Annual Financial Report

RNS Number : 0480T

Opera Investments plc

23 March 2016

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITHIN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

FOR IMMEDIATE RELEASE - 23 March 2016

Opera Investments plc (the "Company")

Announcement of Results

Period from incorporation to 31 December 2015

Opera Investments plc ("Opera" or the "Company") is pleased to announce its preliminary results for the period from incorporation on 11 November 2014 to 31 December 2015.

Key Highlights:

·      Successful listing on the London Stock Exchange via a Standard Listing (the "Listing") in order to undertake one or more acquisitions of target companies in the natural resources sector

·      £1.2million (gross of expenses) raised at the time of the Listing from institutional investors

·      On 20 July 2015, announced that it had reached heads of terms agreement Hudson Clean Energy Partners ("Hudson") to acquire all of the issued share capital of SoloPower Systems Holdings, Inc. ("SoloPower") (the "Acquisition")

·      SoloPower is a US headquartered pioneer in flexible and lightweight high-performance solar materials

·      On-going intensive due diligence and corporate finance transaction analysis to complete the Acquisition and raise equity financing to fund the Acquisition, as well as the future investment and working capital requirements of SoloPower

·      Amended heads of agreement entered into with Hudson on 17 March 2016, to allow Hudson the ability to complete a financing of SoloPower without an exclusive requirement to effect the Acquisition at the same time. In the amended the heads of agreement with Hudson, the Directors have agreed that if the period until 15 May 2016 it is agreed to effect a listing of SoloPower, that such a listing will take place on an exclusive basis with Opera

Enquiries:

Opera Investments plc, Paul Dudley, Tel: [phone]

Buchanan (PR), Ben Romney/Bobby Morse, Tel: [phone]

STRATEGIC REPORT

It is with pleasure that I present the annual report to the shareholders of Opera Investments plc (the "Company" or "Opera") for the period from incorporation to 31 December 2015.

Since Opera was incorporated in November 2014, your Company has seen a number of material corporate developments. The Company, having raised seed funds on incorporation, sought a listing on the Main Market of the London Stock Exchange via a Standard Listing on the Official List of the United Kingdom Listing Authority (the "Listing"). This process was a success and the Company's ordinary shares were listed on the London Stock Exchange on 27 April 2015. At the time of the Listing, Opera was successful in raising £1.2 million (gross of listing expenses) at a share price of 10 pence per ordinary share in Opera.

Following the Listing, the Directors of Opera began to execute the business strategy of the Company and commenced the investigation into, and analysis of, a number of potential investment opportunities. Each potential investment was analysed in light of the Company's investment strategy, which is laid out in the Company's prospectus, issued at the time of the Listing.

Potential Acquisition of SoloPower Systems Holdings, Inc

On 20 July 2015, the Company announced that it had reached a heads of terms agreement to acquire all of the issued share capital of SoloPower SoloPower Systems Holdings, Inc. ("SoloPower") (the "Acquisition"). The heads of terms envisaged that the Acquisition would be satisfied by the issuance of new ordinary shares of £0.01 each in Opera ("Opera Shares") to Hudson at a price of 28 pence per Opera Share, valuing the existing issued share capital of Opera at £4.8 million alongside an equity financing raising net proceeds of not less than US$40 million to fund certain future investment and working capital requirements of SoloPower.

The Directors believe that SoloPower represents a significant opportunity for the Company's shareholders as well as meeting Opera's stated investment criteria:

·      has a management team possessing a strong track record;

·      has solid commercial prospects;

·      is exposed to fast developing countries, but within a low sovereign risk environment;

·      offers the potential for near-term financial and development success; and

·      can be adequately funded to be able to deliver on credible milestones and provide a significant growth opportunity for Opera's shareholders.

SoloPower is a US headquartered pioneer in flexible and lightweight high-performance solar materials.  It manufactures solar photovoltaic ("PV") cells and modules from thin-film copper, indium, gallium and selenium materials ("CIGS") on a flexible substrate using a continuous, roll-to-roll manufacturing process. SoloPower is one of the only CIGS technology companies in the world with a fully commercialized high-volume manufacturing facility producing lightweight flexible solar modules.  SoloPower expects to sell its product to commercial, industrial and residential rooftop installations through project developers, utilities and/or intermediate distributors. SoloPower's module product offerings compete favourably against alternative offerings from other thin film manufacturers due to their relatively lower cost of production and relatively higher performance. The product can be sold into established markets, where it achieves a competitive advantage through lower installation costs by eliminating mounting systems, and in new markets where the product's lightweight properties allow it to be installed on roofs that cannot otherwise support the weight of a conventional PV system.

