ALO.L Regulatory News (ALO)

28 Sep 2007 14:45

Cue Energy Plc28 September 2007 28 September 2007 Cue Energy plc ("Cue" or "the Company") Interim Results Cue Energy plc, announces its results for the six months ended 30 June 2007. Overview • Opportunity to acquire advanced micro fuel cell technology forcommercialisation • Technology developed by CSIRO, Australia's leading technology researchorganisation • Seven years development and £12 million investment by CSIRO • Highly skilled technical team and continued access to CSIRO'sfacilities Chairman's Statement It is with pleasure that I provide you with an update on the work that has beengoing on behind the scenes at Cue. On 3 January 2007 the Company announced it had entered into an agreement withOreion Australia Energy Pty Ltd ("Oreion") to provide funding for thecommercialisation of an advanced micro fuel cell technology developed by CSIRO,the Australian governments leading technology research organisation. CSIRO hasinvested over seven years and £12 million in this technology. Under this agreement, Cue would make available up to £500,000 for Oreion toadvance this technology, file patents and to commence its commercialisation. At30 June 2007 Oreion had drawn down £200,000 whilst preparing for a furthercapital raising aimed at commercialising this technology. Cue has conducted a detailed review of the technology via an independenttechnical assessment and the Directors believe that it has identified asignificant commercial opportunity. Accordingly, Cue has further produced a business plan for the development ofthis fuel cell technology which the Directors believe has the potential toprovide a real alternative to lithium-ion batteries for the powering of portableelectronic devices, such as mobile phones and laptops In the laptop market alone, power demand and functionality is outstripping thecapabilities of lithium-ion batteries and it is believed that fuel cells willprovide this continuous power requirement. Frost & Sullivan predict that by2012 consumer demand will exceed 80 million fuel-cell units in batteryreplacement and that this will be preceded by billions of dollars of governmentand commercial spending on fuel cell technology development. The Directors believe that the Company can advance this technology to provide acommercial solution to the power capacity and life expectancy constraints thatapply to current battery technology and that this technology will besub-licensed to a number of key strategic partners in both the battery and inthe portable electronic devices industries. Whilst the fuel cell technology is being commercialised the business planenvisages early revenue to be generated from the sale of fuel cell teststations, already near commercialisation, that CSIRO has developed for its ownuse. The market for these products will be existing fuel cell developers. The Directors are also planning to develop derivative products from thistechnology. One such product is a portable electrolyser-based oxygen generatorfor medical uses at home and in remote areas such as field hospitals.Approximately 750,000 people in the USA alone require permanent oxygen therapyand the World Health Organisation estimates that 600 million people suffer fromchronic obstructive pulmonary disease and emphysema requiring oxygen supply.The current options for these people is limited to bottled oxygen, which isbulky, and needs regular changing or oxygen "concentrators", which are noisy andbulky. The Directors have also identified a first class management team that will leadthe existing CSIRO technical team to achieve the commercial objectives developedin the business plan. It is proposed that Cue would second from CSIRO its highlyexperienced technical team to continue the technology development and willcontinue to have access to CSIRO's extensive facilities, specialised equipmentand expertise. It has been agreed in principle that, subject to appropriate funding being putin place, Cue will acquire its interest in CSIRO's PEM technology through theacquisition of 100% of the issued capital of Oreion. Completion of the proposedacquisition is conditional on, amongst other things, completion of satisfactorydue diligence by Cue and approval by Cue shareholders. The proposed acquisition would be classified as a reverse takeover under the AIMRules. Discussions are continuing, with financing being achieved through anequity issue in excess of the current market capitalisation of the Company. Asmentioned in the results below, Cue has made a significant investment during theperiod on the legal, technical and commercialisation costs of this project whichis indicative of the confidence which the Directors have in it. Your Directors believe that the acquisition of Oreion represents an excellentopportunity for the Company's shareholders to participate in the growth of thefuel cell industry and to deliver attractive financial returns. Results During the six months to 30 June 2007, the Company received investment income of£40,950 and incurred administrative expense of £219,023 resulting in a loss of£178,074. At 30 June 2007 the Company had provided £200,000 to Oreion under the financefacility agreement dated 3 January 2007 and incurred £462,729 for Oreionacquisition costs which includes due diligence work carried out. The totalamount invested in the project as at 30 June 2007 was therefore £662,729 whichhas been carried forward in the balance sheet. I would take this opportunity to thank the members