TIDMRED
RNS Number : 0562D
RedT Energy PLC
24 April 2017
24 April 2017
redT energy plc
("redT" or the "Company")
2016 Full Year Results
redT energy plc (AIM: RED), ("redT energy" or the "Company"),
the energy storage technology company, today announces its Full
Year Results for the 12 months ended 31 December 2016.
Financial
2016 financials were in line with management expectations. The
Company has a robust cash balance and is fully funded, following
the successful capital raise as announced December 2016.
-- EUR17.2m in available cash held as at 31 March 2017
-- Loans and borrowings EURNil (2015: EURNil)
-- Revenue for the year EUR10.8m (2015: EUR11.1m) (includes carbon-related activity)
-- EBITDA loss for the year EUR5.2m (2015: loss EUR1.5m)
(excluding exceptional & discontinued ops.)
-- Shareholder approval of GBP14.88m (before expenses) fundraise
to accelerate commercialisation
Operational
Successful transformation during the year from technology
development company to delivering a manufactured, commodity
product. With proven core technology and a Gen 2 machine engineered
to a commercial price, the business is now fully funded to deliver
its commercialisation phase.
redT energy storage business:
-- Successfully completed Gen 1 Market Seeding phase
-- Proved core large containerised technology with completion of
performance testing at Power Networks Demonstration Centre
(PNDC)
-- Successful development of Gen 2 at a market leading price
-- First Gen 2 sales and ongoing development of customer interest pipeline
Camco business:
-- Comprising legacy business operations of Africa, US and
Carbon, which combined, generated a positive contribution to the
Company
Commenting, Scott McGregor, Chief Executive Officer said:
"2016 saw redT complete our crucial Gen 1 market seeding phase,
successfully prove our core technology at an independent test site
and secure the first sales of our commercial Gen 2 product, in line
with our business strategy.
Achieving these key milestones throughout 2016 has resulted in
redT being fully funded and well positioned to capitalise on the
rapidly expanding global energy storage market. This year will be
centred on building an organisational structure that has the
agility and skills set required to pursue our growing sales
pipeline.
As a Company which has traditionally positioned itself as a
"quiet achiever", 2017 will see redT entering its sales and
marketing phase, strategically pursuing key geographic and
application markets. Having proven the technology, we are now
focussed on delivering initial Gen 2 sales into key segments and
building the foundations for the long-term growth and stability of
the business.
2017 has started positively for the Company and we are making
good progress towards achieving the business strategy set out above
and in the annual report."
Below is a summary commercial update of redT deployments and
post year end orders to date:
-- Production & Deployments: Thaba Eco Lodge, Jabil Inala,
University of Strathclyde, The Olde House (equivalent to 9 x redT
tank unit modules)
-- 2017 Orders: 1 x 10kW-75kWh & 1 x 60kW-300kWh machines
(equivalent to 5 x redT tank unit modules)
-- Letter of Intent: Signed with a UK energy project developer
with potential 490MW of grid connected sites
-- Final Stage of Customer Selection: EUR6.5m [25 x 60kW-300kWh
& 1 x 5kW-20kWh (equivalent to 101 x redT tank unit
modules)]
-- Active Customer Pipeline: EUR246m
Enquiries:
redT energy plc +44 (0)207 121 6233
Scott McGregor, Chief Executive
Officer
Joe Worthington, Investor
& Media Relations
Cenkos Securities plc +44 131 220 9772
Nick Tulloch +44 131 220 9100
Derrick Lee
Celicourt (Financial PR)
Mark Antelme
Joanna Boon
Jimmy Lea +44 (0)20 7520 9266
Notes to Editors
About redT energy
redT energy develops and supplies durable and robust energy
storage machines based on proprietary vanadium redox flow
technology for on and off-grid applications. The liquid storage
medium affords an exceptionally long life of up to 25,000 full
charge/discharge cycles and a 100 per cent usable depth of
discharge. Combined with low maintenance requirements, this
delivers industry leading lowest levelised cost of storage (LCOS)
and total cost of ownership (TCO) results. The modular approach
allows the power and energy components of systems to be
independently sized to meet customer requirements.
Until now it has not been possible to directly compare variable
renewable energy generation sources with diesel or fossil fuel
generation. PV + Storage is now reaching 'grid parity' in many
countries, a paradigm shift in energy production, which will
ultimately enable a distributed energy network optimising
conventional and renewable generation. The redT energy storage
machine has applications in remote power, smart grids, power
quality, and all aspects of renewable energy management.
To find out more about redT products or to register your
interest in purchasing an energy storage machine please go to the
below web address:
http://www.redtenergy.com/register-interest
For sales enquiries, please email enquiries@redtenergy.com or
call +44 (0) 207 061 6233
Chairman's Report
Last year was a turning point in the energy storage industry, as
it was the year that the market became real - one that does not
require subsidy and is commercially driven. The global market for
stationary battery energy storage exceeded $1bn in 2016 and the
forecasts of $5bn/yr by 2020 look realistic. Closer to home, in the
UK, contracts for over 500MW of energy storage were won under the
capacity auction in December 2016. Driven by the growth in cost
effective renewable energy, especially solar and wind, which are
now one of the cheapest forms of generation, and the move to a
decentralised, flexible, smart grid, there is no doubt about the
scale of market demand and the availability of viable technologies
to meet this demand. Currently, the largest segment is
utility-scale storage and the prevailing technology is Lithium-ion
batteries. So, where does that leave our disruptive, liquid energy
storage machine?
In the past year, we have shown that our production costs, even
at low levels, are encouraging. We can match installed costs of
competing technologies, particularly where long (more than 3 hours)
discharge durations are needed. As we scale up production, our
costs will reduce but so will the competition's, so our R&D and
Engineering departments remain focussed on the continued
development of our technology. We do not have a shortage of
potential sales. Our primary challenge will be to deploy our first
Generation 2 ("Gen 2") machines into our key target markets,
something we have already had some success with in Q1 of this year.
Our main advantage is the durability and project life of our
machines; Lithium-ion batteries degrade and are forecast to have 10
year life. By comparison our flow machines having expected
technology life of 25+ years.
Clearly, 2016 was a very important year for the Company with the
completion of our Generation 1 ("Gen 1") market seeding phase and
the successful independent testing of our larger machines at PNDC.
We have commenced building up a track record that supports the core
performance of our technology. So, the future is encouraging but we
needed the resources to win sales, improve our technology further
and drive down costs. It was for this reason that the Board
approved a fund raise towards the end of 2016. We achieved our goal
of raising nearly GBP15m and that has now put us in a position
where we can recruit the people we need to grow the organisation
and convert our large pipeline of interest into sales that will
drive shareholder returns.
Over the past few years, our Company has transformed from a
carbon credit business to an energy storage company. We could not
have achieved this without our dedicated staff who have worked
tirelessly on low budgets, which were significantly less than our
competitors. This really is a tremendous achievement against all
odds and I am extremely proud of our team. Having completed our
fund raise we will now strengthen the team further, a process that
has already started. I am pleased that David Stewart agreed to join
us as Commercial Director in February this year. David came from
our production partner, Jabil Circuit Inc, so already understood
the technology, its potential and what was required to realise
this. As our business has changed, we have also looked to attain
the relevant Board experience and was further strengthened
throughout the year with the appointment of John Ward and Neil
O'Brien. John is a renewable energy sector expert and long term
investor in the business who joined the Board in February 2016.
Neil, who was formally CEO of Alkane Energy, joined the Board in
September 2016, bringing highly relevant experience on delivering
containerised power generation to projects in the UK.
Once again, I would like to thank our entire team together with
my fellow non-executive directors for the contributions that they
have made to the Company and look forward to another successful
year in 2017.
Jeffrey Kenna
Chairman
Chief Executive Officer's Report
Summary
In 2016, we proved our core technology as a manufactured
product. We also developed and manufactured our first Generation 2
("Gen 2") machine, at a market leading price. Further to this,
shareholders approved the raise of the required capital to secure
the financial future of the business and further strengthen and
develop the Company. In short, 2016 must be viewed as a landmark
year for the business, and our accomplishments during the year have
created a strong foundation from which our business can grow.
redT, during the year, transformed from being a technology
development company to delivering a manufactured commodity product,
with the launch of our Generation 1 ("Gen 1") market seeding units.
Our large 20ft unit also became the first contract manufactured,
containerised, large scale vanadium flow machine to be deployed
globally. Migrating from prototype to delivered product is a very
difficult step for any technology company and clearly an important
milestone for the Group. The Company also delivered the first of
its Gen 2 units, which represent its low cost commodity product,
which were designed and engineered to a target commercial price. In
short, 2016 has seen redT continue to successfully navigate the
difficult path towards commercialisation.
