TIDMZEN
RNS Number : 1547X
Zenergy Power PLC
10 February 2012
Zenergy Power plc
Audited preliminary results for the year ended 31 December
2011.
Highlights
-- Exit from cash-hungry superconductivity operations completed
-- Revised strategy focusing on non-Superconducting mFCL product in place
-- Orders for mFCLs anticipated during 2012
-- Continuing operating loss of GBP3.2m before impairment charge
-- Year end cash reserves of GBP5.3m
-- Accounts are now reported in Sterling
-- 2010 and 2009 comparatives restated in Sterling from Euros
Chairman's statement
As expected the results for the year show a significant loss of
GBP20.6million which includes the loss of GBP10.5million from the
Group's discontinued German superconducting operation and an
impairment charge of GBP7.9million (less related tax credit of
GBP0.6million). Before which, the loss from continuing operations
was GBP2.7million (2010: GBP3.8million).
Cash and net liquid resources at 31 December 2011 is
GBP5.3million (2010: GBP13.6million).
Following our appointment to the Board of Zenergy in April 2011,
the current Directors' focus has been on stabilising the business
and halting the long term decline in shareholder value whilst at
the same time laying a foundation for re-building the business in
future years.
Zenergy's challenges were well understood and the initial months
were spent in seeking strategic partnerships with numerous global
players to support the funding required to bring the Group's core
products to market, while in parallel, investigating all
alternative commercial and strategic strategies that would either
reduce cash burn or assist in raising further cash. We received
considerable interest in the Magnetic Fault Current Limiter
technology whereas some of Zenergy's other products were less well
received.
This process confirmed there were significant commercial
questions around Zenergy's ability to deliver superconductor
technology; notably the time and further investment still necessary
to reach full commercialisation. This, together with the on-going
running costs of the superconducting operations, was such that the
Board concluded the pursuit of superconductor technology was not
commercially feasible for Zenergy.
Other than the mFCL technology, Zenergy's product portfolio was
largely tied to the success of its superconductor technology.
As a result, the Board decided to focus on the mFCLs and not to
continue to support the German based superconductor technology.
Zenergy Power GmbH entered into administration on 22 September
2011. A full and final settlement was reached with the
Administrator of Zenergy Power GmbH on 22 December 2011 in which
all obligations between Zenergy GmbH and the rest of the Group were
settled for a one-off payment of EUR150,000 to the administrator.
No other claims are anticipated in respect of Zenergy Power GmbH
ceasing to trade.
In addition to the above the Board negotiated a 10 year royalty
from any sales derived from the 2G HTS wire programme should it be
successfully developed and commercialised.
Our US and Australian business units, who are responsible for
mFCL development, had for some time believed that it was possible
to manufacture lower voltage mFCLs using simple copper magnets, but
this was not pursued by the previous board due to its focus on
superconducting technology.
Once tests on non-superconducting mFCLs were approved, it soon
became apparent that it was possible to design mFCLs with simple
copper magnets for all voltage classes up to, and including,
transmission voltages and in autumn 2011 a small prototype was
built and successfully tested.
In addition to the acknowledged strengths of the superconductive
FCL's, the new, non-superconductive generation FCL's have a number
of specific advantages over its superconducting equivalent;
-- Technology that is understood by GRID operators; iron with
copper magnets:
-- Robust design; they run at ambient temperature so no cooling
needed:
-- Cheaper to build; 50% of the cost of the equivalent
superconducting mFCL:
-- Smaller footprint; For 11kv, total footprint reduced from 32
m(2) to 10 m(2) :
-- Simpler and quicker to build; reduced turnaround time:
-- Essentially maintenance free; similar operating and
maintenance profile as transformers:
-- Efficiency of design means that at lower voltages the new
mFCL consumes less energy:
These improvements represent a step change in the commercial
prospects of the mFCL program. Indeed, during the last few months
there have been promising initial discussions with over a dozen
potential customers in US, Australia, Europe and Russia.
