Half-yearly Report
Embargoed Release: 07:00hrs Monday 13 August 2007
Zenergy Power plc
(`Zenergy' or the `Group')
Interim Results
for the Six Month Period Ended 30 June 2007
and AIM Rule 26 Compliant Website
Zenergy Power plc (AIM:ZEN.L), the specialist manufacturer and developer of
commercial applications for high-temperature superconductive (`HTS') materials,
is pleased to present its Interim Results for the Six Month Period Ended 30
June 2007 (`the Period').
Highlights
* Selected as exclusive supplier of HTS materials and components by
Converteam SAS (formerly Alstom Power Conversion) (`Converteam') for all
its activities within the wind power and small hydropower sectors (the
`Field');
* Awarded $500,000 grant by the California Energy Commission to install and
test the Group's proprietary electricity grid stability device;
* Institutional placing to raise £6,000,000;
* Successful development and product launch of the Group's proprietary `HTS
Induction Heater' - an energy efficient industrial heating device for the
global metals industry;
* €600,000 commercial order from Converteam for HTS wires; and
* Awarded a further $11,000,000 grant by the U.S. Department of Energy
("DOE") to develop, install and test an upgraded high-voltage version of
the Group's current proprietary electricity grid stability device known as
an `HTS FCL'.
Chairman's Statement
During the period we continued to successfully capitalise on the many years of
hard work and relationship building which subsidiaries within the Group
undertook separately before our formation and flotation on AIM. In doing so, we
significantly strengthened the foundations which will enable us to greatly
accelerate not merely our research and development efforts, but crucially our
commercial progress and market leadership. As highlighted above, Converteam
have appointed us as their exclusive collaborative partner for all their HTS
activities in the Field. In this regard, we will together be launching a range
of highly efficient and compact electricity generators into both the global
wind and hydro-power generation markets. This arrangement is typical of the
type of interest we have received from both public and private sector entities
and, coupled with our ongoing project with E.ON Wasserkraft GmbH (`E.ON') to
install the world's first HTS hydroelectric generator, demonstrates our success
in not only developing world class products, but in establishing direct sales
and marketing channels into what are global addressable markets estimated to be
worth in excess of several billion dollars per annum.
Following these endorsements of our technology and the continuing success in
our ongoing development activities we raised a further £6,000,000 for the Group
by way of an institutional placing in April of this year. These additional
funds will enable us to further invest in our development programme and give
your Board great confidence in the Group's overall ability to exploit its
market position to successfully deploy a wide range of highly energy efficient
HTS products. As I reported at the time of our flotation, in August of 2006,
the way in which society produces, distributes and uses energy is an issue of
great concern for a growing number of industrial corporations, governments,
private households and individual consumers. These are the central issues that
our HTS technology directly addresses and by working with corporations such as
E.ON and Converteam, as well as government bodies, including the European
Commission, US Department of Energy and the UK Government's Department of Trade
and Industry, we are confident that we can deploy product to address these
concerns across a variety of industries in a number of different geographical
locations.
We continue to experience growing interest in our products and I look forward
to reporting on further progress throughout the second half of this year.
Commercial Collaboration - Route to Market for Renewable Energy Products
During the Period we entered into an agreement with Converteam SAS whereby
Zenergy has been appointed as the exclusive supplier of HTS materials and
products for all of Converteam's activities within the Field, in respect of
which we have also been appointed to assist Converteam in designing,
developing, industrializing and marketing products. The global addressable
market for Zenergy's HTS products and contribution in these areas alone is
expected to be worth up to €2.2bn per annum for wind power (a market growing at
25% per annum) and €0.4bn for hydro-power. The Converteam collaboration is an
extremely significant development for the Group and suitably positions us to
move into a global billion dollar market that is renowned for its high barriers
to entry and where first mover advantages are significant. Our alliance with
one of the leading participants in this industry brings us direct route to
market through established commercial relationships and supply channels.
Converteam already enjoys an unrivalled reputation for technical excellence and
innovation, and together with Zenergy will launch a new generation of highly
efficient and compact electricity generators based around Zenergy's patented
HTS materials and components. These new generators are projected to be capable
of reducing the overall cost of producing electricity from wind power sources
by around 25% and are currently delivering efficiency levels of over 98% for
the production of electricity by hydro power.
Our collaboration with Converteam will leverage the joint technical and
marketing resources of both Groups to maximise the penetration of Converteam's
HTS generators in the renewable energy markets. The relationship evidences the
formalisation of a long and successful working association between us, and
represents a significant opportunity for both companies, who jointly believe
the cost benefits capable of being captured by the use of Zenergy's HTS
technology in the production of renewable energy present a significant
commercial proposition. We consider that our exclusive supplier status
represents an endorsement of the highest order not only for our innovative
products and their commercial value, but for our expertise and value in
integrating HTS materials and supporting technologies into sophisticated third
party products.
