RNS Number:6124J
Compact Power Holdings PLC
28 September 2006
28 September 2006
COMPACT POWER HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
for the year ended 31 March 2006
Compact Power Holdings plc, which develops and exploits its innovative pyrolysis
and gasification technology, announces results for the year ended 31st March
2006.
Commenting on the results, Chairman Nic Cooper said:
"The year under review has proved to be a watershed for the Group with several
important milestones achieved during the period and since the year end. These
have included a #1.6million issue of new equity capital and the sale of our
Dumfries project after the year-end which contributed an additional #775,000.
Our existing Avonmouth plant has also reported its first annual operating profit
and we have entered into an agreement to provide financing for the construction
of our new 30,000 Tpa waste to energy plant at Avonmouth."
Highlights
Turnover increased by 42% to #2,136,000 (2005: #1,506,000)
Operating loss before exceptional items reduced to #1.2million
(2005: #1.6million)
Net loss #2.3million (2005: #1.7million)
Loss per share 7.85p (2005: 5.78p).
Existing Avonmouth plant reports profit before interest, tax &
depreciation for the first time.
Contracts agreed for the funding and construction of new MT8 plant
in Avonmouth.
QinetiQ development project has reached a successful conclusion.
Post year-end sale of BATNEEC (Dumfries) Limited provides net cash
contribution of #775,000.
Post year-end equity investment of #1.6million and appointment of
David Weaver to the Board.
On current trading and prospects, Mr Cooper added:
"We expect commercial developments over the next 12 months to demonstrate the
scope of our opportunities and show how we can apply our technology across a
range of applications.
The immediate focus for the coming period is the delivery of the next plant at
Avonmouth, where we believe our collaboration with Bristol City Council will
provide a model for a new generation of integrated solutions for municipal waste
in the UK and abroad."
Contacts
Nic Cooper - Chairman +44 117 980 2900
Barrie Newton - Corporate Synergy Limited +44 117 933 0011
Paul Vann/Ken Rees - Winningtons Financial +44 117 920 0092
CHAIRMAN'S STATEMENT
Introduction
The year under review has proved to be a watershed for the Group with several
important milestones achieved during the period and since the year end.
These have included a #1.6million issue of new equity capital and the sale of
our Dumfries project after the year-end which contributed an additional
#775,000. Our existing Avonmouth plant has also reported its first annual
operating profit and we have entered into an agreement to provide financing for
the construction of our new waste to energy plant at Avonmouth.
We have also signed a number of commercial and technical collaboration
agreements which will extend the scope of our technical offering and expand our
market with a wide range of potential applications of our technology details of
which are given below.
Financial review
The consolidated operating loss before exceptional items for the year reduced to
#1.2million (2005: #1.6million) as a result of the improved performance and the
move into profitability of existing operations at Avonmouth. Revenues for the
year increased by 42% to #2,136,000 (2005: #1,506,000). This increase was
principally due to a 26% increase in waste throughput and the increase in gate
fees which rose by 14% during the year, largely caused by the impact of
environmental regulation.
The net cash outflow from operating activities reduced by 29% to #1.0million
(2005: #1.4million) as a result of the reduction in the operating loss. During
the year the Group drew down the sum of #450,000 (2005: #150,000) from a loan
facility of #600,000 provided by Cooper Holdings Limited to assist the Group
with its working capital requirements. In addition Cooper Holdings made
short-term loans to the Company during the year of #216,000. Subsequent to the
year end Cooper Holdings has converted #600,000 of the loan into 1,944,063 new
Ordinary shares at a price of 30.86 pence per share. The balance of capital and
interest is repayable in cash. On 15 March 2006 the Company announced a placing
of 3,240,106 new ordinary shares to EnviroResources Limited at a price of 30.86
pence per share raising #1million for the Company. At the year-end #350,000 had
been received and the balance of #650,000 has been received since the year-end.
In March 2006, just before the year end, the Group entered into an agreement
with Balkan General Engineering S.A. (BGE) to provide financing for the
construction of our new waste to energy plant at Avonmouth. This agreement also
provided for #3.9m of technology and design fees over the next two years.
Negotiations regarding the timing of payments under the agreement are on-going.
At the same time the Group is pursuing discussions on alternative financing
arrangements which could provide additional economic benefits for all parties.
The Board remains satisfied that the necessary monies are available and that
negotiations can be satisfactorily concluded.
The start of the project is subject to concluding an agreement with DEFRA in
relation to the funding for which Compact Power is a preferred bidder under the
New Technologies Demonstrator Programme. The conclusion of formal agreements
with Bristol City Council for the project is also subject to the DEFRA Agreement
being entered into. Detailed terms have been agreed in each case and the
Directors expect to complete these agreements within the next few weeks. The
delay in concluding these agreements and starting the construction is likely to
have some impact on the date on which the new plant will become operational.
However every effort will be made to minimise this effect.
The Directors have agreed that on completion of the funding for the new
Avonmouth plant the Group will pay exceptional costs of #200,000 to Capital
Leasing Limited in connection with project financing.