Energy analysts are unanimous in their large demand forecasts
for energy storage. Whilst energy storage technology now exists at
a commercial price, the difficulty for technology companies within
this space lies in proving the durability of their products and
working with customers to assist them in best understanding how to
fully utilise this new type of asset. Geographically, the early key
demand markets for energy storage are; sub-Saharan Africa, North
America, Europe and Australia. The UK has not, to date, been a
market which provides sufficient economic return from deployment of
energy storage, however surprisingly, this seems to be changing
quicker than originally anticipated. We can see a tipping point for
the widespread adoption of storage being reached in the short to
medium term in the UK and Europe as the demand for storage
accelerates and pilot sites become commercially proven.
In my statement last year, I highlighted the market seeding
programme and the development of our Gen 2 product as key focus
areas, which would be crucial to the further growth of our
business. 12 months later, I'm pleased to report that our market
seeding programme was completed successfully and our core
technology was proven, following testing conducted by Scottish and
Southern Energy (SSE) at the Power Networks Demonstration Centre
("PNDC").
These achievements have allowed the Company in 2017 to start
planning for volume production and to structure our operations for
growth. To do this, extra capital was required to fund the
Company's ongoing growth strategy and accelerate the qualification
and delivery of redT's initial sales pipeline. As such, I'm pleased
to report the successful result of a placing and open offer for
nearly GBP15m, which received shareholder approval in December
2016. This capital has secured the financial future of the business
and will be used to develop future generations of our product,
whilst building an effective and dynamic organisation, capable of
meeting the challenges of bringing a new and disruptive technology
to market.
Elements of the Group's residual business interests remain as
subsidiary activities of redT energy. The Camco business,
comprising the legacy business operations of Africa, US and Carbon,
continued to provide a positive contribution to the Group
throughout 2016, reporting a profit for the period. As part of the
Camco business, in December 2015 we were appointed on a new
contract to manage the Renewable Energy Performance Platform
("REPP"), which aims to support African renewable energy projects
smaller than 25MW through the provision of advice, technical
assistance and access to debt providers. Sub-Saharan Africa remains
a key geographical region for redT and the continuing success of
Camco within the continent underlines this focus.
Outlook
Our GBP15m placing in December brought in a number of new
institutional investors alongside our highly knowledgeable core
investor base in the process. This allows us to accelerate the
delivery of the extensive sales pipeline the Company has built up
and to provide working capital for the further development of
Generation 3 and 4 energy storage machines. To achieve these
objectives, redT needs to grow as an organisation with the
necessary resources and skills to prevail in the industry. As such,
several key hires were made following the fundraise, including that
of David Stewart as Commercial Director. David brings with him a
wealth of experience, having led Operations, Implementation,
R&D, Sales and Product teams for companies including; Hewlett
Packard, Keysight, Viavi and most recently, Jabil Circuit Inc. In
addition to David, redT has made a number of additional hires
within the Engineering, Implementation, and R&D departments and
has grown its overall headcount by 25% by the end of Q1. One of the
key objectives for 2017 is to build and integrate the core
functional teams to deliver our business plan.
In Q4 2016 redT's pipeline of unqualified global customer
interest totalled $263m. Following strategic assessment by the
management and commercial team, the Company has mined this pipeline
and identified an initial sales segment of qualified, deliverable
projects in which redT are fully engaged, with the aim of closing
orders in the short to medium term. redT's commercial strategy will
focus on deploying systems in the UK, EU and Africa initially,
where the Company has a local presence, close to customer projects.
From an application perspective, the initial focus will be off-grid
diesel optimisation & microgrid projects, where we see strong
payback periods, and on-grid connection projects focussed on
"firming" solar generation, providing savings and additional grid
service revenue streams to customers. The Company will also
continue to pursue orders from the wider sales pipeline for medium
to longer term benefit. However, short term focus on the above
early market segments is crucial to developing the Company's
product reputation, enhancing its corporate brand, and building
long term equity value as a result.
Early product market focus for 2017 has been on validating our
Gen 2 products and delivering these to customer sites. These
include the first delivery of a 5kW-20kWh Gen 2 machine to The
University of Strathclyde and two further sales consisting of a
10kW-75kWh machine and a 60kW-300kWh machine. The Company was also
pleased to announce the deployment of a 1MWh project to The Olde
House in Cornwall, alongside energy services company Centrica. This
project, utilising the systems originally manufactured for the Isle
of Gigha, is the largest energy storage project to be deployed in
Cornwall to date and will be a crucial and high profile
demonstration site.
Thanks to the achievement of the key milestones reached
throughout 2016, redT is now well positioned to capitalise on the
existing interest shown within this rapidly expanding global
market. 2017 will be about building an organisational structure
that retains the strong redT corporate identity which has developed
over the past 15 years, whilst having the agility and skills' set
required to pursue our growing sales pipeline. As a Company which
has traditionally positioned itself as a "quiet achiever", 2017
will see redT entering its sales and marketing phase, strategically
pursuing the key geographical and application markets outlined
above. This year, we are focussed on delivering initial Gen 2 sales
into key market multiplier segments and building the foundations
for the long term growth and stability of the business.
Operational review
The Group reports its results in the following segments; redT
energy storage business and Camco business. The two individual
segments are addressed in further detail in the sections below.
redT energy storage business
In November, redT announced the successful completion of its Gen
1 market seeding phase. The programme aim was to work alongside
selected customers and partners to prove the installation and
commissioning process of redT machines in a variety of market
seeding applications. Throughout the course of the project, over
2MWh of product was dispatched to sites in the UK, Europe and
Africa for use in a wide variety of applications.
As a direct result of the programme, the Company was able to
transfer knowledge gained into the Gen 2 product development
process, leading to several product enhancements being made as a
direct result. Furthermore, in September, redT announced the
successful completion of system performance testing, which took
place at PNDC. This proved the performance of redT's core stack
technology and system IP, and represented a key strategic milestone
for the business. Additionally, the Company was also pleased to
welcome Scottish Minister for Business, Innovation and Energy, Paul
Wheelhouse at the site during a visit he made to highlight the
crucial role redT technology will play in the development of a
flexible, secure and low carbon energy system in the UK.
In addition to redT's achievements regarding the validation of
its technology, the Company also announced in September a new
partnership with Newcastle University to research and develop a
hybrid energy storage system as part of a three year project,
funded by Innovate UK partners. The project is progressing well and
aims to develop a system which can utilise a redT energy storage
machine alongside conventional, power-centric, disposable
technologies such as lead-acid and lithium-ion. By utilising the
individual strengths of these different technologies, we continue
to explore the creation of a hybrid product that could serve the
entire market.
Furthermore, we were also pleased to announce in February this
year, that redT had been awarded the title of "Technology Company
of the Year" at the prestigious Grant Thornton Quoted Company
Awards, which recognises the achievements of the UK's smaller
companies during 2016. External recognition of the Company's
achievements is a major accolade and serves to underline the hard
work and commitment of our highly competent team.
redT's global manufacturing partnership with Jabil Circuit Inc.
continues to develop strongly. The previous year saw a number of
manufacturing milestones surpassed, with the first Gen 2 unit being
manufactured in November. The same month also saw redT make their
first Gen 2 sale, to South Africa based energy solutions provider
Inala, for delivery in 2017, who will in turn supply this to one of
Africa's largest telecom operators for use at one of their sites.
This machine is the first Gen 2 unit sold into Africa and will soon
be followed by another system which will shortly be delivered to
the Thaba Eco Lodge in Johannesburg.
Camco business
The Camco business delivered strongly throughout 2016 and is set
to continue its positive contribution to the Group in 2017. The
business continues to be cash flow positive and managed two
investment advisory mandates during the majority of the past
year.
In December 2015, Camco was appointed as manager of the
Renewable Energy Performance Platform ("REPP"), which aims to
support African renewable energy projects smaller than 25MW through
the provision of project development funding, results based finance
and technical and financial assistance. During its first year of
operation REPP was highly successful, agreeing support packages
with six projects in 2016 and meeting most of its year 1
objectives.
With the continuing success of the REPP mandate, in November
Camco mutually agreed with its partner EISER Infrastructure
Partners LLP to end its involvement in Green Africa Power LLP
(GAP). This allowed Camco to focus its efforts on its further
growth and development, including the REPP mandate.
