19 Aug 2008 07:00
19 August 2008
ENFIS GROUP PLC
("Enfis" or "the Company")
Interim results for the six month period ended 30 June 2008
Solid State Lighting (SSL) is currently five times more efficient than incandescent and forecast to be ten times by 2010. The market for high brightness LEDs is forecast to be just under $1billion in 2011. The fastest growing SSL markets are architectural, retail and entertainment with a forecast CAGR of 45%*.
Enfis, a leader in the design, development and manufacture of intelligent high power light emitting diode (LED) arrays and smart light engines, produces products which immediately address these markets. The Company is pleased to announce its interim results for the six months ended 30 June 2008.
Highlights
The performance of the business during the period has been in line with both management and analyst expectations.
Key highlights of the period were:
Significant H1 revenue growth of 300% to £392k.
Contracted revenue of c.£2.25m in H1.
£725k core product contract signed with a tier one lighting company for delivery in 2008. Competing entities for the project utilised technology from major global lighting companies.
Over 3,000 products shipped in the first six months.
Newly established Shanghai office delivers its first contract worth over $2.15m.
Global network of integrators extended with the addition of Silica, a US based company with 300 direct sales personnel.
Shaun Oxenham, Chief Executive, commented:
"Enfis has made significant strides in its transformation into a cash-generative commercial entity. With energy efficiency dominating the commercial and political agenda, the Company is well positioned in a vibrant market where acquisition and consolidation of key participants continues to be a significant feature".
"The first six months of this year has seen both a strengthening of our global distribution network and strong contract wins. Revenue and visibility of future revenue continues to improve in line with management forecasts and gives the Board confidence that Enfis will produce strong profitable growth over the coming years."
* Strategies Unlimited, January 2007
Enquiries
Enfis Group plc (www.enfis.com) Tel: +44 (0) 1792 485660
Shaun Oxenham, Chief Executive Officer
Giles Davies, Chief Financial Officer
Threadneedle Communications Tel: +44 (0) 20 7653 9850
Graham Herring / Josh Royston
Noble & Company Limited Tel: +44 (0) 20 7763 2200
John Llewellyn-Lloyd / Nick Athanas
About Enfis
Enfis is a global leader in the design, development and manufacture of intelligent, high-power light emitting diode (LED) light engines and arrays across a wide range of wavelengths. With a global headquarters in the UK, and carefully chosen specialist partners and distributors, its unique range of plug-and-play, 'straight from the box' light engine solutions are manufactured and sold around the world.
Using cutting-edge technology developed via an enviable academic heritage and following a successful flotation on the London Stock Exchange, Enfis continues to lead the way in enabling smart, efficient solutions for Solid State Lighting.
Chief Executive Officer's Statement
Introduction
The first six months of 2008 has shown strong signs that Enfis' sales strategy of a generic plug and play light engine, which provides easy integration into professional lighting market applications, is succeeding within the high growth solid state lighting (SSL) sector.
The Company raised capital in March 2007 at the time of its admission to AIM to commercialise the technology advantage that it has in the SSL sector. From the outset, the Company stated its intention to establish a comprehensive global distribution network from which to target end users with its range of products. With this distribution network in place, the Company is able to focus its efforts on direct sales to both integrators and lighting companies.
The period to 30 June 2008 demonstrates continued success in the implementation of this business strategy. A number of significant distribution agreements were entered into during the period including agreements with Silica in North America and Edmond Optics in Europe. Enfis now has a global network of 18 distributors in place.
Revenue
Enfis has achieved strong revenue growth of 300% to £392k from the comparable period in the previous year. Furthermore, contracts signed for delivery in 2008 provide the Board with confidence that the results for the year will be in line with management expectations. The Shanghai office, which was established in 2007, to facilitate Enfis' progress in Asia Pacific, has produced its first c.$2m contract and is now starting to make a strong impact in the market.
In addition Enfis signed a contract worth a minimum of £725k to provide its products to a major tier one lighting company. This was significant in that Enfis was awarded this contract ahead of major international SSL competitors.