of the Board for theirefforts during the year, and your support as shareholders. Martin ThomasChairman28 September 2007 INCOME STATEMENTFOR THE PERIOD ENDED 30 JUNE 2007 6 months to 6 months to Year ended 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Administrative expenses (219) - (253) Operating loss (219) - (253) Interest receivable 41 - 28 Loss on ordinary activities before (178) - (225)taxation Taxation on loss on ordinary activities - - - Loss for the financial year (178) - (225) Basic loss per share (pence) (Note 3) (0.08)p (0.00)p (0.22)p BALANCE SHEETFOR THE PERIOD ENDED 30 JUNE 2007 6 months to 6 months to Year ended 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000ASSETSNon-current assetsTangible assets 3 - 3 3 - 3Current assetsCash 1,994 193 2,831Prepayments - Oreion Acquisition (Note 4) 463 - -Other receivables 298 2 44 2,755 195 2,875LIABILITIESCurrent LiabilitiesOther payables 70 - 12 Net current assets 2,685 195 2,863 NET ASSETS 2,688 195 2,866 Shareholders' equityCalled up share capital 161 56 161Share premium account 2,755 139 2,755Other reserves 176 - 176Retained loss (404) - (226)Total Equity 2,688 195 2,866 CASH FLOW STATEMENTFOR THE PERIOD ENDED 30 JUNE 2007 6 months to 6 months to Year ended 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash used in operating activities (175) (2) (209) Prepayment - Oreion Acquisition (462) - -Payment to acquire tangible assets - - (4)Net cash used in investing activities (462) - (4) Finance Facility costs (note 5) (200) - -Proceeds from Issue of share - 195 3,206Share issue costs - - (289)Share based payments - - 127Net cash inflow from financing (200) 195 3,044 Increase/(decrease) in cash (837) 193 2,831 Cash and cash equivalents at beginning of 2,831 - -the period/year Cash and cash equivalents at end of the 1,994 193 2,831period/year STATEMENT OF CHANGES IN EQUITYFOR THE PERIOD ENDED 30 JUNE 2007 Called up Share Other Retained Loss Total share capital premium Reserves Shareholders Equity £'000 £'000 £'000 £'000 £'000 As at 1 January 2007 161 2,755 176 (226) 2,866Shares issued during the period - - - - -Share issue expense - - - - -Equity-settled share-based payments - - - - -Equity-settled share issue expenses - - - - -Loss for the period - - - (178) (178)Balance as at 30 June 2007 161 2,775 176 (404) 2,688 NOTES TO THE FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 2007 1. Financial Information The financial information set out above does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. It hasbeen prepared on a going concern basis in accordance with InternationalFinancial Reporting Standards (IFRS). The accounting policies applied inpreparing the financial information are consistent with those that have beenadopted in the Company's 2006 statutory accounts. The financial information for the 6 months ended 30 June 2007 and the 6months ended 30 June 2006 has not been audited. 2. Basis of Preparation This financial information has been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion (EU), IFRIC interpretations and the Companies Act 1985 applicable tocompanies reporting under IFRS. The financial information has been preparedunder historical cost convention. The preparation of this financial information in conformity with generallyaccepted accounting principles requires the use of estimates and assumptionsthat affect the reported amounts of assets and liabilities at the date of thefinancial information and the reported amounts of revenues and expenses duringthe reporting period. Although these estimates are based on management's bestknowledge of the amount, event or actions, actual results ultimately may differfrom those estimates. 3. Earnings per share The calculation of loss per share is based on a retained loss of £178,074for the period ended 30 June 2007 (30 June 2006: nil; 31 December 2006:£225,682) and the weighted average number of shares in issue in the period 30June 2007 of 230,207,901 (30 June 2006: 4,351,136; 31 December 2006:104,645,967). There is no difference between the diluted loss per share and theloss per share shown. 4. Prepayments - Oreion Acquisition The direct costs incurred in relation to the Oreion Australia Energy Pty Ltdacquisition at 30 June 2007 was £462,729. 5. Finance Facility Cue Energy plc has entered into an agreement with Oreion Australia Energy PtyLtd ("Oreion") whereby up to a maximum of £500,000 has been made available toOreion as part of a working capital facility. Interest is payable @ 9.1% on theoutstanding balances. During the six months ended 30 June 2007 Oreion had drawndown £200,000. 6. Called Up Share Capital The authorised share capital of the Company and the called up and fully paidamounts at 30 June 2007 follows: £'000Authorised20,000,000,000 ordinary shares of 0.7p each 14,000,000 Issued and fully paid230,207,901 ordinary shares of 0.7p each 161,146 7. Share options and warrants The following equity instruments have been issued by the Company and have notbeen exercised at 30 June 2007: Number of ordinary Exercise shares Price ExpiresIncentive options 5,755,199 2 pence 2 August 2011 **ENDS** For further information please visit www.cueenergyplc.com or contact thefollowing: Jade Styants/Toby Howell Cue Energy plc Tel: +44 (0)20 7182 1748 Edward Hutton/Rachel Kane HB Corporate Tel: +44 (0)20 7510 8600 Hugo de Salis/Isabel Crossley St Brides Media & Finance Tel: +44 (0) 20 7242 4477 This information is provided by RNS The company news service from the London Stock Exchange