth opportunities.

Industrial

Sales in the Industrial segment increased by 31% over 2005, and orders by 45%, mainly due to growth in process heating orders for our new modular pipework systems and associated tank heaters.

We received several orders for larger heating installations from well known manufacturers for heating chocolate, sugars and chemicals. One of these was installed in Poland , where we demonstrated our ability to manage such projects by completing ahead of schedule. The key value propositions of these modular systems are the shortened installation time, improved hygiene, energy savings, controllability and improved production output. Energy savings as a result of using Inditherm, now verified by several of our customers, can be as high as 75% on a like-for-like basis. In order to retain our focus on our core competencies, we have chosen to subcontract areas such as pipework and cladding to competent partners, albeit at lower margins.

During the year we signed a framework agreement with Yorkshire Water and carried out successful trials for heating sewerage sludge transfer lines with Severn Trent Water. After a slow start in 2005, we are now receiving regular water utility orders under the AMP4 Asset Management Programme.

During the year we appointed more overseas distributors and since the cash placing, have strengthened the industrial sales organisation with the recruitment of additional sales resources.

Medical

Medical orders increased by 165% and sales by 146%, helped by the first stock order from Smiths Medical in December. Deliveries to Smiths have now commenced and they have now placed a further order for delivery in the second quarter.

During the year we appointed eight new overseas distributors.

Sales to the NHS have picked up and we are now recognised as providing a highly cost-effective solution. We have recently strengthened our UK Medical sales force.

Sales of the CosyTherm neonatal warming system have grown well and we are also pursuing international distribution opportunities.

Construction

The Construction business had an encouraging year, with the successful installation of a major concrete curing system for a large pre-caster. This really highlighted the benefits of our system: more rapid curing, improved hydration and early strength development, significantly reduced energy cost (typically 80% or more), the opportunity to reduce cement content, along with a range of operational benefits.

Other projects included supplying curing blankets for rapid runway repairs at a major UK airport.

Other Activities

Our standard product lines, notably vessel heaters and heating pads for pizza and curry bags, have continued to grow during the year, providing a good base load of work.

Whilst our existing under-pitch heating installations continue to operate well and we continue to pursue those opportunities that arise from time to time, this is no longer a key area of focus, due to the sporadic nature of this market.

Operations

Our efforts to reduce overhead spend continued throughout the year, with substantial reductions being achieved. Despite the additional headcount now in place, our first quarter overheads in 2007 are 13% lower than the same period in 2006 and 9% lower than in 2005.

Our project management capabilities were put to the test on a number of large projects and in each case, we were able to delight our customers by completing the work on or ahead of schedule.

Product Development

Product development work continued in all main business sectors during the year. Further improvements were made to our Industrial products, notably enhancements and options for our modular pipework systems.

There were ongoing improvements made to our Medical products and some new products based upon our proven technology are also in the pipeline.

The concrete curing R&D project under the European FP6 CRAFT programme, previously reported, has gone well, further validating the technology and providing valuable technical data. Cooperation agreements are being negotiated with some members of the trans-European consortium.

During the year we formed a partnership with Grant Rail and Sheffield Hallam University to develop a system for heating railway track, so that it can be welded more easily. This was supported by a Yorkshire Forward grant. Initial field test results have been encouraging.

Outlook

The agreement with Smiths Medical provides an excellent platform for growth. Medical production rates have been increased to meet our commitments.

Based upon enquiries and recent order flow, Industrial sales are expected to exceed the growth rate seen last year, mainly due to the market acceptance of our modular pipework and tank heating technology. It appears that Inditherm is no longer seen as a high risk purchase, and we are now moving from technical to commercial acceptance. The growing interest in energy savings and the greater emphasis on hygiene among food manufacturers are also expected to drive demand. More widespread deployment of standard products will facilitate growth in international sales through our distributor network. Water utility work continues to rise and with more field sales people now in place, we intend to pursue the all the major Water Utilities throughout the UK .

Now that we have some good reference sites, the Construction sector is expected to see significant growth in 2007, particularly for pre-cast concrete curing applications.

Our initial goal is to reach break-even as fast as possible and our entire team is focused on achieving this.

The challenges facing Inditherm in 2007 remain considerable but so are the opportunities. We have started the year with a substantial order book which has given us a solid start to the year.

Richard Harpum
Chief Executive
29 March 2007

Preliminary announcement of results for the year ended 31 December 2006

Consolidated profit and loss account

All amounts relate to continuing activities.

All recognised gains and losses are included within the profit and loss account.

Preliminary announcement of results for the year ended 31 December 2006

Consolidated balance sheet

Preliminary announcement of results for the year ended 31 December 2006

Consolidated cash flow statement

Preliminary announcement of results for the year ended 31 December 2006

Consolidated cash flow statement (continued)

Preliminary announcement of results for the year ended 31 December 2006

Consolidated cash flow statement (continued)

NOTES

1. The preliminary results have been prepared under the historical cost convention, in accordance with applicable Accounting Standards in the United Kingdom and with the company's accounting policies as set out in the financial statements for the year ended 31 December 2005 with the exception of the adoption of FRS 20 in the year. The preliminary results were approved by the Board on 28 March 2007 and are unaudited. The financial information contained in this unaudited preliminary announcement statement does not constitute accounts as defined by Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2005 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2006 and the auditors report thereon will be finalised based on the information in this preliminary announcement and will be delivered to the Registrar of Companies following the company's AGM.
2. The calculation of loss per ordinary share is based on losses of £1,132,000 (2005: £1,279,000) and on a weighted average of 21,112,581 (2005: 21,073,948) ordinary shares in issue during the year. The share options are anti-dilutive due to the loss in the year.
3. Copies of the 2006 Annual Report and Accounts will be sent to all shareholders. Copies will be available from the Company Secretary at Inditherm plc, Inditherm House, Houndhill Park , Bolton Road , Wath upon Dearne, Rotherham , S63 7LG .
4. On 15 January 2007 the company issued 30,000,000 new ordinary shares of 1p each for a consideration of 10p per share. The company received £2.8m net of expenses.
5. Exceptional costs of £152k arose during the year. £75k has been provided for the costs of upgrading patient warming systems to include additional safety features to detect damage to the product caused by misuse or storage in a method contrary to operating instructions. £57k arose as a result of the Corporate finance work associated with pursuing strategic options to secure additional funding. £20k was incurred as compensation for loss of office.
6. In accordance with FRS 20 the fair value of equity settled share-based payments to employees are determined at the date of grant and have been charged against profit over the period the options have vested. The accounts for the relevant period (2004) have been restated and a share based payment reserve of £60,000 has been created. The adoption of FRS 20 represents a change in accounting policy the impact of which has been to reduce net assets at 31 December 2005 and 2006 by £60,000. There was no impact on reported profit in either year.