Final Results
September 30 2005 - 2:01AM
UK Regulatory
RNS Number:9869R
Compact Power Holdings PLC
30 September 2005
COMPACT POWER HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
for the year ended 31 March 2005
Compact Power Holdings plc, which develops and exploits its innovative waste to
energy technology based on pyrolysis and gasification for processing a wide
range of wastes, announces its results for the year ended 31st March 2005.
Highlights
* Substantial improvement in throughput and profitability of existing
Avonmouth plant
* QinetiQ development project complete and prototype trials in progress
* Planning permission obtained for expansion of Avonmouth facility
* Demonstration project with Bristol City Council agreed
* Turnover increased by 260% to #1,506,000 (2004: #580,000)
* Operating loss before exceptional items in the year of #1.6 million
in line with market expectations (2004: #2.6 million)
* Net loss #1.7 million (2004: #5.2 million)
* Basic loss per share 5.8p (2004: 18.3p).
Contacts
Nic Cooper - Chairman +44 117 980 2900
Barrie Newton - Rowan Dartington & Co. Limited +44 117 933 0011
CHAIRMAN'S STATEMENT
Introduction
Steady progress has been made this financial year in projects and in
improvements in operating performance at the existing plant in Avonmouth.
Compact Power is now well established in the medical and hazardous waste
disposal market and is regarded as a leading advanced thermal conversion
technology. There is increasing recognition of the renewable energy potential of
the technology as a producer of fuel gas, carbon char and usable ash from a wide
range of wastes and biomass.
Financial review
The consolidated operating loss was in line with market expectations at #1.6
million, and lower than the reported loss before exceptional items in 2004 of
#2.6 million, as a result of higher revenues and reductions in development costs
and administrative expenditure. Revenues for the year increased by 260% to
#1,506,000 (2004: #580,000). The increase was principally due to increases in
gate fees and to the new sterilisation plant which became operational at the
beginning of the year.
As expected, development expenditure dropped to #24,000 (2004: #246,000) as the
technology has been operating commercially in the clinical waste market very
successfully. There will be a requirement for future development expenditure as
we continue to focus on operational improvements at the existing plant and
explore ways in which the technology can be adapted to exploit different
markets.
The net cash outflow from operating activities reduced by 40% to #1.4 million
(2004: #2.3 million) as a result of the reduction in the pre exceptional
operating loss. During the year the Group drew down the sum of #150,000 from a
loan facility of #500,000 provided by Cooper Holdings Limited to assist the
Group with its working capital requirements. Since the year end a further
balance of #350,000 has been drawn down and the facility increased to #600,000
to cover a further #100,000 advanced to the Company by Cooper Holdings. At the
year-end, cash balances stood at #104,000.
At 27 September 2005 the Group's cash balances remain tight and the Company
continues to rely on support from its major shareholder, Cooper Holdings
Limited, to meet its obligations. To meet the short-term working capital
requirements the Directors also intend to raise funds by way of a cash placing
under the Company's existing authorities. Potential investors have been
identified and terms are being discussed.
Medium term working capital requirements of the Group are expected to be met
from the Avonmouth project. The plant will be owned by a limited liability
partnership which will contract with Compact Power for construction of the plant
and will enter into an operation and maintenance agreement with Compact Power to
operate and maintain the plant for an annual fee. DEFRA has indicated that,
subject to agreement on detailed terms, it will support the project under the
Government's New Technologies Demonstration Programme ("NTDP") with the purchase
of services related to the project for up to #5 million. This new project will
provide Compact Power with enough working capital to complete construction of
the plant. I hope to be in a position to make an announcement in the next few
weeks.
Dividend
The Company does not expect to pay dividends for the foreseeable future
therefore no dividend is recommended by the Directors for the year ended 31
March 2005.
Progress
In the last financial year Compact Power has continued to establish its
technology in the sector as a leading advanced thermal conversion technology.
In the clinical waste market Compact Power is now processing about 2% of the
national clinical waste arisings and has established trading relationships with
most of the waste management companies in the sector. Gate fees have continued
to increase and the existing plant has made a profit before interest,
depreciation and tax consistently since October 2004.
In the municipal waste market there are the clearest signs that the market is
ready to adopt thermal technologies in future strategies as one of the ways of
dealing with the ever growing volumes of waste and assisting local authorities
to meet their obligations to divert biodegradable municipal waste from landfill.