Additionally, the Camco US business also continued to operate
throughout 2016. This non-strategic, legacy business retains
service contracts from the previously disposed biogas assets and
generates positive cash flows for the Group. Furthermore, the
legacy Camco Carbon portfolio continues to be managed by our EU ETS
compliance specialist and also generates useful cash flow for the
Company whilst not being a core activity.
In closing, I would like to sincerely thank the entire redT team
for their hard work and dedication throughout a landmark year in
the history of the Company. My thanks also go to our shareholders,
both new and existing for their continuing support during this
critical phase for our business. As the Company moves from sound
foundations into a sales and marketing phase over the next 12
months, I look forward to starting a new chapter in our corporate
development.
Scott McGregor
Chief Executive Officer
Financial review
Overall Group result
2016 was a major year in the progress of the redT energy Group.
It was the first full year following the significant changes to the
structure of the business which were undertaken in 2015; acquiring
additional REDH shareholding to fully consolidate the subsidiary
within the Group; disposal of the US biogas assets; and completing
the strategic refocus of the Africa Clean Energy business. The
re-structure enabled the Group to strategically focus its efforts
on bringing the redT energy storage business to market, whilst a
watchful eye was maintained on the self-sufficient and positive
cash generative legacy Camco revenue streams. The year also saw the
Group successfully complete two capital raises - a major
achievement during a period of uncertainty within the capital
markets following Brexit, the US Presidential election result, and
the falling value of the Pound. The capital investment secured
enables the Group, now with a solid balance sheet, to proceed ahead
with the critical commercialisation & operational growth phase
of the redT energy storage business.
Financial results for the Group in 2016 were in line with
management expectations. The Group recorded a loss for the year of
EUR5.6m compared to a profit of EUR0.7m in 2015. The prior year's
profit was largely due to EUR2.2m of one off gains resulting
directly from the structural changes made to the business during
that period, with 2016 seeing the first full year of REDH business
consolidation within the Group. Revenue was broadly in line
year-on-year with EUR10.8m recorded versus EUR11.1m in the prior
year, with almost all revenue generation resulting from the Group's
Camco business. Gross margin saw a year-on-year decrease from
EUR4.8m to EUR2.3m as a result of the redT energy market seeding
programme, plus a one off high margin US Carbon portfolio sale
achieved in prior year. Underlying administrative expenses remain
tightly controlled, however these have increased year-on-year
directly due to a full year of REDH business consolidation in 2016,
from EUR6.3m to EUR7.6m. Full year Share Based Payment expense
following the implementation of the 2015 redT employee scheme in
December 2015, resulted in an income statement charge of EUR0.4m in
the period. The result was the recording of a loss from operating
activities of EUR5.7m (2015: loss EUR1.5m), with an associated
EBITDA loss of EUR5.2m (2015: loss EUR1.5m) (excluding exceptional
& discontinued ops.).
redT energy storage business
The redT business is solely focussed on the on-going progression
of its energy storage machine, with the business entering the
critical commercialisation and operational growth phase of its life
cycle. The results for the period are reflective of the first full
year of the REDH business consolidated within the Group, with prior
year accounting for only three months (roll-in acquisition took
place end of September 2015, taking the business from being an
investment to a fully consolidated subsidiary).
A gross margin loss of EUR1.5m was recorded in the period (2015:
profit EUR0.3m) which related exclusively to the completion of the
key market seeding programme which saw Gen 1 machines deployed to
strategic partners across UK, Europe, and Africa. An overall
segmental loss of EUR6.2m was recorded (2015: loss EUR2.8m),
reflecting the cost of the market seeding programme, plus the full
year absorption of the REDH cost base.
Camco business
The Camco business is comprised of the legacy business
operations of Africa, US and Carbon, which combined generates
positive cash contributions to the Group.
During the period Camco Africa managed two investment advisory
mandates; a co-advisory mandate to Green Africa Power LLP (GAP)
through our partner EISER Infrastructure Partners LLP, and
Renewable Energy Performance Platform (REPP) mandate in partnership
with Greenstream Network Ltd. In November 2016 Camco came to a
mutual agreement to bring to an end its involvement with GAP,
enabling Camco to focus on growing and building the REPP mandate,
for which it is the lead adviser. Camco US is focussed on the
management of the previously disposed biogas assets via a service
contract agreement, with Camco Carbon completing the legacy
business segment, centred on ad hoc EU ETS Compliance Services.
The Camco business recorded revenue of EUR10.5m (2015:
EUR10.7m), gross margin EUR3.8m (2015: EUR4.6m) and segmental
profit EUR0.9m (2015: profit EUR1.3m), with the drop in
year-on-year gross margin and profit relating to the impact of the
prior year one off high margin US Carbon portfolio sale, partially
offset by the Camco Africa GAP mutual termination agreement.
Group operating expenses
Overall administration expenses from continuing operations
amounted to EUR7.6m (2015: EUR6.3m), primarily reflecting the first
full year of the REDH business consolidated within the Group (prior
year accounting for only three months).
The redT business administration expenses totalled EUR4.7m
(2015: EUR3.0m), with the increase centred solely around the full
year recognition of the REDH business, as the development of the
energy storage machine continued at pace. In contrast, the Camco
business saw administration expenses reduce from EUR3.3m to EUR2.9m
in 2016, as a result of the disposal of the US biogas & carbon
portfolio sale in 2015.
The Group continues to maintain tight expenditure control,
however is now focussed on growing its operational cost base to
support the development, commercialisation and growth phase of the
redT energy storage business.
Fundraising
2016 was a very successful year for the Group in securing
investment from new and existing shareholders - a major achievement
during a period of uncertainty within the capital markets following
Brexit, the US Presidential election result, and the deflated value
of the Pound.
On 9 February 2016, shareholders approved the issue of
51,851,852 ordinary shares to new and existing shareholders,
raising GBP3.5m (before expenses).
On 30 December 2016 shareholders approved the issue 150,000,000
ordinary shares through a placing to institutional and other
investors, and an additional 26,774,374 ordinary shares by way of
an open offer, to raise a total of GBP14.88m (before expenses).
Following the placing of the remaining 9,220,156 open offer shares
with certain institutional investors, a total of 185,994,530 new
ordinary shares were admitted to trading on AIM on 3 January 2017,
resulting in a revised total issued and voting share capital
comprising 653,923,424 ordinary shares. As the new ordinary shares
were admitted to trading on 3 January 2017, the fund raise is
deemed a non-adjusting post balance sheet event for the purposes of
the 2016 Annual Report.
The capital raised in 2016 provides the Group with the capital
investment to proceed ahead with the critical commercialisation
& operational growth phase of the redT energy storage business.
It also represented a vote of confidence by both new and existing
shareholders in the strategic plan that the Group has in place to
grow the business, through steady, calculated and sustainable
growth.
Cash and cash equivalents
At 31 December 2016, the Group held cash and cash equivalents of
EUR2.8m (2015: EUR2.9m), with all cash available to the Group for
general working capital purposes, with the Group continuing to hold
zero loans and borrowings.
The key movements in cash during 2016 were: proceeds from issue
of share capital EUR4.4m, final cash payment received for the prior
year sale of the US biogas assets EUR2.4m, and cash outflow from
operating activities EUR6.3m.
Our cash position at 31 March 2017 is EUR17.2m following the
capital raising of GBP14.88m (before expenses).
