RNS Number:6246T
Compact Power Holdings PLC
23 December 2003
COMPACT POWER HOLDINGS PLC
ANNOUNCEMENT OF INTERIM RESULTS
for the six months ended 30 September 2003
Chairman's Statement
Compact Power Holdings plc, the developer and proprietor of a leading waste to
energy technology announces interim results for the six months ended 30
September 2003.
Results
The interim results for the six months ended 30 September 2003 show a loss
before tax of #1.4m (2002: #2.4m). Revenue for the period, which was derived
entirely from the processing of waste at the MT2 plant at Avonmouth was 43 per
cent ahead at #244,000 (2002: #171,000). As at 30 September, the balance sheet
remained debt free and showed aggregate shareholders' funds of #6.7m. The group
had cash outflows in the period of #1.6m and at the period end had cash balances
of #2.1m. As at 12th December 2003 the company's cash balances stood at #1.3m of
which #0.5m is committed for the completion of the sterilisation plant. These
balances take account of capital expenditure of #0.5m since September 2003 in
connection with the sterilisation plant at Avonmouth.
Avonmouth operating review
We were pleased to report a continued improvement in the performance of the
existing MT2 Plant at Avonmouth. Turnover in the period was #244,000 compared
to #171,000 in the same period last year and #240,000 in the second half of the
last financial year. The marginal increase compared to the second half of the
last financial year being due to non-recurring technical upgrades which took
place in the first quarter of this financial year and restricted the number of
operating days.
Improved operating availability is resulting in an improvement in the tonnage of
waste being processed through the plant. Waste throughput averaged 140 tonnes
per month in the first quarter of the year and increased to an average of 214
tonnes per month in the second quarter. This improvement has continued into the
second half of the year. October was a record month with 262 tonnes being
processed. Management now believes this level or more can be achieved on a
consistent basis although certain months such as November of this year will
record a lower level due to planned shut downs.
We announced in July in our preliminary results our intention to consolidate the
investment in Avonmouth by the addition of a steam sterilisation plant. This
will expand the capacity at Avonmouth, raise the energy efficiency of the total
facility and improve its financial return. We are pleased to report that the
implementation of this plant is running to time and budget. The sterilisation
unit is expected to be operational in February 2004. The addition of the
sterilisation unit will allow Compact Power to more than double its installed
capacity and provide a more comprehensive service for the disposal of clinical
and hazardous wastes. The sterilisation unit has the capacity to process
approximately 5,000 tonnes of waste per annum and will concentrate on disposing
of lower grade, lower gate fee clinical waste. This will free additional
capacity in the existing MT2 Plant to process higher grade, higher gate fee
clinical and hazardous wastes.
Once fully operational, the combined Avonmouth facility is expected to operate
profitably and to be cash generative.
Working capital requirements
The company has further reduced its operating monthly cash burn from around
#200,000 at the time of the year end preliminary announcement, to about #170,000
per month currently. This level is expected to reduce by a further 10 to 15 per
cent once the sterilisation unit is operational. Given the remaining cash
reserves reported above, the company intends to undertake a fund raising
exercise early next year. Shareholders' attention is drawn to Note 5 at the end
of this statement in relation to going concern.
Strategic relationships
The Board is currently investigating certain opportunities at a corporate level
which may involve acquisitions of profitable and complementary businesses to
accelerate the group's development and support the ongoing development and
exploitation of its technology.
We are also discussing with AMEC, the international engineering services
company, the possibility of a strategic relationship.
Project pipeline
The company continues to generate a strong level of enquiries and the Board
believes this interest will continue. Our confidence is based on the company's
increasingly long and improving operational record at Avonmouth, the absence of
any firmly established competition and the regulatory environment that is moving
in its favour (albeit more slowly than had been hoped). Our view is reinforced
by the strong endorsement we received from the Environment Agency in their 2003
Annual Report and by increasing recognition within our sector of the quality of
our technology. However the Board continues to be frustrated by the time it is
taking to convert project situations into firm orders and it is now unlikely
that commercial developments will have a material financial impact in the
current financial year. As a result, revenues for the full year are expected to
be significantly below market expectations. However the pre-emptive actions
already taken will mean that the operating losses at the year end will be in
line with market expectations.
Progress does continue to be made. Specifically, in Dumfries in Scotland we are
in discussions with AMEC and with project financiers to take this project
forward and take advantage of the site and planning permission which we have
already secured. It is recognised that the realisation of this project could be
important in accelerating the development of other existing projects.
