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Environmental Recyc (ENRT)

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Wednesday 30 September, 2015

Environmental Recyc

Interim Results

RNS Number : 6980A
Environmental Recycling Tech. PLC
30 September 2015
 



For Immediate Release:

 

Environmental Recycling Technologies plc

 

Interim Results for the six months ended 30 June 2015

 

 

 

Environmental Recycling Technologies plc ("ERT", "the Company") (AIM: ENRT), the patent rights holder to the Powder Impression Moulding ("PIM") process, which converts mixed waste plastics into commercially viable products, announces its unaudited interim results for the six months ended 30 June 2015.

 

Highlights

 

·      Non-exclusive PIM licence signed for the sale and production of flat sheet in Colorado Denver; commissioning of the facility is due in Q4 2015

·      Heads of Terms signed with Mettalis Recycling Limited for an exclusive PIM licence for the sale and production of flat sheet in the UK

·      Commercial agreement signed with CDS Group for the manufacture and distribution of equipment for production of PIM products

·      First order of AXPLAS® for our North American licensee

·      Short term funding facility of £500,000 organised to cover the Company's overheads

 

Lee Clayton - Managing Director comments:

 

"Environmental Recycling Technologies PLC is now benefiting from its strategic partnerships, which have resulted in the securing of key licence agreements. With our commercial partners in place we can focus on expanding the market for our Powder Impression moulding (PIM) process for converting  mixed waste plastics into commercially viable products."

 

 

For further information:

 

Environmental Recycling Technologies plc


Ken Brooks (Chairman)


Lee Clayton (Managing Director)   

01993 779 468



W H Ireland




John Wakefield

0117 945 3470



Kreab

Robert Speed

020 7074 1800

 

 

 

 

                 

 



Half-Yearly Review

 

Results

 

Revenue for the six months ended 30 June 2015 was £36,000 (H1, 2014 £31,000).  The loss on operations was £0.62 million (H1, 2014 loss £0.59 million).  Losses attributable to equity shareholders were £1.11 million (H1, 2014 loss £1.60 million).

 

Turnover included revenue from royalties.

 

Administrative expenses, excluding depreciation and amortisation, incurred in the day to day running of the business, were £0.52 million (H1, 2014 £0.49 million).

 

Review of business

 

The Company continues proactively to market its PIM technology globally, with new and exciting opportunities presenting themselves as a result of recent changes in legislation and increased recycling targets required by the EU under the waste directives.

 

Your board is confident that ERT, through the wider commercialisation of its PIM process has the opportunity to capitalise on these initiatives. Through our recent collaborations, ERT now has the resources to offer turn-key solutions to licensees in the manufacturing and recycling sector.

 

Whilst the board of ERT has decided not to proceed with the previously announced intended acquisition, it confirms negotiations have commenced with the vendors of  another business with a view to achieving  a similar strategic objective of acquiring a company in a complementary sector.

 

Dividends and loss per share

 

As at 30 June 2015, as reported in the statement of financial position, the Company does not have distributable reserves and is unable to declare a dividend.

 

The loss per share was 0.13 pence (H1, 2014 0.18 pence).

 

 

Short term funding

 

The Company meets its day to day cost base by managing its cash resources and securing appropriate levels of finance to settle its liabilities as they fall due.  Additional cash loans during the period were £711,000.

 

The directors have received written assurance from Oxford Capital, the lenders, that there is no intention to request immediate repayment of the liabilities and that subject to agreement on conversion terms, the lender would accept repayment by way of a debt for equity swap.

 

Short term funding facilities of £500,000 have been arranged since the half year-end to cover the Company's normal overheads for the rest of the year.  The board continues to look for a longer term solution from which to develop the Company's proprietary recycling technology.

 

 

 

Ken Brooks

Chairman

 



 

 

Interim Accounts for the Six Months ended 30 June 2015 (unaudited)

 

The financial information contained within these accounts has been prepared by the Directors who accept responsibility for the interim results presented below and confirm that it has been properly presented in accordance with applicable law. The interim results were approved by the Board of Directors on 29 September 2015 and have been prepared on the basis of the accounting policies set out in note 1. The interim results covers the six months ended 30 June 2015.

 

Statement of Comprehensive Income (unaudited)

                                                                                                                                                                                            



 

30 June

2015

 

30 June

2014

 

31 December

2014

 



£'000

£'000

£'000

Continuing operations

Note

Unaudited

Unaudited

Audited






Revenue


36

31

37






Administrative expenses


(653)

(616)

(1.139)






Loss on operations


(617)

(585)

(1,102)






Finance costs

2

(494)

(1,019)

(2,160)






Loss before income tax


(1,111)

(1,604)

(3,262)






Tax on loss on ordinary activities


-

7

44






Loss and total comprehensive loss for the period from continuing





operations attributable to the equity shareholders of the company


(1,111)

(1,597)

(3,218)






Loss per share (pence)   










Basic and diluted loss per share

3

(0.13p)

(0.18p)

(0.37p)



Statement of Financial Position (unaudited)

 




 

30 June

2015

 

30 June

2014

 