Scott Laird
Finance Director
Consolidated Statement of Financial Position
At 31 December 2016
2016 2015
EUR'000 EUR'000
Non-current assets
Property, plant and equipment 103 101
Intangible assets and
goodwill 14,989 14,989
Deferred tax assets 175 132
15,267 15,222
Current assets
Prepayments and accrued
income 509 381
Trade and other receivables 775 1,058
Other financial assets - 2,420
Corporate tax receivable 7 -
Cash and cash equivalents 2,753 2,935
Assets held for sale - -
4,044 6,794
Total assets 19,311 22,016
Current liabilities
Trade and other payables (3,972) (5,522)
Deferred income (480) (408)
Corporate tax payable - (150)
(4,452) (6,080)
Non-current liabilities
Deferred income (222) (250)
(222) (250)
Total liabilities (4,674) (6,330)
Net assets 14,637 15,686
Equity attributable to 2016 2015
equity holders of the EUR'000 EUR'000
parent
Share capital 4,679 4,098
Share premium 89,201 85,375
Share-based payment reserve 1,118 773
Retained earnings (79,340) (73,823)
Translation reserve 729 893
Other reserve (1,621) (1,621)
Non-controlling interest (129) (9)
Total equity 14,637 15,686
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
2016 2015
Continuing operations EUR'000 EUR'000
Revenue 10,829 11,106
Cost of sales (8,563) (6,267)
Gross profit 2,266 4,839
Administrative expenses (7,927) (6,340)
Loss from operating activities (5,661) (1,501)
Financial income 38 26
Financial expenses - (1)
Foreign exchange movement (168) 165
Net financing expense (130) 190
Share of loss of equity-accounted
investees - (1,417)
Gain on disposal of equity-accounted
investee - 2,016
Loss before tax (5,791) (712)
Income tax credit 154 12
Loss from continuing operations (5,637) (700)
Discontinued operations
Profit from discontinued operations
(net of tax) - 1,370
(Loss)/profit for the year (5,637) 670
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations (164) 351
Total comprehensive income for
the year (5,801) 1,021
(Loss)/profit for the year attributable
to:
Equity holders of the parent (5,517) 690
Non-controlling interest (120) (20)
_______ _______
(5,637) 670
Total comprehensive income for
the year attributable to:
Equity holders of the parent (5,681) 1,041
Non-controlling interest (120) (20)
_______ _______
(5,801) 1,021
Basic (loss)/profit per share in 2016 2015
EUR cents
From continuing operations (1.23) (0.24)
From continuing and discontinued
operations (1.23) 0.23
Diluted (loss)/profit per share
in EUR cents
From continuing operations (1.23) (0.24)
From continuing and discontinued
operations (1.23) 0.22
Consolidated Statement of Changes in Equity
For year ended 31 December 2016
2016 2016 2016 2016 2016 2016 2016 2016 2016
Share Share Share-based Retained Translation Other Total Equity Total
capital premium payment earnings reserve reserve equity attributable Equity
reserve attributable to
to non-controlling
shareholders interest
of the
Company
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at 1
January
2016 4,098 85,375 773 (73,823) 893 (1,621) 15,695 (9) 15,686
Total
comprehensive
income for the
year
Loss for the
year - - - (5,517) - - (5,517) (120) (5,637)
Other
comprehensive
income
Foreign
currency
transaction
differences - - - - (164) - (164) - (164)
______
Total
comprehensive
income for the
year - - - (5,517) (164) - (5,681) (120) (5,801)
______
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Share-based
payments - - 345 - - - 345 - 345
Issuance of
shares 581 3,991 - - - - 4,572 - 4,572
Transaction
costs arising
on share
issues - (165) - - - - (165) - (165)
______
Total
contributions
by and
distributions
to owners 581 3,826 345 - - - 4,752 - 4,752
______
Changes in
ownership
interests in
subsidiaries
Acquisition of - - - - - - - - -
subsidiary
through
issuance of
shares
______
Balance at 31
December
2016 4,679 89,201 1,118 (79,340) 729 (1,621) 14,766 (129) 14,637
______
2015 2015 2015 2015 2015 2015 2015 2015 2015
Share Share Share-based Retained Translation Other Total Equity Total
capital premium payment earnings reserve reserve equity attributable Equity
reserve attributable to
to non-controlling
shareholders interest
of the
Company
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at 1
January
2015 2,461 76,917 756 (74,513) 542 - 6,163 - 6,163
Total
comprehensive
income for the
year
Profit for the
year - - - 690 - - 690 (20) 670
Other
comprehensive
income
Foreign
currency
transaction
differences - - - - 351 - 351 - 351
______
Total
comprehensive
income for the
year - - - 690 351 - 1,041 (20) 1,021
______
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Share-based
payments - - 17 - - - 17 - 17
Issuance of
shares 70 - - - - - 70 - 70
Transaction - - - - - - - - -
costs arising
on share
issues
______
Total
contributions
by and
distributions
to owners 70 - 17 - - - 87 - 87
______
Changes in
ownership
interests in
subsidiaries
Acquisition of
subsidiary
through
issuance of
shares 1,567 8,458 - - - (1,621) 8,404 11 8,415
______
Balance at 31
December
2015 4,098 85,375 773 (73,823) 893 (1,621) 15,695 (9) 15,686
______
Consolidated Statement of Cash Flow
For year ended 31 December 2016
2016 2015
EUR'000 EUR'000
Cash flows from operating
activities
(Loss)/profit for the year (5,637) 670
Adjustments for:
Depreciation, amortisation
and impairment 57 34
Foreign exchange loss/(gain)
on translation 168 (165)
Financial income (38) (26)
Financial expense - 1
Impairment of receivables
- bad debt write-off (36) -
Share of loss of equity accounted
investees - 1,417
Gain on disposal of equity-accounted
investee - (2,016)
Gain on sale of discontinued
operations, net of tax - (1,370)
Equity settled share-based
payment expenses 345 17
Taxation (59) (12)
_______ _______
(5,200) (1,450)
Decrease in trade and other
receivables 170 121
(Decrease) in trade and other
payables (1,314) (1,218)
(1,144) (1,097)
_______ _______
Net cash outflow from operating
activities (6,344) (2,547)
Cash flows from investing
activities
Proceeds from disposal of
discontinued operations - 731
Acquisition of a subsidiary,
net of cash acquired - 607
Acquisition of property,
plant and equipment (72) (52)
Net cash inflow from investing
activities (72) 1,286
Cash flows from financing
activities
Proceeds from the issue of
share capital 4,406 -
Proceeds from other financial
assets 2,420 -
Interest received 38 26
Interest paid - (1)
Net cash inflow from financing
activities 6,864 25
Net increase/(decrease) in
net cash and cash equivalents 448 (1,236)
Net cash and cash equivalents
at 1 January 2,935 4,057
Effect of foreign exchange
rate fluctuations on cash
held (630) 114
Net cash and cash equivalents
at 31 December 2,753 2,935
Notes
1 Accounting policies
redT energy plc (the "Company") is a public company incorporated
in Jersey under the Companies (Jersey) Law 1991. The address of its
registered office is 3rd floor, Standard Bank House, 47-49 La Motte
Street, St Helier Jersey, JE2 4SZ. The consolidated financial
statements of the Company for the year ended 31 December 2016
comprise of the Company, its subsidiaries and associates and
jointly controlled entities (together the "Group"). The Company is
admitted to the AIM, a market operated by London Stock Exchange
Plc.
A Statement of compliance
These consolidated financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the European Union
("adopted IFRS").
These consolidated financial statements have been prepared in
accordance with and in compliance with the Companies (Jersey) Law
1991 an amendment to which means separate parent company financial
statements are not required.
These consolidated financial statements were approved by the
Board on 24 April 2017.
B Basis of preparation
The financial statements are presented in Euros, the functional
currency of the Company, rounded to the nearest thousand Euros.
The preparation of financial statements in conformity with
adopted IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and other factors that are believed to be reasonable
under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. The most
significant techniques for estimation are described in the
accounting policies below and Note 15.
The accounting policies set out below have been applied
consistently in the year and presented in these consolidated
financial statements. The accounting policies have been
consistently applied across all Group entities for the purposes of
producing these consolidated financial statements.
The financial statements have been prepared on the historical
cost basis and on a going concern basis.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Financial review. The financial position of the
Group, its cash flows and liquidity position are described in the
same review. In addition, Notes 23 and 24 to the financial
statements include the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments and its exposures to credit
risk and liquidity risk.
The Group has sufficient financial resources together with
long-term relationships with a number of customers and suppliers.
As a consequence, the Directors believe that the Group is well
placed to manage its business risks successfully.
The Directors are satisfied that the Group has adequate
resources to continue to operate for the foreseeable future. For
this reason, they consider it appropriate for the financial
statements to be prepared on a going concern basis.
Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group.
The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The
acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases. Losses applicable to
the non-controlling interests in a subsidiary are allocated to the
non-controlling interests even if doing so causes the
non-controlling interests to have a deficit balance.
Associates and jointly controlled entities Associates are those
entities in which the Group has significant influence, but not
control, over the financial and operating policies. Significant
influence is presumed to exist when the Group holds between 20 and
50 per cent of the voting power of another entity and the Group has
rights to the net assets of the arrangement, rather than rights to
its assets and obligations for its liabilities.
Associates and jointly controlled entities are accounted for
using the equity method and are initially recognised at cost. The
Group's investment includes goodwill identified on acquisition, net
of any accumulated impairment losses. The consolidated financial
statements include the Group's share of the income and expenses and
equity movements of equity accounted investees, after adjustments
to align the accounting policies with those of the Group, from the
date that significant influence or joint control commences until
the date that significant influence or joint control ceases. When
the Group's share of losses exceeds its interest in an equity
accounted investee, the carrying amount of that interest (including
any long-term investments) is reduced to nil and the recognition of
further losses is discontinued except to the extent that the Group
has an obligation or has made payments on behalf of the
investee.