In Italy we are part of a proposed consortium with SNC Lavalin as EPC
management contractor and a significant local engineering contractor to tender
for the supply of an integrated waste management facility for an Italian
Municipal authority. Full tenders are to be received by the end of January and
the tender award is expected to be made in the first half of 2004. The
specification for the tender is expected to include the use of a commercially
proven advanced thermal conversion technology already operating within relevant
standards and, therefore, Compact Power is optimistic of its prospects as one of
the few such technologies in the world, this activity has stimulated other
prospects in Italy.
Technology applications
As well as continuing to explore big projects for mixed waste facilities where
the project process is typically complex and lengthy, the company is seeking to
identify opportunities to exploit its technology and its expertise in less
complex and lower costs situations. An example of this is a development project
recently secured from QinetiQ to develop waste disposal units based on Compact
Power's pyrolysis gasification process for use on Royal Navy ships. The first
phase of the project to assess the feasibility of the plant and prepare the
preliminary design is currently underway for a modest consultancy fee. If
successful, phase 2 would involve the detailed design, construction and testing
of the land based prototype probably in the second quarter of 2004 and then
there would be the construction, installation and testing of a seagoing plant.
The company has also been offered a grant of #296,000 from the DTI for a project
entitled: "Low cost biomass gasification using the Compact Power process". We
see this as an important step in raising the awareness of our technology in the
biomass sector which the Government sees as making an important contribution to
meeting renewable energy targets.
In terms of industrial applications the company is currently in discussion with
major cement groups to explore the use of the technology to provide substitute
fuel gas for their processes.
Outlook
I have given above a clear indication of the short term priorities for the
company which are intended to secure the company's position for the future.
Thereafter, in the longer term, prospects are encouraging:
* We have achieved recognition nationally and internationally for our leading
advanced thermal conversion technology and pyrolysis and gasification are
increasingly being specified as the technology of choice where thermal process
is required.
* The potential in the hazardous/special waste market in the UK in which we
have been operating for over 2 years and demonstrating the highest environmental
standards will be boosted by an anticipated reduction in available landfill and
a tightening of the processing requirements for certain types of waste. This
will favour our technology and lead to increased commercial opportunity.
* Similarly the increasing focus on targets for diversion from landfill and
the growing awareness of the incentives and penalties which are being created to
enforce compliance is likely to accelerate projects in the municipal sector.
* The government interest in energy from biomass as a significant contributor
to renewable energy targets indicates another area in which we expect to make an
impact.
* The economic and environmental pressures on energy intensive industries
such as the cement industry to use non-fossil fuels create opportunities for our
technology as a syngas producer from biomass and waste.
This potential is recognised by the industrial partners with whom we are
building relationships and the Board remains positive about the future,
notwithstanding the fund raising requirement in 2004.
Contacts:
Nic Cooper, Chairman - +44 117 980 2900
John Acton, Chief Executive - +44 117 980 2900
Barrie Newton, Rowan Dartington & Co. Limited - +44 117 933 0000
Fergus Wylie, Cubitt Consulting Limited - +44 20 7367 5100
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 September 2003
Six months Six months Year ended
ended 30 ended 30
September 2003 September 2002 31 March
#'000 #'000 2003
(reviewed) (reviewed) #'000
(audited)
Turnover 244 171 411
Cost of sales (436) (417) (827)
Gross Loss (192) (246) (416)
Administrative expenses (993) (1,409) (2,983)
Development costs (247) (856) (890)
Operating Loss (1,432) (2,511) (4,289)
Interest receivable - group 40 117 187
Interest payable - group 0 (32) (32)
Loss on ordinary activities before taxation (1,392) (2,426) (4,134)
Tax credit on loss on ordinary activities 51 - 407
Loss on ordinary activities after taxation (1,341) (2,426) (3,727)
Balance brought forward (10,539) (6,812) (6,812)
Balance carried forward (11,880) (9,238) (10,539)
Loss per share
Basic and diluted loss per 2p share (note 4) (4.6)p (9.0)p (13.3)p
The Group has no recognised gains or losses other than the loss for the above
financial period.
All activities are classed as continuing operations.