SoloPower is a portfolio company of Hudson Clean Energy Partners ("Hudson"). Hudson is a leading global private equity firm, dedicated solely to investing in renewable power, alternative fuels, energy efficiency and storage. Since July 2015, the Directors have worked continuously to seek to complete the Acquisition for the benefit of Opera's shareholders as quickly as possible.

Over the course of the past few months, a period of considerable global market volatility, Hudson, SoloPower, Opera and its financial advisers have engaged with a wide range of investors including UK based institutions to gauge their willingness to provide the finance required to complete the equity financing and the Acquisition. There has been considerable interest in SoloPower, its products and its stage of commercial development; however, after a recent preliminary market sounding exercise, the Company was advised that the prevailing market sentiment would likely not support completion of the proposed equity capital raise in light of recent significant market volatility. As a result, in order to increase confidence in a successful equity capital raise, Hudson was asked to provide a substantially elevated level of financial support. Hudson has recently indicated it was unprepared to provide this level of equity finance.

However, Hudson has expressed potential interest in continuing to complete the Acquisition, albeit using a different transaction structure that contemplates the financing of SoloPower with the issue of debt and warrants. Hudson has made it clear to Opera that it intends to complete the capital raise for SoloPower, and points to rapid progress made by SoloPower in both sales and manufacturing operations.

As a result, the Directors have amended the heads of agreement with Hudson to allow Hudson the ability to complete a financing of SoloPower without an exclusive requirement to effect the Acquisition at the same time. In addition however, in the amended the heads of agreement with Hudson, the Directors have agreed that if the period until 15 May 2016 it is agreed to effect a listing of SoloPower, that such a listing will take place on an exclusive basis with Opera on the same terms as set above. If an agreement to list SoloPower does not take place before 15 May 2016, the Acquisition will abort.

The Directors would like to record their appreciation of the support of the Company's shareholders and remain firmly of the belief that it is in the best interests of the Company to continue to seek to complete the Acquisition on the revised basis set out above and work towards the completion of the Acquisition.

The Directors are acutely aware of the need for the effective use of the Company's cash resources in seeking to complete the Acquisition, the length of time the transaction process has taken, and the period the Company's shares have been suspended during the Acquisition process. Furthermore the Directors are also aware that a proportion of the sunk advisers costs would be lost in the event of an abortive transaction.

Transaction Events

Upon entering into the heads of terms with Hudson in July 2015, the Directors immediately set about undertaking the transaction due diligence required to complete the Acquisition. This appointment of the following advisers was required to undertake this work:

·      A Financial Adviser - to advise the Directors on broad transactional matters and regulatory requirements;

·      Legal advisers with respect to English law - to advise on transactional aspects impacting English legal matters;

·      Legal advisers with respect to US law - to undertake transaction due diligence on SoloPower (as the company is US based); and

·      A firm of Reporting Accountants - to undertake financial due diligence and working capital assessments (in both the US and UK) on the enlarged group after the completion of the Acquisition.

Opera announced on 28 October 2015 that the transaction documentation was nearing completion and a stage of marketing was to be commenced. This marketing process involved the introduction of the SoloPower business proposition to a number of UK institutional investment professionals during October and November 2015. The Directors had appointed a global investment bank as its lead financial adviser and broker. Despite encouraging feedback from many of these meetings, it was subsequently apparent that the amount that was capable of being raised from UK institutional investment professionals on the terms being offered to such investors would not enable the completion of the transaction.

Opera announced on 14 December 2015 it would seek to continue the proposed Acquisition and seek additional investors in order to complete the transaction in early 2016. At the same time, the Directors continued to work with Hudson in order to amend the transaction terms to make the investment more attractive to UK institutional investment professionals. The heads of terms concerning the Acquisition were amended and a revised range of valuation of around US$110 million for SoloPower was proposed.  This was a material aspect in the Directors' confidence in continuing the transaction to seek to complete the Acquisition. The 28 pence per Opera Share issue price remained unchanged. In addition, at this time Hudson indicated that they were prepared to invest and contribute at least US$20 million to the increased target of US$48 million required for the Acquisition to complete as a cornerstone investor.

In January 2016 the Directors engaged with a new lead adviser, again a global investment bank active in the renewable energy sector, in order to secure marketing support and raise US$28 million to complete the transaction on such revised terms. The significant work in order to complete the Acquisition had largely been completed.