Compact Power's strategy of working with the other technologies that are
relevant to an integrated waste management approach is attracting a significant
number of expressions of interest but clearly the NTDP is going to be
influential in relation to the final decision of many authorities.
The new Avonmouth plant will be a flagship project, demonstrating how Compact
Power can optimise conversion of waste to energy and supply heat and power
meeting the Government's Quality CHP criteria. The funding is likely to be
through a limited liability partnership which will own the plant, leaving
Compact Power with the profit on the plant sale and with ongoing fees from
operating and maintaining the plant.
Progress on the project which Devon County Council has proposed, which DEFRA had
previously selected for NTDP support, remains conditional on a number of factors
including planning permission.
At Dumfries the Company has exercised its option to acquire a long-term lease of
this prime site which has planning consent. Although the municipal waste
contractor has for the time being suspended negotiations to supply waste to the
plant, Compact Power is now developing a project which does not rely on
municipal waste.
The Wrexham project is unlikely to proceed in the immediate future, but the new
lead contractor has confirmed that it is reassessing the project and the Compact
Power proposal remains on the table.
Outside the UK several municipal waste projects have reached advanced stages of
development and we are expecting that construction will begin on more than one
project during 2006. In each case Compact Power will license the technology to a
local strategic partner to enable the plant to be constructed overseas and will
earn fees for technology support during construction and ongoing operation and
maintenance.
In connection with industrial and agricultural applications, intensive energy
users are under continuing pressure from costs of energy and waste disposal, and
there are also concerns about security of energy supply. Embedded waste to
energy facilities are therefore of growing interest and we are having positive
discussions with potential users in various industrial sectors, including cement
manufacturers. We remain positive about the potential for significant
applications of the technology over the next few years.
The small-scale plant being built with QinetiQ for use in Royal Navy ships is
now complete and commissioning trials are under way. It is anticipated that if
the land based trials are successful this plant will be installed in HMS Ocean
in 2006. Interest has already been expressed in developing this product for
land-based military front line use and the company will be making arrangements
to market this product in other suitable marine and land-based applications.
Finally, although our focus to date has been largely driven by the economics of
waste processing we have been encouraged by the recent recognition of the
significant contribution that biomass can make to renewable energy supply if the
potential of the whole spectrum of organic wastes is taken into account. A
recent report concluded that by 2020 up to 21% of the total energy demand of the
UK could be met by the conversion to energy of biomass fuel chains including
organic waste arisings.
Outlook
The company will continue with the operation of the existing plant at Avonmouth
and will be strongly focused on the construction of the new Avonmouth plant. In
addition, it is expected that in the coming year at least one other project will
enter the construction phase outside the UK in collaboration with overseas
contractors. This will see the implementation of our strategy of exploiting our
technology with strategic partners in overseas markets and we anticipate strong
interest following these initial demonstration projects.
There are clear signs that local and national environmental and energy policies
based on the principles of sustainability, both in the UK and in various markets
overseas, favour the technical solution which we have demonstrated as a way of
dealing with wastes and of converting a wide range of biomass materials into
usable energy for the community.
It remains to thank all the Compact Power team who continue to show the
competence and dedication which is so crucial to the success of our business.
The visitors to our plant (who number more than 4,000 over the last 4 years) are
invariably impressed and sense the positive view of the future which is shared
by all our personnel.
Nic Cooper
Chairman
30 September 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2005
Year ended Year ended
31 March 31 March
2005 2004
#'000 #'000
Note
Turnover 1,506 580
Cost of sales (1,612) (963)
Gross Loss (106) (383)
Administrative expenses (1,452) (1,999)
Development costs (24) (246)
(1,582) (2,628)
Exceptional items 3 - (2,673)
Operating loss (1,582) (5,301)
Interest receivable 6 52
Interest payable (141) -
Loss on ordinary activities before taxation (1,717) (5,249)
Tax on loss on ordinary activities 60 -
Loss for the financial year (1,657) (5,249)
Balance brought forward (15,788) (10,539)
Balance carried forward (17,445) (15,788)
Loss per share
Basic loss per 2p share 4 (5.8) p (18.3) p
Adjusted loss per 2p share (excluding exceptional items) 4 (5.8) p (9.0) p
The Group has no recognised gains or losses other than the loss for the above
financial year.
All activities are classed as continuing operations.