Whilst, at the time of writing, there are no firm orders in
place, the Board currently believes that a number of these
discussions should develop into profitable orders sometime in the
course of 2012.
In the meantime, a previously sold superconductive mFCL is in
the course of being installed in the UK grid and discussions are
continuing to deliver a previously specified superconductive mFCL
which could also be installed in the UK grid in 2012.
Whilst the Board is excited about the level of interest it has
seen in the new non-superconducting mFCLs, it remains mindful of
the risks facing the Group and so will continue to keep the
commercial progress and remaining resources of the Group under
close review during the year.
Simon Cleaver
Chairman
Consolidated Income Statement
Group Group
2011 2010
restated
GBP000 GBP000
Continuing operations
Revenue 61 896
Cost of sales (445) (1,098)
Gross loss (384) (202)
Other operating
income (9) 22
Sales & marketing
expenses (713) (1,291)
Administrative
expenses (1,253) (1,408)
Research & development
expenses (810) (818)
Impairment loss
on intangibles (7,924) -
Operating loss (11,093) (3,697)
Financial income 166 275
Financial expenses (32) (439)
Net financing
income/(expense) 134 (164)
Loss before tax (10,959) (3,861)
Taxation 873 22
Loss from continuing
operations (10,086) (3,839)
Discontinued
operation
Loss from discontinued
operation (net
of income tax) (10,484) (4,832)
Loss for the
year (20,570) (8,671)
------------- ------------------
Loss per share
Basic & fully
diluted loss
per share (Pounds) (0.30) (0.13)
Loss per share
- continuing
operations
Basic & fully
diluted loss
per share (Pounds) (0.15) (0.06)
------------------------ ------------- ------------------
Consolidated Statement of Comprehensive income
Group Group
2011 2010
restated
GBP000 GBP000
Loss for the period (20,570) (8,671)
Other comprehensive
income
Foreign exchange translation
differences on translation
of foreign operations (211) 198
Other comprehensive
income for the year,
net of tax (211) 198
Total comprehensive
income for the year (20,781) (8,473)
------------------------------ ----------- --------------
Consolidated Statement of Financial Position
Group Group Group
2011 2010 2009
restated restated
GBP000 GBP000 GBP000
Non-current assets
Investment in Subsidiaries - - -
Property, plant
and equipment 186 2,271 3,066
Goodwill - 1,224 1,173
Other intangible
assets - 7,647 5,617
186 11,142 9,856
Current assets
Inventories 124 953 1,064
Trade and other
receivables 382 2,983 2,086
Research & development
tax credit receivable 158 - -
Cash and cash equivalents 5,287 13,639 6,128
Assets classified
as held for sale - 1,533 -
5,951 19,108 9,278
Total assets 6,137 30,250 19,134
-------------- ------------------ ------------------
Current liabilities
Trade and other
payables (663) (2,527) (2,399)
Liabilities classified
as held for sale - (62) -
Total current liabilities (663) (2,589) (2,399)
Non current liabilities
Deferred tax liabilities - (548) (546)
Total liabilities (663) (3,137) (2,945)
-------------- ------------------ ------------------
Net assets 5,474 27,113 16,189
-------------- ------------------ ------------------
Equity attributable
to equity holders
of the parent
Share capital 691 691 522
Share premium 49,951 49,951 30,839
Translation reserve 2,336 2,547 2,349
Warrant reserve 134 134 134
Retained loss (47,638) (26,210) (17,655)
Total equity attributable
to shareholders 5,474 27,113 16,189
---------------------------- -------------- ------------------ ------------------
Consolidated Statement of Changes in Equity
Capital
Share Share Translation and other Retained
Group capital premium reserve reserves earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance
at 1 January
2010 restated
in Sterling 522 30,839 2,349 134 (17,655) 16,189