More recently, the Company's advisers indicated that additional support from Hudson should be sought for the equity financing to enable the completion of the Acquisition. As set out above, given the recent decision of Hudson to seek to financial support for SoloPower via debt finance rather than from the issue of equity as originally intended, the heads of agreement have been amended and extended until 15 May 2016 as set out above in order to secure Opera's involvement on an exclusive basis in the potential listing of SoloPower should this take place.

The Directors look forward to updating shareholders on progress on the Acquisition at the appropriate time in due course.

Transaction Costs

The Directors have been, and continue to be, diligent in the use of the Company's cash resources and have, wherever possible, structured engagement terms with the Company's advisers so that they are weighted to success and therefore minimise cash outflows. However, during the period when extensive due diligence is required in a transaction of this nature, wholly abortive fee arrangements with professional advisers are not possible and therefore the Company has incurred unavoidable costs in order to investigate and subsequently seek to complete the Acquisition.

Given the complex nature of the transaction and the known material fundraising that was required to complete the Acquisition, the Directors sought legally binding confirmation from Hudson, via the heads of terms, on certain conditions concerning the transaction. Since July 2015, total transaction costs incurred by the Company are approximately £400,000 and in the circumstances, the Company is eligible for the recovery of half of these costs (up to a cap of £200,000) from Hudson. In the amended heads of agreement with Hudson, it has been agreed that the Company will be paid £200,000 from Hudson on 31 March 2016.

Financial Review

In the period from incorporation to 31 December 2015, the Company incurred three sets of expenditure associated with its operations and business strategy:

	11 November 2014 to 31 December 2015 £
Transaction costs associated directly with the Acquisition	348,466
Direct costs of listing and fund raising (taken to share premium account)	161,369
On-going corporate costs	100,225

As a company that does not qualify for VAT registration, Opera incurs VAT as a cost.

As at 31 December 2015, the Company had cash resources of £813,455 and net assets of £642,440.

Paul Dudley

Chairman

23 March 2013
 

Statement of comprehensive income for the period from incorporation to 31 December 2015

	Note	11 November 2014 to 31 December 2015 £
Revenue		-
Administrative costs		(448,691)
Operating Loss	5	(448,691)
Net finance costs		-
Loss before taxation		(448,691)
Taxation	7	-
Loss for the period and total comprehensive loss		(448,691)
Loss for the period and total loss attributable to the owners of the company		(448,691)
Loss per share		£
Basic	6	(0.0358)
Diluted	6	(0.0358)

All of the activities of the Company are classes as continuing

Statement of financial position as at 31 December 2015

Company Number 09306219

	Note	31 December 2015 £
CURRENT ASSETS
Cash		813,455
Total current assets		813,455
LIABILITIES
Trade and other payables	8	(171,015)
Total current liabilities		(171,015)
NET ASSETS		642,440
EQUITY
Capital and reserves attributable to owners of the company
Share capital	9	172,500
Share premium		918,631
Retained earnings		(448,691)
		642,440

Statement of changes in equity for the period from incorporation to 31 December 2015

	Share capital	Share premium	Retained earnings	Total
	£	£	£	£
Transactions with owners
Shares issued	172,500	1,080,000		1,252,500
Share issue costs	-	(161,369)	-	(161,369)
Total transactions with owners	172,500	918,631	-	1,091,131
Comprehensive Loss
Loss for the period	-	-	(448,691)	(448,691)
Total owners' equity at 31 December 2015	172,500	918,631	(448,691)	642,440

Statement of cash flows for the period from incorporation to 31 December 2015

	11 November 2014 to 31 December 2015 £
Cash flows from operating activities
Loss for the period	(448,691)
(Decrease)/Increase in payables	171,015
Net cash used in operating activities	(277,676)
Net cash used in cash flows from investing activities
Interest received	-
Net cash generated from investing activities	-
Cash flow from financing activities
Issue of share capital for cash	1,252,500
Share issue costs	(161,369)
Net cash generated from financing activities	1,091,131
Net increase in cash and cash equivalents
Net cash at start of the period	-
Cash at period end	813,455

Notes to the Financial Statements

For the period from Incorporation to 31 December 2015

1.   General information

Opera Investments Plc is a company incorporated in the United Kingdom and was incorporated on 11 November 2014 as a public limited company. The company does not have an ultimate controlling party. The Company's ordinary shares are currently admitted to a standard listing on the Official List and to trading on the London Stock Exchange.