CONSOLIDATED BALANCE SHEET
for the year ended 31 March 2005
Note 31 March 31 March 2004
2005 #'000
#'000 (Restated)
Fixed Assets
Intangible assets 893 928
Tangible assets 1,686 1,819
2,579 2,747
Current Assets
Debtors 455 373
Cash at bank 104 368
559 741
Creditors: amounts falling due within one year (1,047) (750)
Net current liabilities (488) (9)
Total assets less current liabilities 2,091 2,738
Creditors: amounts falling due after one year (1,000) -
Net assets 1,091 2,738
Capital and reserves
Called-up equity share capital 583 583
Share premium 17,953 17,953
Other reserve - (10)
Profit and loss account (17,445) (15,788)
Shareholders' funds 1,091 2,738
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2005
31 March 31 March 2004
2005 #'000
#'000
Net cash outflow from operating activities (1,395) (2,318)
Returns on investments and servicing of finance
Interest paid (88) -
Interest received 6 52
(82) 52
Taxation 136 139
Capital expenditure and financial investment
Purchase of tangible fixed assets (45) (1,134)
Investment in intangible assets - research & development (28) (99)
Net cash outflow from capital expenditure and financial investment (73) (1,233)
Net cash outflow before financing (1,414) (3,360)
Financing
New secured loans 1,150 -
Net cash flow from financing 1,150 -
(Decrease)/increase in cash in the year (264) (3,360)
Reconciliation of operating loss to net cash outflow from operating activities
31 March 2005 31 March 2004
#'000 #'000
Operating loss (1,582) (5,301)
Depreciation and amortisation 178 354
Provision for impairment in value of fixed assets - 2,673
(Increase) / decrease in debtors (162) 72
Increase / (decrease) in creditors and provisions 171 (116)
(1,395) (2,318)
NOTES
1. Reconciliation of net cash flow to movement in net funds / (debt)
31 March 2005 31 March 2004
#'000 #'000
Decrease in cash in year (264) (3,360)
Cash inflow from debt financing (1,150) -
Movement in net funds / (debt) resulting from cash flows (1,414) (3,360)
Non cash movements (3) -
Movements in net funds / (debt) in the year (1,417) (3,360)
Net funds at 1 April 2004 368 3,728
Net (debt) / funds at 31 March 2005 (1,049) 368
2. Analysis of net funds / (debt)
At 1 April 2004 Non cash At 31 March 2005
Cashflow movements
#'000 #'000 #'000 #'000
Cash at bank 368 (264) - 104
Debt due within one year: - (150) (3) (153)
other loans
Debt due after more than one year: - (1,000) - (1,000)
other loans
Net funds / (debt) at 31 March 2005 368 (1,414) (3) (1,049)
3. Exceptional items
In August 2004, the plant and equipment assets of the Avonmouth plant were sold
for #1,000,000 in order to raise working capital for the Group. Under the terms
of the transaction, Compact Power continues to operate and maintain the plant as
before and is entitled to all contribution generated in excess of #250,000 per
annum. The net book value of the assets at 31 March 2004 was #3.7 million and
the Directors considered it prudent to take an exceptional non-cash charge of
#2.7 million at 31 March 2004 representing an impairment provision on the
carrying value of these fixed assets. This transaction has been accounted for
as a financing arrangement in accordance with FRS 5 "Reporting the substance of
transactions".
4. Loss per share
Basic loss per share is calculated on loss attributable to shareholders of
#1,657,000 (2004 - loss of #5,249,000) divided by the weighted average number of
ordinary shares in issue during the year of 28,655,796 (2004 - 28,650,961).
Adjusted loss per share for 2004 is stated after excluding exceptional items of
#2,673,000 from the loss of that year.
5. Financial statements
The financial information set out above does not constitute the Company's
financial statements for the years ended 31 March 2005 or 2004. The financial
information for the year ended 31 March 2004 is derived from the statutory
accounts for the year ended 31 March 2004, which have been delivered to the
Registrar of Companies and on which the auditors reported. This report was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. The statutory accounts for the financial year ended 31 March
2005 will be finalised on the basis of the financial information presented by
the Directors in this preliminary announcement. The auditors have yet to report
on these financial statements. A copy of the Company's annual report and
financial statements for 2005 will be mailed to shareholders today and will also
be available for collection from the Company's registered office.
The Directors approved this announcement on 30th September 2005. Further copies
of this announcement are available from the Company's registered office at Yara
House, St Andrew's Road, Bristol, BS11 9HZ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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