Transactions eliminated on consolidation Intra-group balances
and transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated in preparing the
consolidated financial statements. Unrealised gains arising from
transactions with equity accounted investees are eliminated against
the investment to the extent of the Group's interest in the
investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence
of impairment.
Business Combinations
The Group adopted IFRS 3 Business Combinations (2008) and IAS 27
Consolidated and Separate Financial Statements (2008) for all
business combinations occurring in the financial year starting 1
January 2009. All business combinations occurring on or after 1
January 2009 are accounted for by applying the acquisition method.
The Group adopted IFRS 3 Business Combinations (2008) and IAS 27
Consolidated and Separate Financial Statements (2008) for
acquisitions of non-controlling interests occurring in the
financial year starting 1 January 2009. The Group also applied IAS
27 (2008) for the disposal and acquisition of non-controlling
interests that do not result in loss of control.
Acquisitions and disposals of non-controlling interests are
accounted for as transactions with equity holders in their capacity
as equity holders and therefore no goodwill is recognised as a
result of such transactions. Previously, goodwill was recognised
arising on the acquisition of a non-controlling interest in a
subsidiary; and that represented the excess of the cost of the
additional investment over the fair value of the interest in the
net assets acquired at the date of exchange. The change in
accounting policy was applied prospectively and had no material
impact on earnings per share.
The Group applied IAS 27 (2008) in accounting for transactions
which result in the loss of control of subsidiaries. Under the
accounting policy transactions that result in loss of control are
accounted for by derecognising the previously consolidated assets
and liabilities of the subsidiary and the carrying amount of any
non-controlling interests in the former subsidiary and recognising
the retained investment at its fair value at the date when control
is lost and any consideration received. The resulting difference,
including any related gains or losses previously recognised in
other comprehensive income that qualify to be recycled to profit or
loss, is recognised in profit or loss as a gain or loss on the
disposal.
C Revenue recognition
US business
Revenue recognition on US service contracts
The US business recognises revenue on the management of the
biogas facilities for which it was awarded the contract to manage
following their sale in the prior year. Revenue is recognised
monthly based upon pre-agreed contractual monthly management
fees.
Africa clean energy business
Revenue recognition on investment advisory services
The investment advisory business derives revenue from the two
mandates which it is currently acting as investment advisers; joint
advisor to Green Africa Power LLP ("GAP") and lead advisor to the
Renewable Energy Performance Platform ("REPP"). Revenue is
recognised monthly based upon pre-agreed contractual monthly
management fees.
redT energy storage business
Revenue recognition on contract project work
Revenue is recognised in the income statement in proportion to
the stage of completion of the contracted project work. The stage
of completion is assessed by reference to the overall contract
value, with revenue invoiced monthly accordingly.
Revenue recognition on energy storage machine sales
Revenue from system sales is recognised when the system has been
delivered, installed, and fully commissioned (system fully
operating). Only once successfully commissioned can revenue be
recognised in line with standard sale of goods recognition
criteria. Where the customer has been billed in advance, revenue
will be deferred and recognised as deferred income on the balance
sheet until such time as the system has been fully
commissioned.
Group (Other)
Revenue recognition on CDM carbon and EU ETS compliance
services
The Group derives revenue from the sale of emissions allowances
and offsets to its clients. The revenue recorded is based on the
sale price per emission allowance or offset, with the associated
cost based upon the purchase price per emission allowance or offset
subsequently sold. The Group is acting as principle in both
separate transactions, the purchase and sale of emission allowances
and offsets, with revenue and cost booked simultaneously as per the
transaction date.
D Goodwill
Subsidiary
Acquisition since 1 January 2009 the Group measures goodwill as
the fair value of the consideration transferred including the
recognised amount of any non-controlling interest in the acquiree,
less the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed, all measured
as of the acquisition date.
Consideration transferred includes the fair values of the assets
transferred, liabilities incurred by the Group to the previous
owners of the acquiree, and equity interests issued by the Group.
Consideration transferred also includes the fair value of any
contingent consideration.
A contingent liability of the acquiree is assumed in a business
combination only if such a liability represents a present
obligation and arises from a past event, and its fair value can be
measured reliably.
The Group measures any non-controlling interest at its
proportionate interest in the identifiable net assets of the
acquiree.
Transaction costs that the Group incurs in connection with a
business combination, such as finder's fees, legal fees, due
diligence fees, and other professional and consulting fees are
expensed as incurred.
Acquisitions of non-controlling interests Acquisitions of
non-controlling interests are accounted for as transactions with
equity holders in their capacity as equity holders and therefore no
goodwill is recognised as a result of such transactions.
Subsequent measurement Goodwill is measured at cost less
accumulated impairment losses. In respect of equity accounted
investees, the carrying amount of goodwill is included in the
carrying amount of the investment, and an impairment loss on such
an investment is not allocated to any asset, including goodwill,
that forms part of the carrying amount of the equity accounted
investee.
Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment.
E Intangible assets
Intangible assets recognised within the balance sheet relate
exclusively to 'research and development (R&D)' as part of the
acquisition of the REDH business (September 2015). The R&D
related to expenditure incurred within two main categories;
Technical Expertise (Personnel Costs) and Other Directly
Attributable Administration Expenses, incurred by the REDH business
since 2010 until the date of acquisition. At date of acquisition,
R&D was capitalised as an intangible asset.
Amortisation of the intangible assets will begin once the redT
energy storage system becomes fully commercialised - for the year
ended 31 December 2016 this criteria had not been fully achieved. A
review will be undertaken in 2017 to confirm the amortisation
status of the intangible asset, as well as to determine the
effective useful life.
F Property, plant and equipment
Computer and office equipment Computer and office equipment is
held at historical cost less accumulated depreciation and
impairment losses. Depreciation is charged to the income statement
on a straight line basis over the estimated useful life of three
years.
Leasehold improvements Leasehold improvements are held at
historical cost less accumulated depreciation and impairment
losses. Depreciation is charged to the income statement on a
straight line basis over the remaining life of the lease.
Project plant and equipment Project plant and equipment is held
at historical cost less accumulated depreciation and impairment
losses. Depreciation is charged to the income statement on a
straight line basis over the estimated useful life of the assets (3
to 25 years).
G Impairment
The carrying amounts of the Group's property, plant and
equipment, goodwill and other intangibles are reviewed at least
annually to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable
amount is estimated. For assets that have an indefinite useful life
the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised immediately in the income
statement. The recoverable amount is the greater of the fair value
less cost of disposal and the value in use. Value in use is
calculated as the present value of estimated future cash flows
discounted using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset.
Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to cash-generating units and then to reduce the carrying
amount of the other assets in the unit on a pro-rata basis. A
cash-generating unit is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the
cash inflows from other assets or groups of assets.
An impairment loss is reversed when there is an indication that
the impairment loss may no longer exist and there has been a change
in the estimates used to determine the recoverable amount, only to
the extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined net of depreciation
and amortisation, if no impairment loss had been recognised. An
impairment loss in respect of goodwill on acquisition is not
reversed.
H Non-current assets held for sale and discontinued
operations
A non-current asset or a group of assets containing a
non-current asset (a disposal group) is classified as held for sale
if its carrying amount will be recovered principally through sale
rather than through continuing use, it is available for immediate
sale and sale is highly probable within one year.
On initial classification as held for sale, non-current assets
and disposal groups are measured at the lower of previous carrying
amount and fair value less costs of disposal with any adjustments
taken to profit or loss. The same applies to gains and losses on
subsequent re-measurement although gains are not recognised in
excess of any cumulative impairment loss. Any impairment loss on a
disposal group first is allocated to goodwill, and then to
remaining assets and liabilities on pro rata basis, except that no
loss is allocated to inventories, financial assets, deferred tax
assets, employee benefit assets and investment property, which
continue to be measured in accordance with the Company's accounting
policies. Intangible assets and property, plant and equipment once
classified as held for sale or distribution are not amortised or
depreciated.
A discontinued operation is a component of the Company's
business that represents a separate major line of business or
geographical area of operations that has been disposed of or is
held for sale, or is a subsidiary acquired exclusively with a view
to resale. Classification as a discontinued operation occurs upon
disposal or when the operation meets the criteria to be classified
as held for sale, if earlier. When an operation is classified as a
discontinued operation, the comparative income statement is
restated as if the operation has been discontinued from the start
of the comparative period.