The principal activity of the Company is to invest in strategic and/or special situations of unquoted companies or businesses that are seeking a public quotation.

The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 31 December 2015 but is derived from those financial statements.  The financial information is not audited.  The auditors have reported on the statutory accounts for the year ended 31 December 2015, their report was unqualified and did not contain statements under sections 498(2) or (3) of the Companies Act 2006, and these will be delivered to the Registrar of Companies following the Company's annual general meeting.  The financial information has been prepared using the recognition and measurement principles of IFRS as adopted in the European Union.  The preliminary announcement was approved by the board on 23 March 2016.

The Company's registered office is located at 40 Dukes Place, London EC3A 7NH.

2.   Accounting policies

Basis of measurement

The financial statements have been prepared on a historical cost basis. All amounts are shown in sterling, the Company's functional currency.

Cash

The Company's cash solely comprises demand deposits.

Taxation

The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax

Deferred income tax is provided for using the liability method on temporary timing differences at the balance sheet date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised in full for all temporary differences. Deferred income tax assets are recognised for all deductible temporary differences carried forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and carry-forward of unused tax credits and unused losses can be utilised.

The carrying amount of deferred income tax assets is assessed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that is probable that future taxable profits will allow the deferred income tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.

Financial instruments

Financial assets and financial liabilities are recognised on the Company's balance sheet when the Company becomes a contractual party to the instrument.

Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency gains and losses arising from the settlement of such transactions and the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Trade payables

Trade payables are recognised initially at their fair value and subsequently at amortised cost.

Equity

Share capital is determined using the nominal value of shares that have been issued. The share premium account includes any premiums on the initial issuing of share capital. Any transaction costs

associated with the issue of shares are deducted from the share premium account.

Accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions in certain circumstances that affect reported amounts. Based on the Company's current activities and structure, there are no areas which give rise to significant exposure to actual results differing from estimates or assumptions.

New and amended standards

Various new or revised accounting standards have been issued which are not yet effective, including IFRS15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments'. Neither of these have yet been endorsed by the European Union. Our initial assessment is that they are unlikely to have a significant impact on the Company.

3.   Going concern

The company's activities, together with the factors likely to affect its future development and performance, the financial position of the company, its cash flows and liquidity position have been considered by the Directors, taking account of the current market conditions which demonstrate that the company shall continue to operate within its own resources. The Directors have sought to minimise the transaction costs with respect to the Acquisition as set out in the Chairman's Report. In particular, the Directors have sought to ensure that abort fee arrangements are in place and fees incurred by the company in such circumstances relating to the Acquisition are also minimised so as to preserve shareholder's funds, all of which can be met from current liquid resources. In the scenario where the Acquisition is completed, the Directors have considered as part of the transaction that, following the Acquisition, the enlarged group would have sufficient working capital to enable the Acquisition to take place and be a going concern in the foreseeable future.

In the event that the Acquisition does not complete, the Directors believe that the company is well placed to manage its business risks successfully, and that the company has adequate resources to continue in operational existence for the foreseeable future.

In either event, accordingly, the Directors consider it appropriate to adopt the going concern basis in preparing these condensed financial statements.

4.   Staff costs

The average number of employees was 2 over the period and the only staff costs were directors' remuneration of £24,000.

5.   Operating loss

The Company's operating loss includes auditor's remuneration of £20,400 (including VAT).

In addition, during the period, costs of raising capital of £161,369 including £10,200 (including VAT) payable to the Company's auditor were netted off the Company's share premium account.

6.   Loss per share

The calculation of the basic and fully diluted loss per share is based on the loss for the period after tax of £448,691 divided by the weighted average issued ordinary shares in the period of 12,537,805.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has no dilutive instruments in existence.

7.   Income Tax Expense

(a)  Analysis of charge in the period

Current Tax	£
UK corporation tax based on the results for the year at 21%	-
Total current tax	-

(b)  Factors affecting the tax charge for the period

The tax assessed for the period does not reflect a credit equivalent to the loss before tax multiplied by the standard rate of corporation tax of 21%.

	£
(Loss) before tax	(448,691)
(Loss) before tax multiplied by the standard rate of corporation tax	(94,225)
Expenses disallowed for tax purposes	(73,178)
Tax losses carried forwards	(21,047)
Total current tax for the period	-
Total (losses) carried forward against future profits	(100,225)

No deferred income tax asset has been recognised in respect of the losses carried forward, due to the uncertainty as to whether the Company will generate sufficient future profits in the foreseeable future to prudently justify this.