Currently, Converteam is leading a UK Department of Trade and Industry funded
project to design a high-power (8MW) direct-drive superconducting wind
generator, centred around Zenergy's HTS technology. The HTS generator will be
significantly smaller than conventional generators and just one quarter of the
weight. These attributes are anticipated to achieve electricity cost savings of
around 25%. Shortly after entering into this strategic partnership, the Group's
HTS electromagnetic coils passed Converteam's extensive testing and technical
evaluation processes in June 2007, and were qualified for use in commercial
wind power generators. The tests reported electrical performance, electrical
capacity and electrical efficiency levels exceeding Converteam management`s
expectations.
This qualification resulted in a further commercial order from Converteam to
Zenergy worth in excess of €600,000 as announced in June 2007.
The successful technical evaluation of the Group`s HTS coils for use in wind
power generators represents a significant de-risking of the Group`s technical
proposition and is a key step towards realising the commercial goals of both
Zenergy and Converteam within the renewable power markets.
Research and Development
Throughout the Period, we continued to enjoy development success across all of
our products; typified in May by the accomplishment of one of our key
development milestones within budget and ahead of schedule.
Induction Heater
Induction heaters are used globally and ubiquitously by producers and
manufacturers in the metals industry to heat large quantities of non ferrous
metal bulk, prior to carrying out processes of manipulation and shaping that
require the metal material to be softened. The softened metal is then used for
products including installation pipes, heat exchangers, window frames, computer
components and profiles for the automotive, aerospace and machine building
industries.
The Group has developed and completed its proprietary HTS induction heater,
which replaces traditionally employed copper-based components with HTS
materials. As anticipated, The HTS induction heater has been demonstrated to
operate with energy efficiency levels of over 90% as compared to conventional
induction heaters which operate at efficiency levels of between 35% and 45%.
This effective halving of the overall electrical energy requirement is
particularly significant when it is considered that, dependent on the country,
between 1% and 5% of the total annual electricity consumed in industrialised
countries is directly attributable to the operation of such heating equipment.
Further independent validation of the environmental significance of the Group's
HTS induction heater was provided by the German Environmental Fund, who
contributed significant development funds to the Group following extensive due
diligence. This funding was provided in recognition of the potential
environmental improvements which the HTS induction heater could deliver. It is
the firm belief of the Board that the increased energy efficiency will also
deliver substantial cost savings whilst simultaneously playing a significant
role in greatly reducing the metal industry's annual carbon footprint. From a
cost savings perspective, it is anticipated, that when run at full capacity,
the Group`s HTS induction heater is capable of yielding ongoing cost savings
equivalent to its total initial purchase price in as little as 5 years.
The Group's HTS induction heater was developed in conjunction with Bültmann
GmbH (`Bültmann'), one of the world's leading suppliers of industrial machinery
to the metal processing industry. As with the Group's agreement with
Converteam, the association with Bültmann, brings world class engineering
expertise to the Group as well as initial channel to market for the HTS
induction heater through Bültmann's existing commercial activities which have
endowed it with extensive established relationships within the global metals
industry.
The current addressable market for the Group's induction heaters is estimated
at c. €2 billion per annum.
Fault Current Limiter
I was delighted to be able to report, that on the penultimate day of the
Period, that the U.S. Department of Energy had notified the Group`s wholly
owned subsidiary, SC Power Systems, Inc. (`SC Power'), that it had been awarded
an US$11million grant to contribute towards an overall project to design, test
and install a high-voltage version of the Group's Fault Current Limiter
(`HVFCL') into the Californian electricity grid.
The FCL is a scaled up version of the Group's ground breaking and proprietary
medium voltage grid stability device ("MVFCL"), which will be tested in the
second half of this year. The HVFCL grant has been awarded to SC Power as
leader and co-ordinator of a project team, the major participants of which
include other members of the Group, Los Alamos National Laboratory, Delta Star
Inc., Southern California Edison (`SCE'), California`s largest utility, and the
Consolidated Edison Company of New York Inc. (`Con Ed'), a subsidiary of
Consolidated Edison Inc., the largest investor-owned energy company in the
United States.
This substantial grant was the second received in the Period for the
development of the Group's FCL devices and follows an initial US$0.5 million
grant from the California Energy Commission to install and test the Group's
existing MVFCL solution in California's electricity grid. This latest grant is
for the subsequent installation and testing of a larger scale device designed
specifically for the protection of higher-voltage electrical grid equipment
falling outside of the initial criteria of the Group's existing device. Both of
these FCLs will be scaled up versions of prototypes previously built, and
successfully tested, by the Group.