31 December

2014




£'000

£'000

£'000

Assets


Note

Unaudited

Unaudited

Audited

Non-Current Assets





Intangible assets


1,388

1,632

1,510

Plant & equipment


41

58

49

Available-for-sale financial assets


40

40

40






Total non-current assets


1,469

1,730

1,599






Current assets





Trade and other receivables


45

92

81

Cash and cash equivalents


18

38

71






Total current assets


63

130

152






Total assets


1,532

1,860

1,751






Liabilities










Current liabilities





Trade and other payables


353

421

398

Borrowings

4

5,171

2,699

4,434

Total current liabilities


5,525

3,120

4,632






Non-Current liabilities





Borrowings

4

1,841

1,841

1,841

Total Non-Current liabilities


1,841

1,841

1,841






Total liabilities


7,365

4,961

6,473






Net liabilities


(5,833)

(3,101)

(4,722)






Equity attributable to the shareholders of the parent



Share capital

5

19,861

19,861

19,861

Share premium reserve


37,436

37,436

37,436

Warrant reserve


74

87

87

Available-for-sale reserve


(71)

(71)

(71)

Retained earnings


(63,133)

(60,414)

(62,035)






Total equity


(5,833)

(3,101)

(4,722)

 



Statement of Changes in Shareholders' Equity (unaudited)

 

 

Six months ended 30 June 2015

Share

Capital

Share

Premium

Warrant

Reserves

Available

-for-sale   

reserve

Retained

Earnings

Total



£'000

£'000

£'000

£'000

£'000

£'000









Loss and total comprehensive loss for the period


-

-


-

(1,111)

(1,111)

Options lapsed


-

-

(13)

-

13

-









Balance at 1 January 2015


19,861

37,436

87

(71)

(62,035)

(4,722)









Balance at 30 June 2015


19,861

37,436

74

(71)

(63,133)

(5,833)

 

 

 

 

Six months ended 30 June 2014

Share

Capital

Share

Premium

Warrant

Reserves

Available

-for-sale   

reserve

Retained

Earnings

Total



£'000

£'000

£'000

£'000

£'000

£'000

Total comprehensive loss for the period


-

-


-

(1,597)

(1,597)









Balance at 1 January 2014


19,861

37,436

87

(71)

(58,817)

(1,504)









Balance at 30 June 2014


19,861

37,436

87

(71)

(60,414)

(3,101)

 

 

 

 

Year ended 31 December 2014

Share

Capital

Share

Premium

Warrant

Reserves

Available

-for-sale

reserve

Retained

Earnings

Total



£'000

£'000

£'000

£'000

£'000

£'000








Total comprehensive loss for the period

-

-

-

-

(3,218)

(3,218)















Balance at 1 January 2014

19,861

37,436

87

(71)

(58,817)

(1,504)

 

Balance at 31 December 2014

19,861

37,436

87

(71)

(62,035)

(4,722)

 



 

 

Statement of Cash Flows (unaudited)

 

Six months ended 30 June 2015

 



 

30 June

2015

30 June

2014

 

31 December

2014



£'000

£'000

£'000



Unaudited

Unaudited

Audited

Continuing Activities





Loss before tax


(1,111)

(1,604)

(3,262)

Adjusted for:





Amortisation of intangible assets


122

123

245

Depreciation of plant and machinery


8

2

10

Accrued interest cost


194

95

421

Finance charges for short-notice loans


266

840

1,739

Provision for trade receivable loan


-

-

29






Adjusted loss from operations


(521)

(544)

(818)






Decrease in trade and other receivables


36

38

44

(Decrease) in trade and other payables


(87)

 

(108) 

(79)






Cash used by operations


(572)

(614)

(853)






Tax receipt



7

19






Net cash outflow from operations


(572)

(607)

(834)






Cash flows from investing activities





Purchase of plant and machinery


-

(1)

(11)






Net cash used in investing activities


-

(1)

(11)






Cash flows from financing activities





Inception of loans (net of issue costs)


711

560

1,159

Interest paid on loans


(192)

(92)

(421)






Net increase in cash from financing activities


519

468

738






Net increase/(decrease) in cash


(53)

(140)

(107)

Cash and cash equivalents at beginning of period

71

178

178






Cash and cash equivalents at end of period


18

38

71

 



 

Notes to the comprehensive financial statements

 

1. Accounting policies

 

Basis of accounting

 

 

The financial information presented in this Interim Report has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards issued by the International Accounting Standards Board, as adopted by the European Union.  The principal accounting policies adopted in the preparation of the financial information in this Interim Report are unchanged from those used in the company's financial statements for the year ended 31 December 2014 and are consistent with those that the company expects to apply in its financial statements for the year ended 31 December 2015.

 

The financial information for the year ended 31 December 2014 presented in this Interim Report does not constitute the company's statutory accounts for that period but has been derived from them.  The Annual Report and Accounts for the year ended 31 December 2014 were audited and can be obtained from the Registered Office Regent House, 316 Beulah Hill, London, SE19 3HF.  The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 December 2014 was unqualified and drew attention to a matter of emphasis in relation to going concern  and did not contain statements under s498(2) or (3) of the Companies Act 2006.  The financial information for the periods ended 30 June 2015 and 30 June 2014 are unaudited and have not been reviewed by the company's auditors.