Product Development
Enfis continues to drive improvements in its current product set. With energy efficiency dominating the commercial and political agenda, the Company expects to release a step change improvement in the efficacy of its multichip products, providing improved energy efficiency that is competitive with a single chip technology.
The next generation of light engine products are expected to be released in 2009 providing even higher efficiency and greater functionality than currently available.
Financial Performance
During the six months to 30 June 2008 Enfis has made significant progress in implementing its outsource manufacturing model and achieving the revenue growth forecast by the financial markets. The increase in revenue visibility with current contracted revenue of £2.25m gives the Board confidence that the 2008 results will be in line with management expectations.
Turnover for the period of £392,000 is four times that of the comparable period last year and in line with the market's current year annual forecast.
Gross profit margin is in line with management expectations at this stage. Product qualification through the volume manufacturing process has been successfully implemented and margins will increase significantly with increased production volumes driven by rapidly improving revenue visibility. The targeted gross margin of 50% is expected to be achieved.
Chief Executive Officer's Statement (continued)
Financial Performance (continued)
Enfis has a scalable, cash generative financial model. The overhead base has remained relatively stable despite a four times increase in revenue. There is no major expenditure forecast for the remainder of the year.
The cash balance stands at over £1m at the end of the period and utilisation over the first half of the year has been in line with management forecasts.
Outlook
Enfis has made important steps in its transformation into a cash-generative commercial entity.
The Company is well positioned in a vibrant market where acquisition and consolidation of participants continues to be a significant feature.
There continues to be an increasing global focus on the reduction in world energy consumption and the associated environmental impacts. Enfis is well positioned in the SSL sector to take advantage of such macro-trends in the marketplace.
Revenue and visibility of future revenue continues to improve in line with management forecasts and gives the Board confidence that Enfis will produce strong profitable growth over the coming years.
Shaun Oxenham
Chief Executive Officer
19 August 2008
Consolidated income statement
for the six month period ended 30 June 2008
| 6 months ended 30 June 2008 (unaudited) | 6 months ended 30 June 2007 (unaudited) | Year ended 31 December 2007 (audited) | ||
| Notes | £000 | £000 | £000 | |
| Revenue | 392 | 98 | 307 | |
| Cost of sales | (272) | (79) | (269) | |
| Gross profit | 120 | 19 | 38 | |
| Administrative expenses | (1,247) | (1,072) | (2,309) | |
| Other income | 22 | 68 | 140 | |
| Operating loss for the period | (1,105) | (985) | (2,131) | |
| Net finance income | 29 | 94 | 84 | |
| Loss before taxation | (1,076) | (891) | (2,047) | |
| Taxation | 284 | - | 182 | |
| Loss after taxation | (792) | (891) | (1,865) |
Attributable to:
| Equity holders of the company | (792) | (891) | (1,865) | |
| Earnings per share for loss attributable to the equity holders of the Company | ||||
| - basic | (8.5p) | (10.6p) | (22.7p) | |
| - diluted | (7.8p) | (9.5p) | (20.4p) | |
All activities above relate to the continuing operations of the group.