An HTS FCL acts as a instantaneously (automated) resetting fuse that protects
electrical power grids from damaging power surges, and is regarded by the US
Federal Government to be an essential component of future self-healing - or
self-regulating - `smart' electricity grids. Such `smart' grids are also
considered to be central to the much needed modernisation of the US's national
electricity grid, which are expected to become reliant upon the deployment of a
range of HTS devices. The grant from the U.S DOE was part of a US$51.8 million
investment in HTS research projects announced by the United States Government
aimed at establishing a diverse and stable supply of reliable, affordable and
environmentally responsible energy.
Investing in HTS FCLs is viewed by the US Federal Government as an essential
means of safeguarding energy efficiency and ensuring economic security. A field
test is expected to take place for the MVFCL in the Southern Californian grid,
with Con Ed providing site selection support, specifications development and
electricity grid testing.
The addressable global market for the Group's FCLs is expected to be worth up
to US$5billion per annum.
2G Development
As described at the time of the Group's flotation, Zenergy has been developing
its own proprietary 2nd Generation of HTS materials that it anticipates will
enjoy far lower material costs and cheaper mass production techniques to
alternative methods currently being developed by other industry participants.
Our ongoing development of 2G materials is a parallel activity to the
commercial activities described above and should ensure a market leadership
position for the Group for many years to come.
Our 2G technical milestone for 2007 is to deliver a 10 metre wire produced
using the Group's proprietary `all-chemical' process by Q4. It is the belief of
the Board that the Group's decision to develop an `all-chemical' production
process as opposed to alternative deposition techniques currently under
development, will give it significant cost and scalability advantages over
other industry participants.
In July we were pleased to receive the support of the German Ministry of
Economics and Technology who notified the Group's wholly owned subsidiary,
Trithor GmbH, that it had been awarded an €825,000 development grant for the
advancement of technical and theoretical development methodologies for 2G
materials. These funds will aid the acceleration of our research programme for
our 2G materials and processes and will enable us to strengthen the Group's
patent portfolio.
The ongoing support of the German Ministry of Economics and Technology is
viewed as a significant endorsement of the Group's commitment to the
development of low-cost processes for the mass production of 2G wire, as well
as the benefits which these processes can deliver to the power industry as a
whole.
Summary of Research Staff and our Patent Portfolio
Zenergy has a leading research and development team boasting more than 24
employees with PhDs or advanced degrees, based in three countries and a patent
portfolio comprising 22 patents and over 65 patent applications based on 40
patent families.
2007 Development Milestones
At the end of last year we set out a number of definable milestones to mark our
progression to commercialised products based around our core HTS intellectual
property. For clarity these are set out again below:
1) Induction Heater: Construction and Test of an HTS Induction Heater leading
to a launch product sale in Q3 2007;
2) Fault Current Limiter: Construction of a Distribution Voltage HTS Fault
Current Limiter to be delivered and tested with a major national utility by Q4
2007; and
3) 2G HTS wire: A 10m `all-chemical' 2G HTS wire delivered by Q4 2007.
I am delighted to report that as announced in May 2007 our research and
development team completed the construction and successful testing of the
Group's ground breaking HTS induction heater ahead of its anticipated Q3
schedule.
I look forward to reporting on delivery of our two remaining technical
milestones in the coming months.
Fund Raising
Following an institutional road show of the Group, 4,285,746 new ordinary
shares of 1p each in the Group (`Placing Shares') were placed by Ambrian
Partners with a number of institutional investors on 3 May 2007 at a price of
140p per Placing Share, raising a total of £6,000,000 for the Group.
The Group will use the proceeds for general working capital purposes, including
the acceleration of its ongoing research and development activities. In
particular, the proceeds are being used in the groundbreaking work that the
Group is conducting with Converteam to bring to market a range of highly
efficient, lightweight and compact wind generators for the offshore wind
market.
AIM Rule 26 Compliant Website
Zenergy confirms that the information required by Rule 26 of the AIM Rules for
Companies (February 2007) is available under the heading "Rule 26" on the
Group's website which is www.zenergypower.com.
Change of Adviser Name
Following its change of name from Teather & Greenwood Limited to Landsbanki
Securities (UK) Limited with effect from 9 August 2007, the name of the Group's
nominated adviser and joint broker has changed to Landsbanki Securities (UK)
Limited.
Appreciation
The Period has been one of significant achievement for the Group which would
not have been possible without the complete dedication and commitment of all of
our employees. On behalf of the Board of Directors, I thank them sincerely for
their extraordinary and continued efforts. I would also like to thank our
shareholders for their continued support.