As an arrangement fee for the loan provided by Cooper Holdings Limited during
the year the Group issued 885,000 warrants to subscribe for Ordinary shares at a
price of 2 pence per share. This has led to an exceptional non-cash charge of
#186,000.
On 16 May 2006 the share capital of BATNEEC (Dumfries) Limited was acquired by
Scotgen Limited for a consideration of #236,022 paid in cash. On 16 May 2006
Batneec (Dumfries) Limited repaid amounts owed to group undertakings of #763,978
representing the total inter company indebtedness at that date.
As at 27 September 2006 the Group's cash balances stood at #156,000 which is
expected to provide working capital until mid November 2006. The Directors are
satisfied that funds in respect of the Avonmouth project will be received in
this time frame and that once received they will be sufficient to meet both the
short and medium term requirements of the Group. In addition discussions on
other projects are nearing completion and these are expected to generate other
revenues which will also contribute to the short and medium term requirements
of the Group.
Dividend
No dividend is recommended by the Directors for the year ended 31 March 2006.
Progress
The most significant commercial developments during the period have been the
formation of a number of industrial partnerships that have substantially
increased the Company's financial resources and the potential market for our
technology.
Our immediate focus is to deliver the Avonmouth project in collaboration with
Bristol City Council. This will become a significant reference plant for the
municipal sector in the UK and abroad, demonstrating the environmental and
economic benefits of our technology, with particular emphasis on smaller
distributed facilities. This strategy appeals to many local authorities which
are seeking to adopt sustainable solutions with reduced transportation impact
and optimised use of heat and power.
The sale of the Dumfries project has provided a cash injection and enabled us to
recover the investment that we had made in this site, helping to consolidate our
financial position.
The relationship with EnviroResources Limited, which has recently made a
substantial equity investment in Compact Power, is another important strategic
collaboration. It is actively developing project opportunities across an
extended territory including Scandinavia and China. We are pleased to welcome
David Weaver, the Chairman of EnviroResources, to our board. His long experience
in the power sector reinforces our new emphasis on energy from biomass where we
believe that our technology has an important contribution to make.
A smaller plant which we have developed in partnership with QinetiQ as a
land-based prototype for the Royal Navy is being further developed in a
sea-going version. The success of this plant is leading to the development of
packaged units for waste processing and disposal or for converting waste and
biomass to energy on a smaller scale.
Dedicated industrial applications for our technology are being developed in
various industries which are looking to extend the use of substitute fuels or to
resolve particular problems of waste disposal. In both cases Compact Power
offers attractive solutions through its ability to convert a wide range of
wastes or biomass to usable fuel gas or carbon char.
We have a collaboration with Turbo Power Systems to offer their turbo-alternator
and power electronics technologies as part of the Compact Power packaged plant
for delivering combined heat and power from a wide range of biomass feedstocks.
Outlook
We expect commercial developments over the next 12 months to demonstrate the
scope of our opportunities and to give evidence of how we can apply our
technology across a range of applications to make a significant contribution to
solving environmental and energy problems throughout the world. This will be
through active collaborations with partners who understand the powerful dynamic
of modular waste processing and energy generation facilities operating at a
local level.
The immediate focus for the coming period is the delivery of the next plant at
Avonmouth, where we believe our collaboration with Bristol City Council will
provide a model for a new generation of integrated solutions for municipal waste
in the UK and abroad.
We have been in a difficult period of cash constraint when we have leaned
heavily on the loyalty and commitment of all our team and the financial
underpinning of our largest shareholder. The board is most grateful for all this
support during this time.
Nic Cooper
Chairman
27 September 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2006
Note Year ended 31 Year ended 31
March 2006 March 2005
#'000 #'000
Turnover 2,136 1,506
Cost of sales (1,746) (1,612)
-------- --------
Gross profit /
(loss) 390 (106)
Administrative
expenses (1,545) (1,452)
Development
costs (16) (24)
-------- --------
(1,171) (1,582)
Exceptional
administration
costs 3 (200) -
-------- --------
Operating loss (1,371) (1,582)
Interest
receivable 2 6
Interest
payable (256) (141)
Exceptional
interest
payable and
similar
charges 3 (686) -
-------- --------
Loss on
ordinary
activities
before
taxation (2,311) (1,717)
Tax on loss on
ordinary
activities 20 60
-------- --------
Loss on
ordinary
activities
after taxation (2,291) (1,657)
Balance
brought
forward (17,445) (15,788)
-------- --------
Balance
carried
forward (19,736) (17,445)
======== ========
Loss per share
Loss per 2p
ordinary share 4 (7.85) p (5.78) p
======== ========
The Group has no recognised gains or losses other than the loss for the above
financial year.
All activities are classed as continuing operations.