I Foreign exchange
Foreign currency transactions
Transactions in currencies different from the functional
currency of the Group entity entering into the transaction are
translated at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the exchange
rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the income statement. Non-monetary
assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the foreign
exchange rate at the date of transaction.
FX rates (Euro) as applied in the year-end financial statements:
GBP 0.8524 (2015: 0.7375), USD 1.0520 (2015: 1.0931), CNY 7.3056
(2015: 7.0973), KES 107.5315 (2015: 111.8906), TZS 2287.2827 (2015:
2357.3786), ZAR 14.4509 (2015: 16.9982).
J Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to business combinations, or items
recognised directly in equity, or in comprehensive income.
Current tax is the expected tax payable or recoverable on the
taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to the tax payable in respect of previous years.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements deferred tax is
determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to
apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
K Employee benefits
Employee share schemes
The Group enters into arrangements that are equity-settled
share-based payments with certain employees (including Directors).
These are measured at fair value at the date of grant, which is
then recognised in the income statement on a straight line basis
over the vesting year, based on the Group's estimate of shares that
will eventually vest. Fair value is measured by use of an
appropriate model. In valuing equity-settled transactions, no
account is taken of any vesting conditions, other than market
conditions linked to the price of the shares of the Company. The
charge is adjusted at each balance sheet date to reflect the actual
number of shares expected to vest based on non-market performance
conditions such as Group profit targets and employment service
conditions where appropriate. The movement in cumulative charges
since the previous balance sheet is recognised in the income
statement, with a corresponding entry in equity.
Where the Company grants share based payment awards over its own
shares to employees of its subsidiaries it recognises the
corresponding movement directly in equity and recharges in the full
the share based payment charge to the relevant subsidiary.
Defined contribution pension scheme
In the UK, the Group operates a defined contribution retirement
benefit plan for qualifying employees. A defined contribution plan
is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and will have no legal or
constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised
as an employee benefit expense in profit or loss when they are
due
L Operating segments
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. All
operating segments' operating results are reviewed regularly by the
Group's CEO to make decisions about resources to be allocated to
the segment and assess its performance, and for which discrete
financial information is available.
Segment results that are reported to the CEO include items
directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly
corporate assets, corporate expenses, and income tax assets and
liabilities.
Segment capital expenditure is the total cost incurred during
the year to acquire property, plant and equipment, and intangible
assets other than goodwill.
M Earnings per share
The Group presents basic and diluted earnings per share ("EPS")
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares, which comprise convertible
notes and share options granted to employees.
N Provisions
A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefit will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
O Leased assets
Payments made under operating leases are recognised in profit or
loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the total
lease expense, over the term of the lease.
Leases where the group has substantially all the risks and
rewards of ownership are classified as finance leases. Finance
leases are capitalised at the lease's commencement at the lower of
the fair value of the leased property and the present value of the
minimum lease payments.
Minimum lease payments made under finance leases are apportioned
between the finance expense and the reduction of the outstanding
liability. The finance expense is allocated to each period during
the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the
minimum lease payments over the remaining term of the lease when
the lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether
such an arrangement is or contains a lease. A specific asset is the
subject of a lease if fulfilment of the arrangement is dependent on
the use of that specified asset. An arrangement conveys the right
to use the asset if the arrangement conveys to the Group the right
to control the use of the underlying asset.
At inception or upon reassessment of the arrangement, the Group
separates payments and other consideration required by such an
arrangement into those for the lease and those for other elements
on the basis of their relative fair values. If the Group concludes
for a finance lease that it is impracticable to separate the
payments reliably, then an asset and a liability are recognised at
an amount equal to the fair value of the underlying asset.
Subsequently the liability is reduced as payments are made and an
imputed finance charge on the liability is recognised using the
Group's incremental borrowing rate.
P Finance income and expense
Finance income comprises interest income on surplus funds,
unwinding of the discount on provisions and accrued costs. Interest
income is recognised as it accrues in profit or loss using the
effective interest method.
Finance expenses comprise interest expense on borrowings,
finance leases and unwinding of the discount on provisions and
accrued costs. All borrowing costs are recognised in profit or loss
using the effective interest method.
Foreign currency gains and losses arising from a group of
similar transactions are reported on a net basis.
Q Non-derivative financial assets
The Group has the following non-derivative financial assets:
cash and cash equivalents, trade and other receivables and other
financial assets. Such financial assets are recognised initially at
fair value and subsequently carried at amortised cost and assessed
for impairment at the end of each financial period.
R Non-derivative financial liabilities
The Group has the following non-derivative financial
liabilities: trade and other payables and payments on account. Such
financial liabilities are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortised
cost using the effective interest method.
S New accounting standards and interpretations
(a) New standards, amendments and interpretations
No new standards, amendments or interpretations, effective for
the first time for the financial year beginning on or after 1
January 2016 have had a material impact on the group or parent
company.
(b) New standards, amendments and interpretations not yet
adopted
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2016, and have not been applied in preparing these
financial statements. None of these is expected to have a
significant effect on the financial statements of the group or
parent company, except the following, set out below:
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9
retains but simplifies the mixed measurement model and establishes
three primary measurement categories for financial assets:
amortised cost, fair value through OCI and fair value through
P&L. The basis of classification depends on the entity's
business model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to
be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair value in
OCI not recycling. There is now a new expected credit losses model
that replaces the incurred loss impairment model used in IAS 39.
For financial liabilities there were no changes to classification
and measurement except for the recognition of changes in own credit
risk in other comprehensive income, for liabilities designated at
fair value through profit or loss. IFRS 9 relaxes the requirements
for hedge effectiveness by replacing the bright line hedge
effectiveness tests. It requires an economic relationship between
the hedged item and hedging instrument and for the 'hedged ratio'
to be the same as the one management actually uses for risk
management purposes. Contemporaneous documentation is still
required but is different from that currently prepared under IAS
39. The standard is effective for accounting periods beginning on
or after 1 January 2018. Early adoption is permitted, subject to EU
endorsement. The impact of IFRS 9 is being assessed by management.
The main impact is likely to arise from the implementation of the
expected loss model although full quantification of this impact is
still underway.
IFRS 15, 'Revenue from contracts with customers' deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts' and related interpretations. The standard
is effective for annual periods beginning on or after 1 January
2018 and earlier application is permitted, subject to EU
endorsement. The impact of IFRS 15 is being assessed by management.
Implementation of IFRS15 requires a thorough review of existing
contractual arrangements. At present, the directors anticipate
there may be some changes in the recognition of royalty income
leading to earlier recognition of some income although the amounts
involved are relatively immaterial. The transition work in respect
of other areas is on-going but has not, as yet, highlighted
potentially material adjustments.
IFRS 16, 'Leases' addresses the definition of a lease,
recognition and measurement of leases and establishes principles
for reporting useful information to users of financial statements
about the leasing activities of both lessees and lessors. A key
change arising from IFRS 16 is that most operating leases will be
accounted for on balance sheet for lessees. The standard replaces
IAS 17 'Leases', and related interpretations. The standard is
effective for annual periods beginning on or after 1 January 2019
and earlier application is permitted, subject to EU endorsement and
the entity adopting IFRS 15 'Revenue from contracts with customers'
at the same time. The full impact of IFRS 16 has not yet been
assessed.
2 Segmental reporting
Operating segments
The Group reports these results in line with the following main
reporting segments:
1. redT: redT develops and supplies durable and robust energy
storage machines based upon a proprietary vanadium redox flow
technology for on and off-grid applications. This operating segment
also contains the corporate costs of the Group.
2. Camco: Camco business segment comprises of Africa, US and
Carbon. Camco Africa manages two investment advisory mandates; a
co-advisory mandate to Green Africa Power LLP (GAP) through our
partner EISER Infrastructure Partners LLP, and Renewable Energy
Performance Platform (REPP) mandate in partnership with Greenstream
Network Ltd. The US is comprised of the management of the
previously disposed biogas assets via a service contract agreement.
Carbon contains the EU ETS Compliance Services business.
Inter segment transactions are carried out at arm's length.