I look forward to reporting on the Group fulfilling its objectives in the
second half of the year.
Michael Fitzgerald
Chairman
13 August 2007
Further information:
Dr. Jens Müller Zenergy Power Plc + 49 22 26 90 60 200
Chief Executive Officer
Tom Hulme Landsbanki Securities +44 207 426 9000
(UK) Limited
Andrew Tan Hansard Group + 44 207 245 1100
www.hansardgroup.co.uk
-Ends-
About Zenergy Group plc
Zenergy Power plc is a global specialist manufacturer and developer of
commercial applications for superconductive materials. Comprising three
operating subsidiaries located in Germany (Trithor), USA (SC Power Systems) and
Australia (Australian Superconductors), Zenergy is developing a number of
energy efficient applications to be adopted in renewable energy power
generation, energy distribution and large scale, energy intensive industrial
processes.
About superconductivity
Superconductive materials are capable of conducting electricity without any
resistance and were first discovered in 1911 in what was to prove to be one of
the most significant scientific breakthroughs of the 20th century.
The global HTS market is substantial and growing, with a number of market
studies projecting multi-billion dollar markets for the application of HTS
materials and products. The proliferation of the use of superconductor
materials is largely being driven by the following key factors:
(a) HTS materials are highly complementary to energy efficient technologies as
a substitute for copper
(b) HTS wires have power densities of over 100x that of copper
(c) Current developments are leading to substantially reduced costs in the
production of HTS wires and are targeting to be cheaper than copper over the
next few years.
(d) HTS applications deliver exceptional energy efficiencies and thus reduced
power consumption and running costs
(e) HTS technology is set to play a significant role in reducing CO2 emissions
in line with international targets
(f) HTS applications are capable of delivering vastly increased levels of power
with increased reliability and reduced material usage
Consolidated income statement
For the six months ended 30 June 2007
Note Unaudited 6 Unaudited 6 Audited non
months to months to statutory
30 June 30 June reporting
2007 2006 period 12
months to 31
December
2006
€000 €000 €000
Revenue 3 94 103 119
Cost of sales (67) (93) (107)
Gross profit 27 10 12
Other operating income 206 142 667
Distribution expenses (179) (210) (471)
Administrative expenses:
- Equity settled (230) (73) (542)
share-based payment
expenses
- Other admin expenses (1,190) (361) (1,511)
Administrative expenses (1,420) (434) (2,053)
Research & development (632) (774) (2,219)
expenses
Operating loss (1,998) (1,266) (4,064)
Net financial income 4 141 2 8
Loss before tax (1,857) (1,264) (4,056)
Taxation 13 2 12
Loss for the period 3 (1,844) (1,262) (4,044)
attributable to equity
holders of the Parent
Earnings per share
(Euros)
Basic and fully diluted 5 (0.05) (0.14) (0.21)
loss per share
Consolidated statement of recognised income and expense
For the six months ended 30 June 2007
Note Unaudited Unaudited Audited
6 months 6 months
to 30 June to 30 June non
2007 2006 statutory
reporting
period 12
months to
31 December
2006
€000 €000 €000
Foreign exchange translation 8 (40) 14 (47)
differences
Net income recognised directly in (40) 14 (47)
equity
Loss for the period (1,844) (1,262) (4,044)
Total recognised income and expense (1,884) (1,248) (4,091)
Total recognised income and expense (1,884) (1,248) (4,091)
for the period attributable to the
equity holders of the parent
Consolidated balance sheet
Note Unaudited Unaudited Audited At
30 June 30 June 31
2007 2006 December
2006
€000 €000 €000
Non-current assets
Property, plant and equipment 6 1,484 1,155 1,155
Goodwill 7 1,391 1,450 1,415
Other intangible assets 7 2,997 2,151 2,122
5,872 4,756 4,692
Current assets
Inventories 339 76 123
Trade and other receivables 786 1,070 532
Cash and cash equivalents 7,488 1,997 2,722
8,613 3,143 3,377
Total assets 14,485 7,899 8,069
Current liabilities
Trade and other payables (844) (1,330) (1,168)
Non current liabilities
Deferred tax liabilities (718) (786) (750)
Total liabilities (1,562) (2,116) (1,918)
Net assets 12,923 5,783 6,151
Equity attributable to equity
holders of the parent
Share capital 8 595 1 532
Share premium 8 18,409 1,770 10,046
Translation reserve 8 (87) 14 (47)
Warrant reserve 8 200 - 200
Capital and other reserves 8 - 6,065 -
Retained earnings 8 (6,194) (2,067) (4,580)
Total equity attributable to 12,923 5,783 6,151
shareholders
