12 Aug 2009 07:00
12 August 2009
ENFIS GROUP PLC
("Enfis" or "the Company")
Interim results for the six month period ended 30 June 2009 and Trading update
The market for high brightness LEDs was $5.1 billion in 2008. The lighting sector (including architectural, retail display and entertainment lighting) represented 9% of the market and was the fastest growing sector in 2008 with year on year growth of 39%*.
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 address these markets. The Company today announces its interim results for the six months ended 30 June 2009.
Overview
Shaun Oxenham, Chairman, commented:
"During the first half of 2009, Enfis has continued to pursue the large pipeline of SSL opportunities reported in the full year results statement of March 2009. Enfis has achieved a number of key goals including raising additional funds, setting up Enfis US and signing further contracts. However, as a result of the economic crisis during the first half of 2009, a number of projects have experienced delays associated with funding confidence. Consequently, although revenue was 35% higher than the same period for 2008, it was lower than management expectations. As financing confidence returns, we expect these delayed projects to result in orders in 2010.
Despite the slippage in revenue conversion the Company is still confident that we have a significant revenue pipeline to exploit and expect more opportunities to arise, particularly as we bring on line one of our global showcase lighting projects in the Middle East, which is nearing completion and due for full operation by November 2009. We are also confident in the contracts that have already been signed and remain in force and which will set Enfis up well for 2010."
* Strategies in Light 2009
Enquiries
Enfis Group plc (www.enfis.com) Tel: +44 (0) 1792 485660
Shaun Oxenham, Chairman
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 / Sam Reynolds
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 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, Enfis continues to lead the way in enabling smart, efficient solutions for Solid State Lighting.
Chairman's Statement
Introduction
During the first half of 2009, Enfis has continued to pursue the large pipeline of SSL opportunities reported in the full year results statement of March 2009. Enfis has achieved a number of key goals including raising additional funds, setting up Enfis US and signing further contracts. However, as a result of the economic crisis during the first half of 2009, a number of projects have experienced delays associated with funding confidence. Consequently, although revenue was 35% higher than the same period for 2008, it was lower than management expectations. As financing confidence returns, we expect these delayed projects to result in orders in 2010. Despite the slippage in revenue conversion the Company is still confident that we have a significant revenue pipeline to exploit in the coming year and expect many more opportunities to arise, particularly as we bring on line one of our global showcase lighting projects in the Middle East, which is nearing completion and due for full operation by November 2009. We are also confident in the contracts that have already been signed and remain in force and which will set Enfis up well for 2010.
In light of these challenges and to respond to the changing needs of the Company as focus turns to high volume production, we have recently made some high level management changes to ensure even greater emphasis on contract conversion and rapid revenue growth. We are confident that as project funding eases, the challenge will be to manage accelerating revenue growth, Our customers have made it clear that they are committed to use our leading edge light engine technology.
We expect contracts that were forecast to close in Q2, to now be signed during the second half of 2009 and in 2010 and to contribute to the 2010/11 revenues. This will provide clear confidence to all that Enfis remains on track to become cash generative and profitable in the near future and that our funding is sufficient to take us through to full profitability.
Product Development
As detailed in the full year results, Enfis continues to drive improvements in its current product set. The Company expects to complete and release several important product developments in the second half of 2009 which will further support its growth in 2010.
Financial Performance
Despite being on track at the end of the first quarter, revenue for the first six months to 30 June 2009 was affected by project funding availability. Nonetheless, several key objectives were achieved:
Although less than anticipated, revenue has increased by 35% on the corresponding period in 2008, in what are widely regarded as extremely challenging trading conditions.
Gross margin, at 35% for the period, has increased 5% on prior year.
The administrative cost base has been reduced by 30% on the first half of 2008.
The reduction in the cost base has offset the lower than expected revenues and management remains confident that current cash balances will be sufficient to see the Company through to full profitability.
Outlook and trading update
We expect that conversion of sales in 2009 will remain difficult to forecast until our customers can see greater confidence in the project funding environment. In addition, many companies have delayed projects pending better visibility of the general economic environment.
As a result of this we have seen major contract slippage and the board has reviewed its 2009 revenue pipeline. The lack of signed contracts has caused the board to conclude that at least £3.5m of revenue opportunities will now move into 2010.