Operating segments redT Camco Consolidated
2016 2015 2016 2015 2016 2015
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------------------- -------- -------- -------- -------- -------- --------
Segment revenue 302 426 10,527 10,680 10,829 11,106
Segment gross margin (1,540) 256 3,806 4,583 2,266 4,839
------------------------------ -------- -------- -------- -------- -------- --------
Segment administrative
expenses (4,680) (3,037) (2,875) (3,286) (7,555) (6,323)
Segment result (6,220) (2,781) 931 1,297 (5,289) (1,484)
Impairment of receivables - - 36 - 36 -
Share-based payments (408) (17)
Results from operating
activities (5,661) (1,501)
Finance income 38 26
Finance expense - (1)
Foreign exchange movement (168) 165
Share of loss of equity
accounted investees - (1,417)
Gain on original investment - 2,016
Taxation 154 12
Gain from discontinued
operation - 1,370
(Loss)/profit for the
year (5,637) 670
Segment assets 17,387 15,866 1,924 6,150 19,311 22,016
Total assets 17,387 15,866 1,924 6,150 19,311 22,016
Segment liabilities (4,100) (5,009) (574) (1,321) (4,674) (6,330)
Total liabilities (4,100) (5,009) (574) (1,321) (4,674) (6,330)
Capital expenditure 72 48 - - 72 48
Depreciation 53 32 4 2 57 34
------------------------------ -------- -------- -------- -------- -------- --------
3. Revenue
By reporting segments:
2016 2015
EUR'000 EUR'000
redT 302 426
Camco 10,527 10,680
Total revenue 10,829 11,106
4. Expenses and auditor's remuneration
Included in comprehensive income are the following:
2016 2015
EUR'000 EUR'000
Depreciation of property, plant
and equipment - owned assets 57 34
Operating lease rental - land and
buildings 211 260
Share-based payments 408 17
Services provided by the Group's auditor:
During the year the Group obtained the following services from
the Company's auditor, PricewaterhouseCoopers LLP (2015: KPMG
LLP):
2016 2015
EUR'000 EUR'000
Audit of these financial statements 62 108
Amounts receivable by auditors and
their associates in respect of:
Audit of financial statements of
subsidiaries pursuant to legislation 11 19
Total services 73 127
5. Staff numbers and costs
The average number of persons employed by the Group (including
Executive Directors) during the year, analysed by category, was as
follows:
Number of employees
2016 2015
redT 24 8
Camco 19 41
43 49
The aggregate payroll costs of continuing operations were as
follows:
2016 2015
EUR'000 EUR'000
Wages and salaries 3,674 3,527
Share-based payments 408 17
Social security costs 381 266
Contributions to defined
contribution plans 48 6
4,511 3,816
Wages and salaries shown above include salaries paid in the year
and bonuses relating to the year. These costs are charged within
administration expenses.
6. Share-based payments
The Group operated share-based incentive plans called the
Long-Term Incentive Plan (the "LTIP"), the Camco 2006 Executive
Share Plan, and the 2015 redT Employee Share Plan. The expense
recognised in respect to the plans is set out below.
2016 2015
EUR'000 EUR'000
2015 redT Employee Share Plan 345 17
NIC on exercised options - Camco
2006 Executive Share Plan 63 -
408 17
7. Net finance income
2016 2015
EUR'000 EUR'000
Finance income
Interest on bank deposits 11 26
Interest on loan note 27 -
38 26
Finance expense
Interest - (1)
- (1)
Foreign exchange movements (168) 165
Net finance income (130) 190
8. Investments in Associates and Joint Ventures
Investments in Associates and Joint ventures held on Balance
Sheet are as follows;
REDH REDH
2016 2015
EUR'000 EUR'000
Balance at 1 January - 2,533
Share of loss - (1,417)
Disposal of original
investment - (1,188)
Foreign exchange
movement - 72
Balance as 31 December - -
During 2015 the Group reached agreement to acquire REDH shares
that it did not already own or control. Following the transaction
on 29 September 2015, the Group had effective voting control over
100% of the shares in REDH and an economic interest of 90% in REDH.
The share acquisition resulted in a net gain on original investment
of EUR2.0m being recorded in the Income Statement. Further share
acquisitions increased the economic interest held by the Group to
99.7% by 31 December 2015.
9. Assets held for sale and discontinued operations
Summary results of discontinued
operations - Group
2016 2015
EUR'000 EUR'000
US biogas income statement - (371)
US biogas net gain from disposal - 2,042
Kenya income statement net of FV
loss on assets - (160)
Tanzania income statement net of
FV loss on assets - (141)
Profit for the year - 1,370
Discontinued operations
The Group sold its US biogas business on 23 December 2015
following previous announcements that the Board was exploring
strategic alternatives to realise additional value from its US
business activities. Due to the timing of the transaction, there
was no requirement to classify the related assets and liabilities
as held for sale. The US biogas business was sold for EUR4.1m, with
EUR1.7m received in cash immediately and the remaining EUR2.4m
being received in full post 31 December 2015. Outstanding loans and
borrowings were transferred to the buyer as part of the sale (loans
were secured against the related US biogas facilities). Tax on
disposal was EUR0.1m. The Group incurred disposal costs of EUR0.3m
in relation to advisor and legal fees. These costs have been
included in administration expenses in the statement of
comprehensive income.
Results of the discontinued operation
- US biogas:
2016 2015
EUR'000 EUR'000
Revenue - 4,008
Expenses - (4,379)
Tax on profit - -
(Loss)/profit for the year - (371)
Cash flows from / (used in) discontinued
operation - US biogas:
2016 2015
EUR'000 EUR'000
Net cash used in operating activities - 1,887
Net cash used in investing activities - -
Net cash from financing activities - (918)
Net cash from discontinued operations - 969
Effect of the disposals on individual assets and
liabilities - US biogas:
2016 2015
EUR'000 EUR'000
Property, plant and equipment - 17,288
Prepayments and accrued income - 1,122
Trade and other receivables - 631
Cash and cash equivalents - 945
Current tax liability - -
Trade and other payables - (210)
Loans and borrowings - (13,113)
Deferred income - (4,731)
Net identifiable assets and liabilities - 1,932
Consideration received (net of tax) - (3,974)
Net gain from disposal (discontinued
operations) - 2,042
Assets held for sale
As at the 31 December 2015 the Group had entered into two
separate Sale and Purchase Agreements (SPA) to sell its Camco
Advisory Services (Kenya) Ltd and Camco Advisory Services
(Tanzania) Ltd businesses, both of which operated under the Africa
Clean Energy reporting segment. The Group strategy for the Africa
reporting segment involves the growth of its funds advisory
business. The current Kenya and Tanzania consulting businesses
focuses on adaption and land use policy consulting and is therefore
non-core to the business strategy.
Given the limited asset value, recent trading history, and the
geographical challenges of both businesses, management has agreed
to the sale of both entities to existing entity Directors, which
allows the Group to exit both businesses efficiently and
effectively. The SPA's record the consideration amounts for each
entity to be - Kenya $1 / Tanzania TZS 100,000,000 (EUR40,000).
Although set at an initial consideration of TZS 100,000,000 for the
Tanzania entity, this is in order to comply with local law, and it
is the consensus and agreement of all parties that only the
equivalent of $1 will be settled. The SPA's remain subject to the
completion and filing of the audited financial statements for the
local entities, and the local revenue authorities sanctioning the
share transfers.
In view of the market value that can be attributed to be
entities, and using this as the recognised basis for measurement of
the carrying value of the assets and liabilities, a fair value
write down of the assets was recorded at 31 December 2015, with
both entities holding an assets held for sale at a nominal value of
$1.