Consolidated cash flow statement
For the six months ended 30 June 2007
Note Unaudited Unaudited Audited non
6 months 6 months statutory
to 30 June to 30 June reporting
2007 2006 period 12
months to
31 December
2006
€000 €000 €000
Cash flows from operating
activities
Loss for the period (1,844) (1,262) (4,044)
Adjustments for:
Depreciation, amortisation and 6,7 272 94 334
impairment
Foreign exchange gains/ (losses) 12 (1) (4)
Financial income (141) (2) (47)
Financial expense - - 39
Equity settled share-based 230 73 542
payment expenses
Taxation (13) (2) (12)
Cash flows from operations before (1,484) (1,100) (3,192)
changes in working capital and
provisions
(Increase)/decrease in trade and (237) 106 (98)
other receivables
(Increase)/decrease in stock (216) (4) (51)
Increase in trade and other (322) 578 869
payables
Cash absorbed by operations (2,259) (420) (2,472)
Tax paid - - (1)
Net cash outflow from operating (2,259) (420) (2,473)
activities
Cash flows from investing
activities
Interest received 53 2 47
Acquisition of subsidiary, net of 2 - (501) (501)
cash acquired
Acquisition of a business - - -
Acquisition of property, plant 6 (542) (306) (585)
and equipment
Development expenditure 7 (984) (43) (118)
capitalised and other intangible
assets acquired
Net cash outflow from investing (1,473) (848) (1,157)
activities
Cash flows from financing
activities
Interest paid - - (14)
Proceeds from the issue of share 8 8,426 - -
capital
Proceeds from the issue of loan - 2,790 7,200
notes
Listing expenses - - (858)
Proceeds from new loan - - -
Repayment of borrowings - - (448)
Net cash inflows from financing 8,426 2,790 5,880
activities
Net increase in cash and cash 4,694 1,522 2,250
equivalents
Cash and cash equivalents at 2,722 475 475
start of period
Effect of exchange rate 72 - (3)
fluctuations on cash held
Cash and cash equivalents at end 7,488 1,997 2,722
of period
Notes
1. Basis of preparation
The condensed consolidated interim financial statements for the six months
ended 30 June 2007 have been prepared under applicable International Financial
Reporting Standards adopted by the European Union (`IFRS`), which include
International Accounting Standards (`IAS`) and interpretations issued by the
International Accounting Standards Board (`IASB`) and its committees, which are
expected to be endorsed by the European Union.
The financial information included in this document is unaudited and does not
comprise statutory accounts within the meaning of section 240 of the Companies
Act 1985. The comparative figures for the year ended 31 December 2006 are
extracted from the statutory financial statements for that financial period
which have been filed with the Registrar of Companies and on which the auditor
gave an unqualified report, without any statement under section 237(2) or (3)
of the Companies Act 1985.
The interim financial statements have been prepared under the same accounting
policies as those used for the financial statements for the period ended 31
December 2006.
2. Acquisitions of subsidiaries and businesses
Acquisition of subsidiaries
On 1 June 2006 Zenergy Power plc (`Zenergy Power') acquired SC Power Systems,
Inc. (`SC Power').
SC Power was formed in 2004 to acquire the underlying business known as
Australian Superconductors from Metal Manufacturers Limited. SC Power was owned
by Jane Capital Partners, LLC (32,500 shares), Metal Manufacturers Limited
(32,500 shares) and Woody Gibson (10,000 shares). On 7 December 2005 Metal
Manufacturer's shares were repurchased by SC Power and held in treasury stock.
The repurchase was funded by a loan from Cloverleaf Holdings Limited
(`Cloverleaf') of $560,000.
Zenergy Power acquired 42,500 shares in SC Power in exchange for 28,111
Ordinary Shares credited as paid up to €63 per share. The remaining 32,500
shares in SC Power are held in treasury by SC Power. SC Power is effectively a
wholly owned subsidiary of Zenergy Power. SC Power has a wholly owned
subsidiary Australian Superconductors Pty Limited (`Australian
Superconductors').
23,867 of the Ordinary Shares issued were allotted to the former shareholders
of SC Power. The remaining 4,244 were allotted to Cloverleaf. These shares were
allotted in recognition of the increase in value of SC Power since the date of
the original loan provided by Cloverleaf Holdings Limited.
In a separate private transaction, Cloverleaf allotted the 4,244 shares by way
of a call option to certain key management in Trithor GmbH.
Effect of acquisitions
The acquisitions had the following effect on the Group's assets and
liabilities.