8.   Trade and other Payables

	£
Accrued expenses	171,015

9.   Issued share capital

Authorised, allotted and called up share capital: 

	£
On 11 November 2014, 5,250,000 ordinary shares of £0.01 each issued at par	52,500
On 22 April 2015, 12,000,000 ordinary shares of £0.01 issued at £0.10 per share	120,000
As at 31 December 2015, 17,250,000 ordinary shares of £0.01 each in issue	172,500

5,250,000 Ordinary shares of £0.01 each were issued on incorporation for aggregate consideration of £52,500. A further 12,000,000 Ordinary shares of £0.01 each were issued on the Company's listing on the Main Market of the London Stock Exchange for aggregate consideration of £1,200,000. Associated costs totalled £161,368 were taken against share premium account.

10.  Financial Instruments

There were no financial instruments not recognised in the statements of financial position of the Company. Financial assets and liabilities were held as follows:

	£
Assets
Cash	813,455
Total Financial Assets	813,455
Liabilities
Accrued expenses	171,015
Total financial liabilities	171,015

The Directors consider that the carrying value of the financial assets and liabilities approximates their fair value.

Financial risk management objectives and policies

The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and cash flow interest-rate risk. These risks are limited by the Company's financial management policies and practices described below:

(a) Credit risk

As the Company had no revenue during the period, there is no significant concentration of credit risk. The Company does not currently have written credit risk management policies or guidelines.

The Company's cash is held in a reputable bank. The carrying amount of these financial assets represent the maximum credit exposure.

(b) Liquidity risks

The Company currently has no operational revenue streams. Operational cash flow represents the ongoing administrative costs. The group manages its liquidity requirements by the use of long and short term cash flow forecasts. The Company's policy is to ensure facilities are available as required and to issue share capital in accordance with long and short term cash flow forecasts. As at 31 December 2015, the Company has no undrawn facilities. The Company actively manages its working finance to ensure it has sufficient funds for operations and planned expansion. The Company's financial liabilities are primarily accruals. All amounts are due for payment in accordance with agreed

settlement terms.

(c) Cash flow and fair value interest rate risks

The Company has no interest-bearing liabilities. Interest rates on bank deposits are based on the relevant national inter-bank offered rates. The Company has no fixed interest rate assets.

The main financial risks for the Company are given on page 6 in the Strategic Report.

At 31 December 2015, the currency and interest rate profile of the financial assets and liabilities of the Company was as follows:

	£
GBP cash	813,455

(d) Capital risk management

The Company defines capital as the total equity of the Company. The Company manages its capital to ensure that it will be able to continue as a going concern, while maximising the return to shareholders through the optimisation of debt and equity balances. The Company manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust its capital structure, the Company may adjust the amount of dividends to shareholders, issue new shares or return capital to shareholders, and raise debt or sell assets to reduce debt.

11.  Related parties

As set out in the Company's prospectus dated 22 April 2015, HD Capital Partners Ltd was entitled to receive broking commission at a rate of 5% on certain new funds raised in the Listing, which were taken against the company's share premium account, totalling £60,000. HD Capital reimbursed £26,000 of this commission to other stock broking firms in return for assistance with raising these funds.

In addition, HD Capital Partners Ltd entered into a Corporate Advisor Mandate with the Company on the Listing for the provision of certain corporate services to the Company at a rate of £2,000 per month (plus VAT).

Mr Paul Dudley, Chairman of Opera Investments plc is also a director of HD Capital Partners Ltd.

No directors' expenses were due at year end. In the period, Paul Dudley incurred costs on behalf of the Company of £17,559 directly associated with due diligence for the Acquisition which were repaid by the Company. In the period, Myles Campion incurred costs on behalf of the Company of £5,924 directly associated with due diligence for the Acquisition which were repaid by the Company.

12.  Events after the reporting date

The Company has continued to seek to complete the Acquisition of SoloPower. On 14 January 2016 it terminated the engagement of Investec plc as its Financial Adviser and engaged Cantor Fitzgerald Europe as its Financial Adviser.

On 17 March 2016, the heads of agreement with Hudson were amended to allow Hudson the ability to complete a financing of SoloPower without an exclusive requirement to effect the Acquisition at the same time. In the amended the heads of agreement with Hudson, the Directors have agreed that if the period until 15 May 2016 it is agreed to effect a listing of SoloPower, that such a listing will take place on an exclusive basis with Opera on the same terms as previously agreed.

 

END

 

 

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