Loss for
the year - - - - (8,671) (8,671)
Other
comprehensive
income
Foreign
exchange
differences
on
translation
of foreign
operations - - 198 - - 198
Total
comprehensive
income for
the year - - 198 - (8,671) (8,473)
Transactions
with owners
of the
Company,
recognised
directly
in equity
Share based
payment
transactions - - - - 116 116
Issue of
ordinary
shares 169 19,112 - - - 19,281
Balance
at 31
December
2010 restated
in Sterling 691 49,951 2,547 134 (26,210) 27,113
------------------- ------------------ ------------------ ------------------ ------------------- --------------
Balance
at 1 January
2011 restated
in Sterling 691 49,951 2,547 134 (26,210) 27,113
Loss for
the period - - - - (20,570) (20,570)
Other comprehensive
income
Foreign
exchange
differences
on translation
of foreign
operations - - (211) - - (211)
Total comprehensive
income for
the year - - (211) - (20,570) (20,781)
Transactions
with owners
of the Company,
recognised
directly
in equity
Equity settled
share based
payments
transactions - - - - (858) (858)
Issue of
ordinary
shares - - - - - -
Balance
at 31 December
2011 691 49,951 2,336 134 (47,638) 5,474
--------------------- -------------- ------------- ------------- ------------- -------------- -------------
Consolidated Cash Flow Statement
Group Group
2011 2010
restated
GBP000 GBP000
Cash flows from
operating activities
Loss for the period (20,570) (8,671)
Adjustments for:
Depreciation 446 656
Amortisation of
intangible assets 119 150
Foreign exchange
gains/(losses) (276) (81)
Impairment losses
on intangible
assets 7,924 -
Impairment loss
on investment
in subsidiaries - -
Loss on sale of
fixed assets - 3
Loss on discontinued
operation, net
of cash disposed
of 5,881 -
Financial income (166) (278)
Financial expenses 32 439
Equity settled
share-based payment
expenses (262) 160
Taxation (873) (22)
Operating loss
before changes
in working capital
and provisions (7,745) (7,644)
(Increase)/Decrease
in trade and other
receivables 1,691 (1,161)
(Increase)/Decrease
in inventory (186) 86
Increase/(decrease)
in trade and other
payables (211) 190
Cash absorbed
by operations (6,451) (8,529)
Tax received/(paid) (157) -
Net cash (outflow)/inflow
from operating
activities (6,608) (8,529)
-------------- ------------------
Group Group
2011 2010
restated
GBP000 GBP000
Net cash (outflow)/inflow
from operating
activities (6,608) (8,529)
Cash flows from
investing activities
Interest received 50 278
Investment in
subsidiaries -
Proceeds from
the sale of fixed
assets - 15
Acquisition of
property, plant
and equipment (322) (1,185)
Development expenditure
capitalised and
acquisition of
other intangible
assets (1,585) (1,891)
Net cash outflow
from investing
activities (1,857) (2,783)
Cash flows from
financing activities
Proceeds from
the issue of
share capital - 19,237
Net cash inflow
from financing
activities - 19,237
Net (decrease)/increase
in cash and cash
equivalents (8,465) 7,925
Cash and cash
equivalents at
start of period 13,639 6,128
Effect of exchange
rate fluctuations
on cash held 113 (414)
Cash and cash
equivalents at
31 December 5,287 13,639
--------------------------- -------------- ------------------
Basis of preparation
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 December 2011 or
2010, but is derived from those accounts. Statutory accounts for
2010 have been delivered to the registrar of companies, and those
for 2011 will be delivered in due course. The auditors have
reported on those accounts; their reports (i) were unqualified),
(ii) except as noted below did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The audit report on the accounts for 2011 includes an Emphasis
of Matter paragraph regarding the disclosures in the accounts about
the ongoing applicability of the going concern basis in preparing
those accounts.
