TIDMIEH
RNS Number : 5020R
Intelligent Energy Holdings PLC
22 September 2017
Trading update
Released: 22(nd) September 2017 at 07:00
Intelligent Energy Holdings PLC
(LSE: IEH; ADR:INGYY)
22 September 2017
INTELLIGENT ENERGY HOLDINGS PLC: FINANCING TRADING UPDATE AND
REVIEW OF STRATEGIC OPTIONS
Intelligent Energy Holdings plc, the energy technology group
("Intelligent Energy", "IE", the "Group" or the "Company"),
provides the following update with respect to trading for the full
year ending 30 September 2017, including the Company's high level
financial estimates for the period. This announcement contains
inside information.
Financial KPI 2016/17 2015/16
Forecast Actual
Unaudited Audited
GBPm GBPm
--------------------- ------------ ---------
Revenue(1) c21 91.8
--------------------- ------------ ---------
Adjusted EBITDA(2) -c17 -33.4
--------------------- ------------ ---------
Loss after tax(3) -c24 -82.7m
--------------------- ------------ ---------
Cash(4) c2.7 20.6
--------------------- ------------ ---------
(1) The revenue estimate includes GBP16.7m (2015/16 GBP85.1m)
from the Indian GTL interim contract, which ceased at 30 November
2016
(2) EBITDA is a non-statutory measure often used by investors as
a proxy for cash and to calculate the value of a business. The
Company uses adjusted EBITDA (Earnings before Interest, impairment
charges, Tax, Depreciation, Amortisation, share of joint venture
results, equity fund raising costs and IFRS2 share-based payment
charges) as an indicator of trading profitability and a proxy for
operating cashflow, before any cash movements relating to
investment, tax, funding and changes in working capital. It is not
an IFRS measure, and therefore not shown in the Group income
statement
(3) Loss after tax in 2015/16 is after GBP27.8m of exceptional
items and the derecognition of a GBP21.9m deferred tax asset
(4) Cash is defined as cash and cash equivalents and short term deposits
(5) The estimates for 2016/17 do not include those adjustments
that would be required were the group no longer to continue as a
going concern.
Summary
While the Group has made progress in advancing its commercial
strategy, its constrained financial resources has led the Board to
initiate a sale process for some or all of the businesses and/or
assets held by the Company's subsidiaries as one of its strategic
options, however there is no guarantee that any sale will be
achieved. As detailed below, given the slower than expected
development of the market and the Group's financial structure, the
Group faces an uncertain outlook.
Trading related updates
-- The business remains focused on fuel cell product sales as
one segment in global markets. Products comprise:
- the economically competitive Fuel Cell Module (FCM) 800 range,
for 1kW to 4kW power output across three standard products; and
- lightweight fuel cell stack and system products for drones in
the 650W to 2kW power output range which more than double
conventional drone flight times.
-- The restructuring initiated in H2 2015/16 has reduced
adjusted EBITDA losses from GBP(33.4)m in 2015/16 to an estimated
GBP(17)m for 2016/17. Restructuring activities were extended
further during H1 2016/17 to include the Group's Indian based
activities, to support fuel cell product sales on the same
commercial model as the rest of the Company. This followed the
cessation of the interim energy management agreement with GTL on 30
November 2016.
-- Contracts signed in the year include:
- The supply of up to 600 1kW fuel cell modules for US based
Luxfer-GTM Technologies. These are to be used in their portable,
zero-emission lighting towers as part of a growing strategic
relationship in the development of a line of integrated fuel cell
products;
- The sale of demonstrators of the Group's lightweight stack
technologies which have been delivered to drone market
participants. This has included PINC, the US logistics group;
- The sale of showcase demonstrators of stationary power related
fuel cell modules and systems that have been deployed in Japan,
China, India and the US; and
- The Digiman grant funded program to reduce the cost of AC
manufactured fuel cell stacks at volume which has been launched in
collaboration with other industrial companies.
-- In addition:
- The Group's fuel cell stacks are being used in a trial of
Suzuki Burgman scooters with the Metropolitan Police in London,
announced in September 2017;
- A strategic partnership with US based FlightWave, announced in
September 2017, will enable FlightWave to integrate Intelligent
Energy's innovative lightweight 650W fuel cell power module into
their UAV product range within North America. The first product
from this partnership will be FlightWave's 'Jupiter-H2', a
multi-rotor, endurance UAV capable of flying for up to two hours;
and
- A strategic partnership with UK based Taylor Construction
Plant Ltd was announced in September 2017 to supply its air cooled
fuel cell modules for integration, testing and evaluation into
power products for the construction industry.