Acquiree's Fair value Acquisition
book values amounts
adjustments
€000 €000 €000
Acquiree's net assets at the acquisition
date:
Property, plant and equipment 183 - 183
Patents and Trademarks - 818 818
Development rights - 1,247 1,247
Trade and other receivables 11 - 11
Cash and cash equivalents 286 - 286
Trade and other payables (13) - (13)
Deferred tax liability - (785) (785)
Net identifiable assets and liabilities 467 1,280 1,747
Goodwill on acquisition 1,276
Total consideration 3,023
Consideration paid in shares 2,236
Consideration satisfied in cash 787
(Including legal fees of €61,000)
Cash (acquired) (286)
Net cash outflow 501
Consideration paid in shares includes: 28,111 shares credited as paid up to €63
per share, €1,771,000 and €465,000 Series B loan notes issued in consideration
for the loan provided by Cloverleaf to enable SC Power to repurchase its own
shares (See Note 8).
Goodwill has arisen on the acquisition because the employees transferred were
considered to be valuable to the Group for development of future intellectual
property and customer relationships.
A deferred tax liability at the US effective tax rate of 38% has been
recognised in respect of the intangible assets, as the tax base of these assets
is nil.
3. Segmental reporting
Geographic segments
For management purposes, the Group is currently organised into four
geographical regions based on the location of the Group's assets - Germany,
USA, Australia and UK. These geographical regions are the basis on which the
Group reports its primary segment information.
Business segment
The Group has one business segment, being the development and production of
high temperature superconducting wires, components and applications.
Six months to 30 June Germany USA Australia UK Eliminations Consolidated
2007
€000 €000 €000 €000 €000 €000
Revenue
Total revenue 180 - - - (86) 94
Result
Segment result being (745) (674) (189) (353) (37) (1,998)
loss from operations
Financial income - 1 1 140 (1) 141
Loss before tax (745) (673) (188) (213) (38) (1,857)
Tax - - - - 13 13
Loss for the period (745) (673) (188) (213) (25) (1,844)
Other information
Capital additions 798 592 119 17 - 1,526
Depreciation and (161) (98) (13) - - (272)
amortisation
Balance sheet
Segment assets 2,208 926 310 19,076 (8,035) 14,485
Segment liabilities (420) (1,998) (633) (213) 1,702 (1,562)
Net assets/(liabilities) 1,788 (1,072) (323) 18,863 (6,333) 12,923
6 months to June 2006 Germany USA Australia UK Eliminations Consolidated
€000 €000 €000 €000 €000 €000
Revenue
Total revenue 103 - - - - 103
Result
Segment result being loss (1,050) (168) (42) 150 (156) (1,266)
from operations
Financial income 2 - - - - 2
Loss before tax (1,048) (168) (42) 150 (156) (1,264)
Tax - - - - 2 2
Loss for the period (1,048) (168) (42) 150 (154) (1,262)
Other information
Capital additions 331 18 - - - 349
Depreciation and (78) (14) (2) - - (94)
amortisation
Balance sheet
Segment assets 2,175 260 121 8,916 (3,573) 7,899
Segment liabilities (319) (45) (2) (964) (786) (2,116)
Net assets/(liabilities) 1,856 215 119 7,952 (4,359) 5,783
4. Finance income and expense
6 months to 30 6 months to non statutory
June 2007 30 June 2006 reporting
period 12
months to 31
December 2006
€000 €000 €000
Financial income
Interest income - bank 74 2 46
Interest reversal - ATQ - - 1
Holdings Limited
Net foreign exchange gain 67 - -
Financial income 141 2 47
Financial expense
Interest expense - ATQ Holdings - - -
Limited
Net foreign exchange loss - - (25)
Other interest expense - - (14)
Financial expense - - (39)
Net financial income 141 2 8
5. Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the six months ended 30 June
2007 was based on the loss attributable to ordinary shareholders of €1,844,000
(Six months ended 30 June 2006: €1,262,000) and a weighted average number of
Ordinary Shares outstanding during the period of 37,535,000 (Six months ended
30 June 2006: 9,044,000) calculated as follows:
Thousand of shares 6 months to 6months to Non statutory
30 June 2007 30 June 2006 reporting
period 12
months to 31
December 2006
Issued ordinary shares at start 36,091 41 41
of period
Shares issued in respect of the - 4 16
acquisition of SCP
Effect of the 199:1 bonus issue - 8,999 11,351
on 7 August 2006
Effect of Series A loan notes - - 3,616
Effect of Series B loan notes - - 534
Effect of Series C loan notes - - 2,893
Effect of Series D loan notes - - 1,042
New placing 1,444 - -
Weighted average number of 37,535 9,044 19,493
ordinary shares
Diluted earnings per share
Share options and warrants have not been included in the calculation of fully
diluted earnings per share since these are anti-dilutive. 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:
Thousand of shares 30 June 30 June 2006 31 December
2007 2006
Warrants in respect of the working capital 160 - 160
facility from Cloverleaf Holdings Limited
(issued 16 August 2006)
Share options (issued on various dates 1,220 400 1,320
from 1 March 2006 to 27 September 2006)
Total potential dilutive instruments 1,380 400 1,480
100,000 share options have lapsed in the period 1 January 2007 to 30 June 2007.