The financial statements include the following notes:
Restatement of prior year: Change in presentational currency
Following the administration of Zenergy Power GmbH, the
Directors have determined that the presentational currency of the
Group is Sterling as the currency of funding, where majority of
cash is held and its listing on AIM. The 2010 consolidation has
been restated to reflect this change and in accordance with IAS 21
three year-end balance sheets have been presented in the accounts,
2009, 2010 and 2011 into Sterling
Going concern
The accounts have been prepared on a going concern basis.
The Group made a loss of GBP20,570,000 after impairment charges
of GBP7,924,000 and a loss from discontinued operation of
GBP10,484,000 in the year ended 31 December 2011 and is forecast to
remain loss making in the year to 31 December 2012. As at 31
December 2011 the Group had cash reserves of GBP5,287,000
The Directors have prepared projections covering more than one
year which, based on current sales prospects, indicate that the
Group will initiate sales of fault current limiters sometime during
2012. These projections assume payroll costs continue at current
levels, no significant capital expenditure, working capital
profiled on the basis of current experience and foreign exchange
rates at those prevailing at 31 December 2011. Any such forward
looking projections are inevitably subjective and sensitive to
changes in the underlying assumptions and the Directors have
sensitised these projections, including that no fault current
limiter is delivered within 12 months of these accounts being
approved. These projections, as sensitised, indicate that
sufficient funds will be available to settle liabilities as they
fall due for at least 12 months from the date of approving these
accounts.
The Directors recognise that the long term financial viability
of the Group as currently structured will depend upon concluding
sales of fault current limiters and/or raising additional working
capital. Accordingly, the Directors have considered the financial
and commercial implications of rationalising the Group further and
will continue to keep the commercial development of the business
under close review.
The Directors have concluded that the inherent uncertainties
reported above represent a material uncertainty that may cast
significant doubt on the Group's and Company's ability to continue
as a going concern. The Group and parent Company, may, therefore,
be unable to continue realising their assets and discharging their
liabilities in the normal course of business but the financial
statements do not include any adjustments that would result from
the basis of preparation being inappropriate.
Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2011
of GBP0.30 loss (2010:GBP0.13 loss) was based on the loss
attributable to ordinary shareholders of GBP20,570,000,000 (2010:
GBP8,671,000) and a weighted average number of Ordinary Shares
outstanding during the period of 69,059,000 (2010:68,025,000),
calculated as follows:
Thousands of 2011 2010
shares
(000) (000)
Issued ordinary
shares at start
of period 69,059 52,242
Share options
exercised - 60
Shares issued
to directors - 29
Placing - January
2010 - 15,694
Weighted average
number of ordinary
shares 69,059 68,025
--------------------- ------------------- ----------------
Diluted earnings per share
Share options and warrants have only been included in the
calculation of fully diluted earnings per share when they are
dilutive.
Thousands of shares 2011 2010
(000) (000)
Warrants 160 160
Share options 5,523 2,534
Total potential
dilutive instruments 5,683 2,694
----------------------- ------ ------
The instruments that could potentially dilute the basic earnings
per share in the future, but were not included because they were
anti-dilutive for the periods presented are:
Thousands of 2011 2010
shares
(000) (000)
Issued ordinary
shares at start
of period 69,059 52,242
Issued for cash - 15,723
Issued in settlement
of services - 60
Share options 21 -
Diluted weighted
average number
of ordinary shares 69,080 68,025
---------------------- -------------- ------------------
Operating Segments
Following the discontinuation of superconductor technology,
theGroup has one product range, mFCLs. Zenergy Power Pty Ltd based
in Australia is primarily focused on research and development,
Zenergy Power Inc. based in the USA undertakes the detailed design,
engineering, manufacturing, sales and distribution and Zenergy
Power plc provides sales, marketing and management support. Zenergy
Power plc also maintains a small sales office in Germany. Together,
these companies are responsible for the entire life cycle of the
mFCL product and this is therefore the sole operating segment in
addition to the Head Office segment.
The Head office segment comprises the expenses of Zenergy Power
plc relating to the head office function and Stock Exchange listing
and related costs.