-- Continued improvement has taken place in the Group's fuel
cell operating capabilities, which the Group continues to consider
as industry leading with respect to power output per unit volume
and power output per unit weight.
-- The Company has continued to note significant industrial
interest in bringing IE's higher powered Evaporatively Cooled
technology to market at scale on a funded basis. This has yet
however to convert to contracted commitments, although discussions
with various parties continue.
-- IE is in discussion with Suzuki regarding the restructuring
and unwinding of SMILE, the 50/50 joint venture which contains a
pilot production line for air cooled stacks. It is expected
that:
- Suzuki will exit the joint venture, with IE receiving an
expected net GBP0.9m of cash. This is not expected to conclude
until December 2017 at the earliest.
- IE expects to continue its relationship with Suzuki with
respect to fuel cell technology, including the scooter trial in the
UK, post the restructuring of SMILE.
Future Financing and Sale process
As noted in the Company's announcement on 30 June 2017, the
Company does not possess sufficient reserves of cash to continue to
fund the current cash burn (of approximately GBP1.6m a month) from
product sales alone. The Company will have an estimated cash
balance of GBP2.7m at 30 September 2017. Material one off cash
receipts are expected at the end of November 2017 for cGBP1.6m of
cash R&D credits subject to IE being a going concern and
cGBP0.9m from the restructuring of SMILE, which is expected no
earlier than December 2017. Discussions with potential customers on
trading related opportunities have been progressed, which, if they
were secured, could offer funding to allow the Group to reach a
free cash flow positive position. However, while promising and
ongoing, such discussions have not to date translated to signed
contracts. In consultation with advisers and significant
shareholders the Board, in line with previous advice and
indications, has concluded that that it is not viable for the
Company to be able to access capital markets in a conventional
manner.
The Board has therefore already initiated a sale process for
some or all of the businesses and/or assets held by the Company's
subsidiaries, which will include consultation with the principal
holders of the Convertible Loan Notes who are also significant
shareholders in the Company. The sale process has and continues to
be managed on the Board's behalf by Deloitte. It should be noted
that constraints exist in relation to that sale process, including
the security granted (as part of the refinancing of the Company in
2016) in favour of the holders of the Convertible Loan Notes.
The Board will continue to review any other options available to
the Company and the Group, whilst recognising the circumstances
that the Company faces. There can be no certainty over the outcome
of the sale process, or of any other options that might be
available to the Company and the Group, and further announcements
will be made as appropriate in due course.
Board Composition
In order to assist the Company during this process, Mike Muller,
Non-Executive Director, will delay stepping down from the Board and
Paul Heiden, Non-Executive Chairman, will continue to act in his
capacity as Non-Executive Chairman of the Company until the process
has concluded.
Outlook
The Board note their continued belief in the value of the
Company's technology and the long-term viability of the market for
fuel cell technology. However, given the slower than expected
development of the market, the Company's financing position and the
GBP30m interest bearing principal amount owed by the Company in
respect of the Convertible Loan Notes, the Board has reluctantly
concluded that there could be little (or potentially no) value
remaining in the Company's ordinary shares.
This announcement contains inside information. The person
responsible for the release of this announcement on behalf of the
Group is John Maguire, Chief Financial Officer.
Enquiries:
Intelligent Energy Holdings plc +44 (0)1509 271271
Martin Bloom Group Chief Executive Officer
John Maguire Chief Financial Officer
Forward-looking statements
Certain statements made in this announcement are, or may be,
forward-looking statements. These represent expectations for the
Company's business, and involve risks and uncertainties. The
Company has based these forward-looking statements on current
expectations and projections about future events. However, because
they involve known and unknown risks, uncertainties and other
factors, which in some cases are beyond the Company's control,
actual results or performance may differ materially from those
expressed or implied by such statements. No reliance should be
placed on such forward-looking statements. Without limitation to
the foregoing, nothing in this announcement is intended to
constitute (or should be construed as) a profit forecast.
About Intelligent Energy
Intelligent Energy Holdings plc delivers clean energy solutions
for the distributed energy, diesel replacement, automotive and
aerial drone markets. Working with international companies,
Intelligent Energy aims to embed its fuel cell stack technology
into applications across its target market sectors.
With its principal facility and headquarters in Loughborough,
UK, the Company also operates in Japan, India, China, Singapore,
France and the US. Intelligent Energy Holdings plc is listed on the
London Stock Exchange (LSE: IEH.L).
More information on Intelligent Energy is available at Twitter,
YouTube and LinkedIn. Or visit
http://www.intelligent-energy.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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