It is clear that we still have significant product advantages in the market and we have taken actions to broaden the appeal of our product lines. It is also becoming increasingly clear that political and environmental pressures will play an increasingly important role in driving the SSL market. We have taken structural steps to support conversion of key contracts to revenue. We remain confident that our products will play a key role in the rapid adoption of solid state lighting and look forward to seeing some of our high profile projects which have been installed and tested go live later this year.
Shaun Oxenham
Chairman
12 August 2009
Consolidated income statement
for the six month period ended 30 June 2009
| 6 months ended 30 June 2009 (unaudited) | 6 months ended 30 June 2008 (unaudited) | Year ended 31 December 2008 (audited) | ||
| Notes | £000 | £000 | £000 | |
| Revenue | 530 | 392 | 1,628 | |
| Cost of sales | (342) | (272) | (1,023) | |
| Gross profit | 188 | 120 | 605 | |
| Administrative expenses | (881) | (1,247) | (2,608) | |
| Other income | 15 | 22 | 73 | |
| Operating loss for the period | (678) | (1,105) | (1,930) | |
| Net finance (cost)/income | (2) | 29 | 33 | |
| Loss before taxation | (680) | (1,076) | (1,898) | |
| Taxation | - | 284 | 556 | |
| Loss after taxation | (680) | (792) | (1,342) |
Attributable to:
| Equity holders of the company | (680) | (792) | (1,342) | |
| Earnings per share for loss attributable to the equity holders of the Company | ||||
| - basic and diluted | (5.7p) | (8.5p) | (14.4p) | |
All activities above relate to the continuing operations of the group.
Consolidated balance sheet
As at 30 June 2009
| 30 June 2009 (unaudited) | 30 June 2008 (unaudited) | 31 December 2008 (audited) | ||
| Notes | Assets | £000 | £000 | £000 |
| Non-current assets | ||||
| Property, plant and equipment | 166 | 248 | 218 | |
| Intangible assets | 527 | 558 | 540 | |
| 693 | 806 | 758 | ||
| Current assets | ||||
| Inventories | 369 | 288 | 351 | |
| Trade and other receivables | 487 | 426 | 218 | |
| Corporation tax receivable | 271 | 284 | 271 | |
| Cash and cash equivalents | 1,415 | 1,080 | 641 | |
| 2,543 | 2,078 | 1,482 | ||
| Total assets | 3,236 | 2,884 | 2,240 | |
| Capital and reserves attributable to equity holders of the company | ||||
| Ordinary shares | 1,498 | 938 | 938 | |
| Share premium | 5,294 | 4,067 | 4,067 | |
| Share option reserve | 185 | 102 | 144 | |
| Reverse acquisition reserve | 2,284 | 2,284 | 2,284 | |
| Retained losses | (6,447) | (5,217) | (5,767) | |
| 3 | Total equity | 2,814 | 2,174 | 1,666 |
| Liabilities | ||||
| Non-current liabilities | ||||
| Deferred income | 20 | 80 | 35 | |
| Borrowings | 43 | 80 | 58 | |
| 63 | 160 | 93 | ||
| Current liabilities | ||||
| Trade and other payables | 321 | 500 | 433 | |
| Borrowings | 38 | 50 | 48 | |
| 359 | 550 | 481 | ||
| Total liabilities | 422 | 710 | 574 | |
| Total equity and liabilities | 3,236 | 2,884 | 2,240 |
Consolidated cash flow statement
for the six month period ended 30 June 2009
| 6 months ended 30 June 2009 (unaudited) | 6 months ended 30 June 2008 (unaudited) | Year ended 31 December 2008 (audited) | ||
| Notes | £000 | £000 | £000 | |
| Cash outflows from operating activities | ||||
| 2 | Cash used in operations | (939) | (1,184) | (1,812) |
| Interest paid | (6) | (12) | (21) | |
| R&D tax credits received | - | - | 284 | |
| Net cash (used) in operating activities | (945) | (1,196) | (1,549) | |
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment | (1) | (47) | (59) | |
| Purchase of intangible assets | (45) | (218) | (316) | |
| Receipt of government grants | 0 | 7 | 42 | |
| Interest received | 4 | 41 | 54 | |
| Net cash (used) from investing activities | (43) | (217) | (278) | |
| Cash flows from financing activities | ||||
| Proceeds from the issuance of ordinary shares | 1,787 | 527 | 527 | |
| Proceeds from borrowings | - | - | - | |
| Repayments of borrowings | (15) | (15) | (30) | |
| Finance lease principal repayments | (10) | (18) | (28) | |
| Net cash generated from financial activities | 1,792 | 494 | 468 | |
| Net (decrease) / increase in cash and cash equivalents | 774 | (919) | (1,358) | |
| Cash and cash equivalents at the beginning of the period | 641 | 1,999 | 1,999 | |
| Cash and cash equivalents at the end of the period | 1,415 | 1,080 | 641 |
1 Basis of preparation
| This condensed consolidated interim financial information for the six months ended 30 June 2009 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2008, which have been prepared in accordance with IFRSs as adopted by the European Union.