Results of the discontinued operation
- Kenya:
2016 2015
EUR'000 EUR'000
Revenue - 804
Expenses - (934)
Tax on profit - -
(Loss) recognised on FV of assets - (30)
(Loss)/profit for the year - (160)
Cash flows from / (used in) discontinued
operation - Kenya:
2016 2015
EUR'000 EUR'000
Net cash used in operating activities - (37)
Net cash used in investing activities - -
Net cash from financing activities - -
Net cash (used in) / from discontinued
operations - (37)
Assets / liabilities classified
as held for sale - Kenya:
2016 2015
EUR'000 EUR'000
Property, plant and equipment - 11
Prepayments and accrued income - 103
Trade and other receivables - 21
Cash and cash equivalents - 51
Current tax liability - (62)
Trade and other payables - (85)
Loans and borrowings - -
Deferred income - (9)
Net identifiable assets and liabilities - 30
(Loss) recognised on FV of assets - (30)
Carrying value of assets - -
Results of the discontinued operation
- Tanzania:
2016 2015
EUR'000 EUR'000
Revenue - 16
Expenses - (132)
Tax on profit - -
(Loss) recognised on FV of assets - (25)
(Loss)/profit for the year - (141)
Cash flows (used in) / from discontinued
operation - Tanzania:
2016 2015
EUR'000 EUR'000
Net cash used in operating activities - (113)
Net cash used in investing activities - -
Net cash from financing activities - -
Net cash (used in) / from discontinued
operations - (113)
Assets / liabilities classified
as held for sale - Tanzania:
2016 2015
EUR'000 EUR'000
Property, plant and equipment - -
Prepayments and accrued income - 85
Trade and other receivables - 107
Cash and cash equivalents - 5
Current tax liability - (82)
Trade and other payables - (85)
Loans and borrowings - -
Deferred income - (5)
Net identifiable assets and liabilities - 25
(Loss) recognised on FV of assets - (25)
Carrying value of assets - -
10. Profit / (loss) per share
Loss per share attributable to equity holders of the Company is
calculated as follows:
2016 2015
EUR cents EUR cents
per share per share
Basic profit/(loss) per share
From continuing operations (1.23) (0.24)
From continuing and discontinued
operations (1.23) 0.23
Diluted profit/(loss) per share
From continuing operations (1.23) (0.24)
From continuing and discontinued
operations (1.23) 0.22
Profit/(loss) used in calculation
of basic and diluted loss per share EUR'000 EUR'000
From continuing operations (5,637) (700)
From continuing and discontinued
operations (5,637) 670
Weighted average number of shares
used in calculation
Basic 459,941,919 287,839,087
Diluted 459,941,919 300,195,730
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Group by the weighted average
number of ordinary shares in issue during the period.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential shares.
Where the inclusion of potentially issuable shares decreases the
loss per share (anti-dilutive), the potentially issuable shares
have not been included. This was the situation for the 2016
calculations, and the continuing operations calculations for 2015,
with only continuing and discontinued operations showing a true
diluted EUR cents per share.
Weighted average number of shares used in calculation
- basic and diluted
2016 2015
Number Number
Number in issue at 1 January 409,833,227 246,135,113
Effect of share options exercised 3,923,709 6,309,589
Effect of shares issued in the year 46,184,983 35,394,385
Weighted average number of basic
shares at 31 December 459,941,919 287,839,087
Effect of share options granted
not yet exercised - 12,356,643
Weighted average number of diluted
shares at 31 December 459,941,919 300,195,730
11. Directors' share interests
2016 2015
Number Number
Executive Directors
Scott McGregor 11,973,126 11,973,126
Non-executive Directors
John Ward 97,419,319 -
Jonathan Marren 7,743,815 4,700,000
Jeffrey Kenna 2,162,325 2,162,325
Michael Farrow 86,230 86,230
12. Property, plant and equipment
Computer Leasehold Property
and office improvement plant
equipment & equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost at 1 January 2016 334 59 - 393
Additions 52 20 - 72
Disposals (77) - - (77)
Acquired through business - - - -
combination
Effect of movements in
foreign exchange 3 - - 3
Cost at 31 December 2016 312 79 - 391
Accumulated depreciation
at 1 January 2016 (282) (10) - (292)
Charge for the year (40) (17) - (57)
Charge for the year - - - - -
discontinued operations
Disposals 78 - - 78
Effect of movements in
foreign exchange (10) (7) - (17)
Accumulated depreciation
at 31 December 2016 (254) (34) - (288)
Net book value at 31 December
2016 58 45 - 103
Net book value at 31 December
2015 52 49 - 101
13. Intangible fixed assets
Goodwill - Subsidiary acquisition (REDH)
2016 2015
EUR'000 EUR'000
Cost at 1 January 8,167 -
Acquisitions - 8,167
Cost at 31 December 8,167 8,167
Intangible assets - R&D (REDH)
2016 2015
EUR'000 EUR'000
Cost at 1 January 6,822 -
Acquisitions - 6,822
Cost at 31 December 6,822 6,822
Total Goodwill & Intangible Assets
2016 2015
EUR'000 EUR'000
Cost at 1 January 14,989 -
Acquisitions - 14,989
Cost at 31 December 14,989 14,989
Amortisation
Amortisation of the intangible asset (excluding goodwill) will
begin once the redT energy storage system becomes fully
commercialised - for the year ended 31 December 2016 this criteria
had not yet been achieved. A review will be undertaken in 2017 to
confirm the amortisation status of the intangible asset, as well as
to determine the effective useful life.
Goodwill is not amortised, but tested annually for
impairment.
Impairment testing
Goodwill and indefinite life intangible assets considered
significant in comparison to the Group's total carrying amount of
such assets have been allocated to the REDH cash generating units.
The Group conducted a formal review to determine whether the
carrying value of intangible assets, including goodwill, can be
supported. The impairment review comprises a comparison of the
carrying amount of the intangible assets with the Net Present Value
of future discounted cash flows, using a Value in use calculation,
for which the recoverable amount exceeds its carrying amount.
The Group prepared cash flow forecasts derived from the most
recent financial results and 5 year budget projection approved by
management and the Board, which on a discounted cash flow basis, is
greater than the carrying value of the intangible assets held. The
key assumptions for the Net Present Value calculation were; pre-tax
discount rate 23% and growth rate beyond forecast period 2%. A
reduction in the growth rate beyond forecast period from 2% to 1%
would reduce the excess of the recoverable amount, however still
resulting in an overall excess amount exceeding the carrying
value.
14. Prepayments and accrued income
2016 2015
EUR'000 EUR'000
Prepayments 409 247
Accrued income 100 134
509 381
15. Trade and other receivables
2016 2015
EUR'000 EUR'000
Trade receivables 573 820
Other receivables 202 238
775 1,058
16. Other financial assets
2016 2015
EUR'000 EUR'000
Loan note receivable - 2,420
- 2,420
The Group sold its US biogas business on 23 December 2015 for
EUR4.1m, with EUR1.7m received in cash immediately and the
remaining EUR2.4m being received as a loan note which was paid in
full 29 January 2016.
17. Cash and cash equivalents
2016 2015
EUR'000 EUR'000
Cash on deposit 2,753 2,935
Cash and cash equivalents in the
cash flow statement 2,753 2,935
18. Trade and other payables
2016 2015
EUR'000 EUR'000
Trade payables 1,782 185
Other payables 2,190 5,337
3,972 5,522
19. Deferred income
2016 2015
EUR'000 EUR'000
Non-current liabilities
Deferred income 222 250
222 250
Current liabilities
Deferred income 480 408
480 408
20. Issued share capital and reserves
Number Number
2016 2016 2015 2015
'000 EUR'000 '000 EUR'000
Authorised
Ordinary shares of
EUR0.01 1,250,000 12,500 1,250,000 12,500
Issued and fully paid
All ordinary shares
of EUR0.01 (all classified
in shareholders' funds)
Issued on 1 January 409,833 4,098 246,135 2,461
Issued in the year 58,096 581 163,698 1,637
Issued at 31 December 467,929 4,679 409,833 4,098
21. Related parties
The Group's related business partner is Consortia Secretaries
Limited which is 100% owned by Consortia Partnership Limited
("Consortia") who have been appointed Company Secretary. Michael
Farrow, a non-executive Director of the Company, is a Director of
Consortia. The amounts charged to administration expenses in
respect of these services are shown in the table below.
Income statement
2016 2015
EUR'000 EUR'000
Administrative expenses:
Consortia Partnership
Limited 38 46
Balance sheet
2016 2015
EUR'000 EUR'000
Trade and other payables:
Consortia Partnership - -
Limited
Business disposals
The Group has two Sale and Purchase Agreements (SPA) in place as
at 31 December 2016 (pending completion conditions) to sell its
shareholding in the following entities:
o Camco Advisory Services (Kenya) Limited
o Camco Advisory Services (Tanzania) Limited
Both SPA's have been entered into by the Group with a current
standing Director of each of the entities.
22. Post balance sheet events
redT energy raised GBP14.88 million (before expenses) through a
placing of 185,994,530 ordinary shares on 3 January 2017. The
number of ordinary shares in issue and the total voting rights in
the Group following the placing is 653,923,424.
As part of the share raise Neil O'Brien, a non-executive
Director, purchased 625,000 shares of EUR0.01 each in the capital
of the Company at a price of 8.0 pence per ordinary share.
Following completion of the above post balance sheet event, as
at 31 March 2017 the Group held EUR17.2m in available cash.
23. Posting of 2016 Annual Report and Accounts and availability
on website
The 2016 Annual Report will be posted to shareholders on 25
April 2017 and will be available on the Company's website
www.redtenergy.com shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZDMFRGNZM
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