CONSOLIDATED BALANCE SHEET
As at 31 March 2006
31 March 2006 31 March 2005
#'000 #'000
Fixed assets
Intangible assets 1,080 893
Tangible assets 1,627 1,686
-------- --------
2,707 2,579
-------- --------
Current assets
Debtors 647 455
Cash at bank 10 104
-------- --------
657 559
Creditors: amounts falling due within
one year (3,958) (1,047)
-------- --------
Net current liabilities (3,301) (488)
-------- --------
Total assets less current liabilities (594) 2,091
Creditors: amounts falling due after
more than one year - (1,000)
-------- --------
Net (liabilities) / assets (594) 1,091
======== ========
Capital and reserves
Called-up equity share capital 584 583
Share premium 18,022 17,953
Share capital to be issued 350 -
Other reserve 186 -
Profit and loss account (19,736) (17,445)
-------- --------
Equity Shareholders' (deficit) / funds (594) 1,091
======== ========
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2006
Year ended 31 Year ended 31
March 2006 March 2005
#'000 #'000
Net cash
outflow from
operating
activities (949) (1,395)
Returns on investments and servicing of
finance
Interest
received 2 6
Interest paid (83) (88)
--------- ---------
(81) (82)
Taxation - 136
Capital expenditure and financial
investment
Purchase of
tangible fixed
assets (80) (45)
Investment in
intangible
fixed assets -
research &
development - (28)
--------- ---------
Net cash
outflow from
capital
expenditure
and financial
investment (80) (73)
--------- ---------
Net cash
outflow before
financing (1,110) (1,414)
Financing
Warrants
exercised 1 -
Share capital
to be issued 350 -
New secured
loans 665 1,150
--------- ---------
Net cashflow
from financing 1,016 1,150
--------- ---------
Decrease in
cash in the
year (94) (264)
========= =========
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Year ended 31 Year ended 31
March 2006 March 2005
#'000 #'000
Operating loss (1,371) (1,582)
Depreciation and
amortisation 174 178
Increase in
debtors (172) (162)
Increase in
creditors and
provisions 420 171
-------- --------
(949) (1,395)
======== ========
NOTES
1. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Year ended 31 Year ended 31
March 2006 March 2005
#'000 #'000
Decrease in cash
in the year (94) (264)
Cash inflow from
debt financing (665) (1,150)
-------- --------
Movement in net
debt resulting
from cash flows (759) (1,414)
Non cash movements (50) (3)
-------- --------
Movement in net
debt in the year (809) (1,417)
Opening net (debt)
/ funds (1,049) 368
-------- --------
Closing net debt (1,858) (1,049)
======== ========
2. ANALYSIS OF NET DEBT
At 31 March Non cash At 31 March
2005 Cashflow movements 2006
#'000 #'000 #000's #'000
Cash at bank 104 (94) - 10
Debt due
within one
year (153) (665) (1,050) (1,868)
Other loans
------- -------- -------- -------
Debt due after
more than one
year (1,000) - 1,000 -
Other loans
------- -------- -------- -------
Net debt at 31
March 2006 (1,049) (759) (50) (1,858)
======= ======== ======== =======
3. EXCEPTIONAL ITEMS
The Directors have agreed that the Group will pay exceptional costs of #200,000
to Capital Leasing Limited in connection with project financing.
The Directors have agreed to re-purchase the existing plant and equipment from
Capital Leasing Limited for #1,500,000 on receipt of the funding for the new
Avonmouth plant. The excess of this amount over the carrying value of the loan
has been treated in the accounts as an exceptional finance charge of #500,000
incurred in the repayment of the loan for #1,000,000 that was secured on these
assets.
As an arrangement fee for the loan provided by Cooper Holdings Limited the Group
issued 885,000 warrants to subscribe for Ordinary shares at a price of 2 pence
per share. This has led to an exceptional non-cash charge of #186,000 which has
been included as an exceptional interest charge.
4. LOSS PER SHARE
Basic loss per share is calculated on loss attributable to shareholders of
#2,291,000 (2005 - loss of #1,657,000) divided by the weighted average number of
ordinary shares in issue during the year of 29,170,799 (2005 - 28,655,796).
5. GOING CONCERN
At 27 September 2006 the Group's cash balances stood at #156,000 which is
expected to provide working capital until mid November 2006. As noted in the
Chairman's statement discussions with external parties concerning projects where
the Compact Power technology could be utilised and revenues generated in the
short-term are nearing completion. The Directors are satisfied that there is
likely to be a positive outcome to these discussions which will provide enough
finance for the Group to meet its short-term and medium-term working capital
requirements and therefore have prepared the financial statements on a going
concern basis.
6. FINANCIAL STATEMENTS
The financial information set out above does not constitute the Company's
financial statements for the years ended 31 March 2006 or 2005. The financial
information for the year ended 31 March 2005 is derived from the statutory
accounts for the year ended 31 March 2005, which have been delivered to the
Registrar of Companies and on which the auditors reported. This report was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. The statutory accounts for the financial year ended 31 March
2006 will be finalised on the basis of the financial information presented by
the Directors in this preliminary announcement. The auditors report will contain
an emphasis of matter paragraph concerning going concern. A copy of the
Company's annual report and financial statements for 2006 will be mailed to
shareholders on 29 September 2006 and will also be available for collection from
the Company's registered office.
The Directors approved this announcement on 27 September 2006. Further copies of
this announcement are available from the Company's registered office at Yara
House, St Andrew's Road, Bristol, BS11 9HZ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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