The Company is a limited liability company incorporated and domiciled in the UK. The address of its registered office is Technium 2, Kings Road, Swansea Waterfront, Swansea, SA1 8PJ and the registered number of the company is 06133765.The Company has its primary listing on AIM.This condensed consolidated interim financial information was approved for issue on 12 August 2009.This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2008 were approved by the Board of directors on 6 April 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.This condensed consolidated interim financial information has not been reviewed or audited. |
2 Cash used in operations
| 6 months ended 30 June 2009 (unaudited) | 6 months ended 30 June 2008 (unaudited) | Year ended 31 December 2008 (audited) | |
| £000 | £000 | £000 | |
| Loss before income tax | (680) | (1,076) | (2,047) |
| Adjustments for: | |||
| - Depreciation | 38 | 35 | 59 |
| - Amortisation - intangibles | 73 | 60 | 52 |
| - Write-off of patents | - | - | 49 |
| - Amortisation - grants | (15) | (23) | (137) |
| - Share based payments | 41 | 41 | 62 |
| - Government grant income | - | - | 42 |
| - Net finance (income) | 2 | (29) | (33) |
| Changes in working capital: | |||
| - Inventories | (18) | (10) | (73) |
| - Trade and other receivables | (222) | (213) | (7) |
| - Trade and other payables | (159) | 31 | (62) |
| Cash used in operations | (939) | (1,184) | (1,812) |
3 Combined statement of movements in equity, shareholders funds' and statement of movement on reserves (Group)
| Ordinary share capital | Share premium | Share option reserve | Reverse acquisition reserve | Retained losses | Total | |
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| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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| At 1 January 2008 in Enfis Group Plc | 894 | 3,585 | 61 | 2284 | (4,425) | 2,399 |
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| Issue of new shares | 44 | 494 | - | - | - | 538 |
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| Expenses incurred on issue of new shares | - | (12) | - | - | - | (12) |
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| Loss for the period | - | - | 41 | - | (792) | (751) |
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| At 30 June 2008 in Enfis Group plc | 938 | 4067 | 102 | 2,284 | (5,217) | 2,174 |
| Ordinary share capital | Share premium | Share option reserve | Reverse acquisition reserve | Retained losses | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 January 2008 in Enfis Group Plc | 894 | 3,585 | 62 | 2,284 | (4,425) | 2399 |
| Issue of new shares | 45 | 482 | - | - | - | 527 |
| Loss for the period | - | - | 82 | - | (1,342) | (1,260) |
| At 31 December 2008 in Enfis Group plc | 938 | 4,067 | 144 | 2,284 | (5,767) | 1,666 |
| Ordinary share capital | Share premium | Share option reserve | Reverse acquisition reserve | Retained losses | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2009 | 938 | 4,067 | 144 | 2,284 | (5,767) | 1,666 |
| Issue of new shares | 560 | 1,456 | - | - | - | 2,016 |
| Expenses incurred on issue of new shares | - | (229) | - | - | - | (229) |
| Loss for the period | - | - | 41 | - | (680) | (639) |
| At 30 June 2009 | 1,498 | 5,294 | 185 | 2,284 | (6,447) | 2,814 |
Share Issue
On 6 April 2009 Enfis Group plc issued 5,600,000 £0.1 new ordinary shares. The placing represented approximately 37.4% of the company's issued shared capital immediately following the placing. The placing generated gross proceeds of £2,016,000.