6. Property, plant and equipment
Technical Office Assets under Total
plant and and construction
equipment business
equipment
€000 €000 €000 €000
Cost
1 January 2006 729 66 39 834
Acquisitions through business 126 56 - 182
combinations
Other acquisitions - internally - - 47 47
developed
Other acquisitions - externally 189 70 - 259
purchased
Balance at 30 June 2006 1,044 192 86 1,322
1 January 2007 1,186 259 65 1,510
Other acquisitions - internally 98 14 82 194
developed
Other acquisitions - externally 186 25 137 348
purchased
Effect of movements in foreign (5) 2 - (3)
exchange
Balance at 30 June 2007 1,465 300 284 2,049
Depreciation and impairment
Balance at 1 January 2006 (57) (27) - (84)
Depreciation charge for the (51) (32) - (83)
period
Balance at 30 June 2006 (108) (59) - (167)
Balance at 1 January 2007 (279) (76) - (355)
Depreciation charge for the (164) (48) - (212)
period
Effect of movements in foreign 2 - - 2
exchange
Balance at 30 June 2007 (441) (124) - (565)
Net book value
At 30 June 2006 936 133 86 1,155
At 30 June 2007 1,024 176 284 1,484
No assets are held under finance leases.
7. Intangible assets
Goodwill Patents Development Total
and rights
Trademarks
€000 €000 €000 €000
Cost
1 January 2006 170 30 16 216
Acquisitions through business 1,276 818 1,247 3,341
combinations
Other acquisitions - internally - - 43 43
developed
Effect of movements in foreign 4 4 5 13
exchange
Balance at 30 June 2006 1,450 852 1,311 3,613
1 January 2007 1,415 855 1,317 3,587
Other acquisitions - internally - - 916 916
developed
Other acquisitions - externally - 68 - 68
purchased
Effect of movements in foreign (24) (20) (31) (75)
exchange
Balance at 30 June 2007 1,391 903 2,202 4,496
Amortisation and impairment
Balance at 1 January 2006 - - (1) (1)
Amortisation charge for the - (8) (3) (11)
period
Effect of movements in foreign - - - -
exchange
Balance at 30 June 2006 - (8) (4) (12)
Balance at 1 January 2007 - (46) (4) (50)
Amortisation charge for the - (40) (20) (60)
period
Effect of movements in foreign - 2 - 2
exchange
Balance at 30 June 2007 - (84) (24) (108)
Net book value
At 30 June 2006 1,450 844 1,307 3,601
At 30 June 2007 1,391 819 2,178 4,388
Amortisation and impairment charge
The amortisation and impairment charge is recognised in other admin expenses.
Patents and Trademarks are amortised over a 15 year period. Development rights
are amortised over a five year period, commencing when the product under
development is available for sale.
Goodwill
Goodwill is allocated as follows: Trithor €170,000, SC Power €1,135,000 and
Australian Superconductors €86,000, the entities are considered to be the
smallest cash generating unit to which goodwill can be allocated. Goodwill is
tested annually for impairment. Goodwill is denominated in the currency of the
acquired entity.
Government grants
€344,000 of Government grants receivable have been netted against the
internally developed intangibles acquired in the six months to 30 June 2007 (6
months to June 2006: €28,000).
8. Capital and reserves
Reconciliation of movement in capital and reserves
Share Share Translation Capital Retained Total
reserve and equity
capital premium other earnings
reserves
€000 €000 €000 €000 €000 €000
Balance at 1 January 2006 1 - - 2,000 (878) 1,123
Total recognised income - - 14 - (1,262) (1,248)
and expense
Series B loan notes - - - 465 - 465
Equity-settled share based - - - - 73 73
payment transactions
Series C loan notes - - - 3,600 - 3,600
Paid in share capital
- Acquisition of - 1,770 - - - 1,770
subsidiary
Balance at 30 June 2006 1 1,770 14 6,065 (2,067) 5,783
Share Share Translation Warrant Retained Total
reserve reserve equity
capital premium earnings
€000 €000 €000 €000 €000 €000
Balance at 1 January 2007 532 10,046 (47) 200 (4,580) 6,151
Total recognised income - - (40) - (1,844) (1,884)
and expense
Equity-settled share based - - - - 230 230
payment transactions
Paid in share capital
- Placing 63 8,363 - - - 8,426
Balance at 30 June 2007 595 18,409 (87) 200 (6,194) 12,923
The aggregated current and deferred tax relating to items that are charged or
credited to equity is €Nil.