The Discontinued segment comprises the results of Zenergy Power
GmbH up to the date it was placed into administration.
Information regarding each operating segment is included below.
Segments are assessed based on revenues and loss before tax, as
included in the management information that is reviewed by the
Board. Inter-segment pricing is determined on an arm's length
basis.
Information about reportable segments
For the
year ended Eliminat-
31 December Head ions and
2011 Discont-inued mFCL office restate-ments Continuing
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Sales to
external
customers 443 61 - (443) 61
Sales with
other
segments 1,045 - - (1,045) -
Total segment
revenue 1,488 61 - (1,488) 61
------------------- ------------------ ------------------ ------------------ -------------------
Result
Segment
result being
loss from
operations (3,411) (10,545) (548) 3,411 (11,093)
Finance
income 3 8 158 (3) 166
Finance
expense - (32) - - (32)
Loss before
tax (3,408) (10,569) (390) 3,408 (10,959)
Tax - 873 - - 873
Loss on
sale of
discontinued
operation (7,076) 7,076 -
Loss for
the year (10,484) (9,696) (390) 10,484 (10,086)
------------------- ------------------ ------------------ ------------------ -------------------
Balance
sheet
Segment
assets 8,935 1,975 5,205 (9,978) 6,137
Segment
liabilities (1,717) (280) (383) 1,717 (663)
Net
assets/(liabilities) 7,218 1,695 4,822 (8,261) 5,474
------------------- --------------- ------------------ ------------------ -------------------
Other information
Capital
additions 478 1,429 - - 1,907
Depreciation
and amortisation 366 199 - - 565
Impairment
loss on
intangibles - 8,184 9 (269) 7,924
-
Other non
cash expenses
(share option
charge/(credit)
and directors
shares) (596) (172) (90) 596 (262)
Research
and development 1,973 810 - (1,973) 810
---------------------- ------------------- --------------- ------------------ ------------------ -------------------
Eliminations and restatements comprise adjustments to eliminate
transactions between group undertakings and restatements to
reclassify the discontinued operation.
Discontinued Operations
Zenergy Power GmbH was placed into administration on 22
September 2011. It was not treated as a discontinued operation at
31 December 2010 and the comparative statement of comprehensive
income has been re-presented to show the results of Zenergy GmbH as
a discontinued operation.
On 22 December 2011, Zenergy Power plc concluded a full and
final settlement with the Administrator, the principal terms of
which were as follows:
Zenergy Power plc paid EUR150,000 and surrendered its rights to
the intellectual property rights registered by Zenergy Power GmbH.
These related to superconductor technology including the 2G HTS
wire development and the billet heater programme.
The administrator granted Zenergy Power plc a royalty of 1% of
all 2G HTS wire sales for the next 10 years, certain assets which
had been previously paid for by Zenergy Power Inc. and, Zenergy
Power trademarks and trading names. The trademarks and trading
names were transferred and recorded at nil book value by Zenergy
Power Plc. The inventory returned to Zenergy Power Inc. had a book
value of GBP276,000 and has been included in tinventory at a
realisable value of GBP26,000 at 31 December 2011.
The Group and administrator of Zenergy Power GmbH agreed to
forgive all indebtedness between Zenergy Power GmbH and the Group.
At that date there was a balance of GBP1,669,000 due from Zenergy
Power Inc. to Zenergy Power GmbH and GBP950,000 due from Zenergy
Power GmbH to Zenergy Power plc.
This announcement was approved by the Board of Directors on 9
February 2011. Statutory accounts for the year to 31 December 2011
will be delivered to the registrar of companies following the
Annual General Meeting which is set for 18 April 2012.
Further information
Simon Cleaver Zenergy Power plc +44 1344 667 347
Adam Pollock/Katherine Roe Panmure Gordon +44 207 459 3600
David Bick/Mark Longson Square1 Consulting +44 207 929 5599
This information is provided by RNS
The company news service from the London Stock Exchange
END
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