 

As at 30 June 2015, the company held 40% of the voting rights of Delta Waste Management Limited, which meets the definition of an associated undertaking. Delta Waste Management Limited has not been accounted for as an associated undertaking on the basis that its results are not material to the company.

 

This report has not been audited and has not been reviewed by independent auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

Going concern

 

The company has reported another operating loss for the half year and has net liabilities of £5.8 million as at the balance sheet date. 

 

The directors have prepared detailed cash flow forecasts for the period ended 30 September 2016.  Based on their current expectations of current and new licence fees the directors have a reasonable expectation that revenue will be generated in line with the forecasts and will be available to provide some level of underpinning to the cash flows of the Company for the period to September 2016. The forecasts also assume that Oxford Capital (the lender) and Mr K W brooks (a director) will not seek cash repayment of any of the £6.85 million of loan funding and £0.162m of loans made available to the company during at least the 12 months from the date of approval of these interim results.  The forecasts indicate that the company should be able to meet its liabilities as they fall due for payment over the forthcoming 12 months.  

 

Appropriate assurances have been received from the lender and Mr K W Brooks that there is no intention to request repayment of the amounts due for at least the period within 12 months from the date of signing these interim results.  In addition, the directors are in discussions with the lender that will enable the company to settle the outstanding loans of £6.85 million by the issue of shares in the company rather than settling in cash.

 

The directors have also agreed further funding of £500,000 from Oxford Capital subsequent to the year end.

 

The directors have also obtained written confirmation from Magna Group confirming their willingness to make available to the company, if required, a Convertible Promissory Note amounting to the value of $0.6 million on acceptable terms to help cover the company's normal overheads in the foreseeable future. 

 

The directors consider that the recent and expected trading performance and the requirement for the continuation of loan funding from the lenders indicate the existence of material uncertainties which may cast significant doubt over the company's ability to continue as a going concern.  However, the directors are confident that the level of funds available to the company will enable the company to meet its liabilities as they fall due.  Accordingly the directors continue to adopt the going concern basis in preparing these interim results.

 

These interim results do not include the adjustments to the carrying value of assets that would result if the company was unable to continue as a going concern.

 

 

 

2. Finance


30 June

2015

30 June

2014

31 December

2014


£'000

£'000

£'000


Unaudited

Unaudited

Audited





Finance costs

 




Loan interest

194

95

243

Finance charges for short-notice loans

266

840

1,739

Amortisation of finance costs

34

84

178





Total finance costs

494

1,019

2,160

 



 

3. Earnings per share

 

 


30 June

2015

30 June

2014

31 December

2014


£'000

£'000

£'000


Unaudited

Unaudited

Audited









Loss used for calculation of basic and diluted EPS

(1,111)

(1,597)

(3,218)

 


30 June

2015

30 June

2014

31 December

2014


Number

number

Number


Unaudited

Unaudited

Audited





Weighted average number of shares used in basic and diluted EPS

869,563,733

 

869,563,733

869,563,733

                                                                                       

At 30 June 2015, there were 4,550,000 (31 December 2014: 5,550,000) (H1, 2014: 5,750,000) of potentially issuable shares which are anti-dilutive.

 

4. Borrowings


30 June 2015

30 June 2014

31 December 2014

 


£'000

£'000

£'000

 


Unaudited

Unaudited

Audited

 





 

Current - due within one year




Short term borrowings

5,171

2,699

4,234





Long term - due more than one year




Long term borrowings

1,841

1,841

1,841





Total borrowings

7,012

4,540

6,075

 

The carrying value (which is a reasonable approximation to fair value) of borrowings analysed by lender is as follows:


30 June 2015

30 June 2014

31 December 2014

 


£'000

£'000

£'000

 


Unaudited

Unaudited

Audited

 





 

K W Brooks - current

162

-

-

 

Oxford Capital - current

5,009

2,699

4,234

                              long term

1,841

1,841

1,841





Total borrowings

7,012

4,540

6,075

                                                                                                                                                              

 

Cash loans advanced during the period (net of issue costs) totalled £711,000 (31 December 2014: £1,159,000) (H1 2014: £560,000).

 

Long term borrowings of £1,841,369 are secured five year loan notes and carry an interest rate of 2% above the Bank of England base rate. The balance of loans outstanding carry interest at 7.5%.

 

The company has no other borrowing facilities.

 

 

5. Share capital

 

Authorised share capital

 


30 June 2015

30 June 2014

31 December 2014


£'000

£'000

£'000

1,000,000,000 New Ordinary shares of 0.25 pence and 1,000,000,000 Deferred shares of 2.25 pence

 

25,000

 

25,000

 

25,000

 

The Deferred Shares do not entitle holders to receive any dividend or other distribution or to attend or to vote at any general meeting of the company.

 

At the Annual General Meeting held on 21 August 2014, the ordinary resolution to increase the authorised share capital of the Company from a nominal value of £2,500,000 to a nominal value of £4,000,000 was approved.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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