Share capital
30 June 2007 30 June 2006 31 December
2006
Ordinary shares in thousands of
shares
On issue at start of period 36,091 41 -
Issued for cash 4,285 - 41
Issued for acquisition of - 24 28
subsidiary
Bonus issue - - 13,666
Series B loan notes - - 1,476
Issued for cash (Series A, C and - - 20,880
D loan notes)
On issue - fully paid 40,376 65 36,091
30 June 30 June 30 June 30 June 31 31
December December
2007 2007 2006 2006
2006 2006
£000 €000 £000 €000 £000 €000
Authorised
Ordinary shares of £ 1,000 1,484 10 15 1,000 1,484
0.01 each
Allotted, called up
and fully paid
Ordinary shares of £ 404 599 1 1 361 532
0.01 each
Shares classified in 599 1 532
equity
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Group.
On 1 June 2006, the Group allotted 23,867 Ordinary Shares in the Group,
credited as paid up to €63 per share to the former shareholders of SC Power.
On 1 June 2006, the Group allotted 4,244 fully paid up Ordinary Shares in the
Group credited as paid up to €63 per share to Cloverleaf. These shares were
issued in recognition of the appreciation of the value of SC Power and were
issued to Cloverleaf as they had funded the repurchase of 32,500 shares from
Metal Manufacturers on 7 December 2005. As the acquisition of SC Power had been
contemplated and planned at the date of the original loan, the shares were
allotted to Cloverleaf rather than the former shareholders of SC Power.
On the same date Cloverleaf allotted these shares to certain management in
Trithor, in a private transaction by way of a call option exercisable by each
individual option holder at an aggregate exercise price of €1 per option holder
for a period of 10 years.
On 7 August 2006, the authorised share capital of the Group was increased from
£10,000 to £1,000,000 by the creation of 99 million new Ordinary Shares. On the
same date, by way of a capitalisation of part of the Group's accrued share
premium account, the Group issued 13,665,728 Ordinary Shares through a bonus
issue of new Ordinary Shares at par, pro-rata to its existing Shareholders on
the basis of 199 new Ordinary Shares for each existing Ordinary Share held on
the record at the date of issue.
On 30 May 2006, pursuant to the Series A Loan Note Instrument, the Group issued
€2,000,000 of Series A convertible loan notes to ATQ Holdings Limited which
were subsequently transferred to Cloverleaf Holdings Limited and the other
underlying shareholders of ATQ Holdings Limited. These loan notes automatically
converted to Ordinary Shares on Admission at a conversion price of €0.20 per
share (which price was automatically adjusted from the original conversion
price of €40 per share following completion of the 199:1 bonus issue). These
loan notes were treated as a capital contribution in the 2005 Accountant's
report included in the Admission document as the loan note holder had
irrevocably committed to convert this debt to loan notes prior to the period
end, the cash for which had been advanced prior to the period end.
On 1 June 2006, pursuant to the Series B Loan Note Instrument, the Group issued
€465,000 of Series B convertible loan notes to Cloverleaf Holdings Limited.
These loan notes automatically converted into Ordinary Shares on Admission at a
conversion price of €0.315 per Ordinary Share (which price was automatically
adjusted from the original conversion price of €63 per Ordinary Share following
completion of the 199:1 bonus issue).
On 1 June 2006, pursuant to the Series C Loan Note Instrument, the Group issued
€3,600,000 of Series C convertible loan notes to various investors. These loan
notes automatically converted into Ordinary Shares on Admission at a conversion
price of €0.45 per Ordinary Share (which price was automatically adjusted from
the original conversion price of €90 per Ordinary Share following completion of
the 199:1 bonus issue).On 4 August 2006, pursuant to the Series D Loan Note
Instrument, the Group issued €3,600,000 of Series D convertible loan notes
pro-rata to the investors in the Series C Loan Notes. These loan notes
automatically converted into Ordinary Shares on Admission at a conversion price
of €1.25 per Ordinary Share (which price was automatically adjusted from the
original conversion price of €250 per Ordinary Share following completion of
the 199:1 bonus issue).
On 3 May 2007, 4,285,746 new Ordinary Shares were issued at £1.40 per share
raising £6,000,000 (£5,750,000 net of fees and directly attributable expenses,
equivalent to €8,426,000).
Translation reserve
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of foreign operations.
Warrant reserve
The warrant reserve comprises the fair value of the equity component of
warrants issued by the Group.
Wednesday, 18th December 2024
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