CONSOLIDATED BALANCE SHEET
as at 30 September 2003
As at 30 As at 30 As at 31
September September March
2003 2002 2003
#'000 #'000 #'000
(reviewed) (reviewed) (audited)
Fixed Assets
Intangible assets 945 577 963
Tangible assets 3,442 3,744 3,602
Assets under construction 272 - -
Investments 40 40 40
4,699 4,361 4,605
Current Assets
Debtors 620 875 584
Cash at bank 2,124 4,792 3,728
2,744 5,667 4,312
Creditors: Amounts falling due within one year
Creditors (787) (669) (920)
Net current assets/(liabilities) 1,957 4,998 3,392
Total assets less current liabilities 6,656 9,359 7,997
Provisions for liabilities and charges - (61) -
Net assets / (liabilities) 6,656 9,298 7,997
Capital and reserves
Called-up equity share capital 583 583 583
Share premium 17,953 17,953 17,953
Profit and loss account (11,880) (9,238) (10,539)
Shareholders funds (including non-equity) 6,656 9,298 7,997
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2003
Six months Six months Year ended
ended 30 ended 30 31 March
September September 2003
2003 2002 #'000
#'000 #'000
Net cash outflow from operating activities (1,308) (2,359) (3,816)
Returns on investments and servicing of finance
Interest paid - (58) (32)
Interest received 40 117 155
Net cash (outflow) / inflow from returns on
investments and servicing of finance 40 59 123
Taxation - - 434
Capital expenditure and financial investment
Purchase of tangible fixed assets (225) (188) (216)
Investment in intangible fixed assets -
Research & development (111) - (228)
Long term loan to other companies - (286) (135)
Net cash outflow from capital expenditure and
financial investment (336) (474) (579)
Net cash outflow before financing (1,604) (2,774) (3,838)
Financing
Gross proceeds from issue of new shares - 7,500 7,500
Issue costs - (671) (671)
Net cash flow from financing - 6,829 6,829
Increase/(decrease) in cash in the period (1,604) 4,055 2,991
Notes
1. Reconciliation of operating loss to net cash outflow from operating activities
Six months Six months Year ended
ended 30 ended 30 31 March
September September
2003 2002 2003
#'000 #'000 #'000
Operating loss (1,432) (2,511) (4,289)
Depreciation and amortisation 181 182 368
Provision for impairment in value of unlisted - 52 135
investments
(Increase) / Decrease in debtors 15 (166) (104)
(Decrease) / Increase in creditors (72) 84 74
(1,308) (2,359) (3,816)
2. Reconciliation of net cash flow to movement in net funds/(debt)
Six months Six months Year ended
ended 30 ended 30 31 March
September September
2003 2002 2003
#'000 #'000 #'000
Increase/(decrease) in cash in year (1,604) 4,055 2,991
Conversion of loan notes to ordinary shares - 9,024 9,024
Movement in net funds/(debt) (1,604) 13,079 12,015
Net debt at beginning of period 3,728 (8,287) (8,287)
Net funds at end of period 2,124 4,792 3,728
3. Analysis of net funds/(debt)
Cash at Bank Debt Total
#'000 #'000 #'000
At March 2002 737 (9,024) (8,287)
Cash flow 4,055 - 4,055
Non cash movements - 9,024 9,024
At September 2002 4,792 - 4,792
Cash flow (1,064) - (1,064)
At March 2003 3,728 - 3,728
Cash flow (1,604) - (1,604)
At September 2003 2,124 - 2,124
4. Loss per share
The calculations of loss per share are based on the following losses and number
of shares:
Six months Six months Year ended 31
ended 30 ended 30 March 2003
September September
2003 2002
(reviewed) (reviewed) (audited)
#'000 #'000 #'000
Loss for the financial period 1,341 2,426 3,727
Number of Number of Number of
shares shares shares
Weighted average number of shares 29,150,961 27,093,632 28,119,471
5. Going concern
At the currently anticipated levels of income and expenditure, the company only
has sufficient cash for the next four to five months. The company intends to
undertake a fund raising exercise early in 2004 to provide additional funds and
the company's largest shareholder has confirmed that, subject to agreeing terms
with the company, it intends to support a fund raising. On the basis that this
takes place early next year the directors have prepared the interim results
statement on the going concern basis. The statement does not include any
adjustments that might result if the fund raising were unsuccessful
This interim report was approved by the directors on 23 December 2003. The
financial information set out above does not constitute the Company's financial
statements for the period ended 30 September 2003 or 2002. The financial
information for the year ended 31 March 2003 is derived from the financial
statements for 2003, which have been delivered to the Registrar of Companies.
The auditors have reported on the 2003 statements; their report was unqualified
and did not contain a statement under section 237(2) or (3) of the Companies Act
1985.
Compact Power Holdings plc
Hydro House
St Andrew's Road
Avonmouth
Bristol BS11 9HZ
www.compactpower.co.uk
Tel: +44 117 980 2900
Fax: +44 117 980 2901
This information is provided by RNS
The company news service from the London Stock Exchange
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