Consolidated balance sheet
As at 30 June 2008
| 30 June 2008 (unaudited) | 30 June 2007 (unaudited) | 31 December 2007 (audited) | ||
| Notes | Assets | £000 | £000 | £000 |
| Non-current assets | ||||
| Property, plant and equipment | 248 | 211 | 235 | |
| Intangible assets | 558 | 184 | 400 | |
| 806 | 395 | 635 | ||
| Current assets | ||||
| Inventories | 288 | 216 | 278 | |
| Trade and other receivables | 426 | 200 | 212 | |
| Corporation tax receivable | 284 | 1 | - | |
| Cash and cash equivalents | 1,080 | 3,136 | 1,999 | |
| 2,078 | 3,553 | 2,489 | ||
| Total assets | 2,884 | 3,948 | 3,124 | |
| Capital and reserves attributable to equity holders of the company | ||||
| Ordinary shares | 938 | 894 | 894 | |
| Share premium | 4,067 | 3,589 | 3,585 | |
| Share option reserve | 102 | 71 | 61 | |
| Reverse acquisition reserve | 2,284 | 2,284 | 2,284 | |
| Retained losses | (5,217) | (3,583) | (4,425) | |
| 3 | Total equity | 2,174 | 3,255 | 2,399 |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred income | 80 | 112 | 66 | |
| Borrowings | 80 | 132 | 106 | |
| 160 | 244 | 172 | ||
| Current liabilities | ||||
| Trade and other payables | 500 | 384 | 495 | |
| Borrowings | 50 | 65 | 58 | |
| 550 | 449 | 553 | ||
| Total liabilities | 710 | 693 | 725 | |
| Total equity and liabilities | 2,884 | 3,948 | 3,124 |
Consolidated cash flow statement
for the six month period ended 30 June 2008
| 6 months ended 30 June 2008 (unaudited) | 6 months ended 30 June 2007 (unaudited) | Year ended 31 December 2007 (audited) | ||
| Notes | £000 | £000 | £000 | |
| Cash outflows from operating activities | ||||
| 2 | Cash used in operations | (1,184) | (1,128) | (2,237) |
| Interest paid | (12) | (43) | (41) | |
| R&D tax credits received | - | - | 183 | |
| Net cash (used) in operating activities | (1,196) | (1,171) | (2,095) | |
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment | (47) | (47) | (103) | |
| Purchase of intangible assets | (218) | (131) | (381) | |
| Receipt of government grants | 7 | 103 | 155 | |
| Interest received | 41 | 49 | 124 | |
| Net cash (used) from investing activities | (217) | (26) | (205) | |
| Cash flows from financing activities | ||||
| Proceeds from the issuance of ordinary shares | 527 | 4,147 | 4,144 | |
| Proceeds from borrowings | - | - | - | |
| Repayments of borrowings | (15) | (15) | (30) | |
| Finance lease principal repayments | (18) | (17) | (33) | |
| Net cash generated from financial activities | 494 | 4,115 | 4,081 | |
| Net (decrease) / increase in cash and cash equivalents | (919) | 2,918 | 1,781 | |
| Cash and cash equivalents at the beginning of the period | 1,999 | 218 | 218 | |
| Cash and cash equivalents at the end of the period | 1,080 | 3,136 | 1,999 |
1 Basis of preparation
The unaudited Interim Report has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and interpretations expected to be in issue at 31 December 2008.
The Interim Report was approved by the Board of Directors and the Audit Committee on 19 August 2008. The Interim Report does not constitute statutory financial statements within the meaning of S240 of the Companies Act 1985 and has not been audited.
The accounting policies that have been used are consistent with those used in the preparation of the IFRS financial statements for the year ended 31 December 2007 of Enfis Group plc which are publically available.
Comparative figures in the financial statements for the year ended 31 December 2007 have been taken from the Group's audited statutory accounts prepared under IFRS on which the company's auditors, PricewaterhouseCoopers LLP, expressed an unqualified opinion.
The preparation of the Interim Report requires management to make estimates and assumptions that affect both the reported income and expense and the reported assets and liabilities at the date of the Interim Report. Although these estimates are based on management's best judgement at the date of the Interim Report, actual results may differ from these estimates.
The interim financial information is unaudited but has been reviewed by the auditors and their review opinion is included in this report.
The Interim Report will be announced to all shareholders on the London Stock Exchange and published on the Group's website on 19 August 2008. Copies will be available to members of the public upon application to the Company Secretary at Technium II, Kings Road, Swansea Waterfront, Swansea, SA1 8PJ.
2 Cash used in operations
| 6 months ended 30 June 2008 (unaudited) | 6 months ended 30 June 2007 (unaudited) | Year ended 31 December 2007 (audited) | |
| £000 | £000 | £000 | |
| Loss before income tax | (1,076) | (891) | (2,047) |
| Adjustments for: | |||
| - Depreciation | 35 | 25 | 59 |
| - Amortisation - intangibles | 60 | 70 | 52 |
| - Write-off of patents | - | - | 49 |
| - Amortisation - grants | (23) | (68) | (137) |
| - Share based payments | 41 | 71 | 62 |
| - Net finance (income) | (29) | (94) | (83) |
| Changes in working capital: | |||
| - Inventories | (10) | (155) | (216) |
| - Trade and other receivables | (213) | (118) | (131) |
| - Trade and other payables | 31 | 32 | 155 |
| Cash used in operations | (1,184) | (1,128) | (2,237) |
3 Combined statement of movements in equity, shareholders funds' and statement of movement on reserves (Group)
| Ordinary share capital | Deferred share capital | Capital redemption reserve | Preference shares (equity element) | Share premium | Share option reserve | Reverse acquisition reserve | Retained losses | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2007 in Enfis Limited | 2 | - | - | 78 | 2,554 | 221 | - | (2,913) | (58) |
| Conversion of preference shares | - | 300 | - | (78) | - | - | - | - | 222 |
| Redemption of deferred shares | - | (300) | 300 | - | - | - | - | - | - |
| Share for share exchange (Enfis Group plc with Enfis Limited) | 572 | - | - | - | - | - | (572) | - | - |
| Reverse Acquisition adjustments | (2) | - | (300) | - | (2,554) | - | 2,856 | - | - |
| AIM listing (Issue of new shares) | 322 | - | - | - | 4,178 | - | - | - | 4,500 |
| Expenses incurred on issue of new shares | - | - | - | - | (589) | - | - | - | (589) |
| Share option valuation | - | - | - | - | - | (221) | - | 221 | - |
| Loss for the period | - | - | - | - | - | 71 | - | (891) | (820) |
| At 30 June 2007 in Enfis Group plc (consolidated) | 894 | - | - | - | 3,589 | 71 | 2,284 | (3,583) | 3,255 |
3 Combined statement of movements in equity, shareholders' funds and statement of movements on reserves (Group)
| Ordinary share capital | Deferred share capital | Capital redemption reserve | Preference shares (equity element) | Share premium | Share option reserve | Share warrants | Reverse acquisition reserve | Retained losses | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 January 2007 (in Enfis Limited) | 2 | - | - | 78 | 2,554 | 221 | - | - | (2,913) | (58) |
| Conversion of preference shares | - | 300 | - | (78) | - | - | - | - | 132 | 354 |
| Share issue and redemption of deferred shares | - | (300) | 300 | - | - | - | - | - | - | - |
| Allotment of shares (Enfis Group plc) | - | - | - | - | - | - | - | - | - | - |
| Share for share exchange (Enfis Group plc with Enfis Limited) | 572 | - | - | - | - | - | - | (572) | - | - |
| Reverse Acquisition adjustments | (2) | - | (300) | (2,554) | - | - | 2,856 | - | - | |
| AIM listing (Issue of new shares) | 322 | - | - | - | 4,178 | - | - | - | - | 4,500 |
| Expenses incurred on issue of new shares | - | - | - | - | (593) | - | - | - | - | (593) |
| Share option reversal | - | - | - | - | - | (221) | - | - | 221 | - |
| Loss for the period | - | - | - | - | - | 61 | - | - | (1,865) | (1,804) |
| At 31 December 2007 in Enfis Group plc (consolidated) | 894 | - | - | - | 3,585 | 61 | - | 2,284 | (4,425) | 2,399 |
3 Combined statement of movements in equity, shareholders funds' and statement of movement on reserves (Group) (Continued)
| Ordinary share capital | Share premium | Share option reserve | Reverse acquisition reserve | Retained losses | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2008 | 894 | 3,585 | 61 | 2,284 | (4,425) | 2,399 |
| Issue of new shares | 44 | 494 | - | - | - | 538 |
| Expenses incurred on issue of new shares | - | (12) | - | - | - | (12) |
| Loss for the period | - | - | 41 | - | (792) | (751) |
| At 30 June 2008 | 938 | 4,067 | 102 | 2,284 | (5,217) | 2,174 |
Share Issue
On 14 February 2008 Enfis Group plc issued 446,803 £0.1 new ordinary shares. The placing represented approximately 4.8% of the company's issued shared capital immediately following the placing. The placing generated proceeds of £538,398.
Independent review report to Enfis Group plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008, which comprises the income statement, balance sheet, cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.
PricewaterhouseCoopers LLP Chartered Accountants One Kingsway Cardiff