13 Aug 2007 07:00
Embargoed Release: 07:00hrs Monday 13 August 2007
Zenergy Power plc (`Zenergy' or the `Group') Interim Results for the Six Month Period Ended 30 June 2007 and AIM Rule 26 Compliant Website
Zenergy Power plc (AIM:ZEN.L), the specialist manufacturer and developer of commercial applications for high-temperature superconductive (`HTS') materials, is pleased to present its Interim Results for the Six Month Period Ended 30 June 2007 (`the Period').
Highlights
* Selected as exclusive supplier of HTS materials and components by Converteam SAS (formerly Alstom Power Conversion) (`Converteam') for all its activities within the wind power and small hydropower sectors (the `Field'); * Awarded $500,000 grant by the California Energy Commission to install and test the Group's proprietary electricity grid stability device; * Institutional placing to raise ‚£6,000,000; * Successful development and product launch of the Group's proprietary `HTS Induction Heater' - an energy efficient industrial heating device for the global metals industry; * ¢â€š¬600,000 commercial order from Converteam for HTS wires; and * Awarded a further $11,000,000 grant by the U.S. Department of Energy ("DOE") to develop, install and test an upgraded high-voltage version of the Group's current proprietary electricity grid stability device known as an `HTS FCL'.
Chairman's Statement
During the period we continued to successfully capitalise on the many years of hard work and relationship building which subsidiaries within the Group undertook separately before our formation and flotation on AIM. In doing so, we significantly strengthened the foundations which will enable us to greatly accelerate not merely our research and development efforts, but crucially our commercial progress and market leadership. As highlighted above, Converteam have appointed us as their exclusive collaborative partner for all their HTS activities in the Field. In this regard, we will together be launching a range of highly efficient and compact electricity generators into both the global wind and hydro-power generation markets. This arrangement is typical of the type of interest we have received from both public and private sector entities and, coupled with our ongoing project with E.ON Wasserkraft GmbH (`E.ON') to install the world's first HTS hydroelectric generator, demonstrates our success in not only developing world class products, but in establishing direct sales and marketing channels into what are global addressable markets estimated to be worth in excess of several billion dollars per annum.
Following these endorsements of our technology and the continuing success in our ongoing development activities we raised a further ‚£6,000,000 for the Group by way of an institutional placing in April of this year. These additional funds will enable us to further invest in our development programme and give your Board great confidence in the Group's overall ability to exploit its market position to successfully deploy a wide range of highly energy efficient HTS products. As I reported at the time of our flotation, in August of 2006, the way in which society produces, distributes and uses energy is an issue of great concern for a growing number of industrial corporations, governments, private households and individual consumers. These are the central issues that our HTS technology directly addresses and by working with corporations such as E.ON and Converteam, as well as government bodies, including the European Commission, US Department of Energy and the UK Government's Department of Trade and Industry, we are confident that we can deploy product to address these concerns across a variety of industries in a number of different geographical locations.
We continue to experience growing interest in our products and I look forward to reporting on further progress throughout the second half of this year.
Commercial Collaboration - Route to Market for Renewable Energy Products
During the Period we entered into an agreement with Converteam SAS whereby Zenergy has been appointed as the exclusive supplier of HTS materials and products for all of Converteam's activities within the Field, in respect of which we have also been appointed to assist Converteam in designing, developing, industrializing and marketing products. The global addressable market for Zenergy's HTS products and contribution in these areas alone is expected to be worth up to ¢â€š¬2.2bn per annum for wind power (a market growing at 25% per annum) and ¢â€š¬0.4bn for hydro-power. The Converteam collaboration is an extremely significant development for the Group and suitably positions us to move into a global billion dollar market that is renowned for its high barriers to entry and where first mover advantages are significant. Our alliance with one of the leading participants in this industry brings us direct route to market through established commercial relationships and supply channels.
Converteam already enjoys an unrivalled reputation for technical excellence and innovation, and together with Zenergy will launch a new generation of highly efficient and compact electricity generators based around Zenergy's patented HTS materials and components. These new generators are projected to be capable of reducing the overall cost of producing electricity from wind power sources by around 25% and are currently delivering efficiency levels of over 98% for the production of electricity by hydro power.
Our collaboration with Converteam will leverage the joint technical and marketing resources of both Groups to maximise the penetration of Converteam's HTS generators in the renewable energy markets. The relationship evidences the formalisation of a long and successful working association between us, and represents a significant opportunity for both companies, who jointly believe the cost benefits capable of being captured by the use of Zenergy's HTS technology in the production of renewable energy present a significant commercial proposition. We consider that our exclusive supplier status represents an endorsement of the highest order not only for our innovative products and their commercial value, but for our expertise and value in integrating HTS materials and supporting technologies into sophisticated third party products.
Currently, Converteam is leading a UK Department of Trade and Industry funded project to design a high-power (8MW) direct-drive superconducting wind generator, centred around Zenergy's HTS technology. The HTS generator will be significantly smaller than conventional generators and just one quarter of the weight. These attributes are anticipated to achieve electricity cost savings of around 25%. Shortly after entering into this strategic partnership, the Group's HTS electromagnetic coils passed Converteam's extensive testing and technical evaluation processes in June 2007, and were qualified for use in commercial wind power generators. The tests reported electrical performance, electrical capacity and electrical efficiency levels exceeding Converteam management`s expectations.
This qualification resulted in a further commercial order from Converteam to Zenergy worth in excess of ¢â€š¬600,000 as announced in June 2007.
The successful technical evaluation of the Group`s HTS coils for use in wind power generators represents a significant de-risking of the Group`s technical proposition and is a key step towards realising the commercial goals of both Zenergy and Converteam within the renewable power markets.
Research and Development
Throughout the Period, we continued to enjoy development success across all of our products; typified in May by the accomplishment of one of our key development milestones within budget and ahead of schedule.
Induction Heater
Induction heaters are used globally and ubiquitously by producers and manufacturers in the metals industry to heat large quantities of non ferrous metal bulk, prior to carrying out processes of manipulation and shaping that require the metal material to be softened. The softened metal is then used for products including installation pipes, heat exchangers, window frames, computer components and profiles for the automotive, aerospace and machine building industries.
The Group has developed and completed its proprietary HTS induction heater, which replaces traditionally employed copper-based components with HTS materials. As anticipated, The HTS induction heater has been demonstrated to operate with energy efficiency levels of over 90% as compared to conventional induction heaters which operate at efficiency levels of between 35% and 45%. This effective halving of the overall electrical energy requirement is particularly significant when it is considered that, dependent on the country, between 1% and 5% of the total annual electricity consumed in industrialised countries is directly attributable to the operation of such heating equipment.
Further independent validation of the environmental significance of the Group's HTS induction heater was provided by the German Environmental Fund, who contributed significant development funds to the Group following extensive due diligence. This funding was provided in recognition of the potential environmental improvements which the HTS induction heater could deliver. It is the firm belief of the Board that the increased energy efficiency will also deliver substantial cost savings whilst simultaneously playing a significant role in greatly reducing the metal industry's annual carbon footprint. From a cost savings perspective, it is anticipated, that when run at full capacity, the Group`s HTS induction heater is capable of yielding ongoing cost savings equivalent to its total initial purchase price in as little as 5 years.
The Group's HTS induction heater was developed in conjunction with Bƒ¼ltmann GmbH (`Bƒ¼ltmann'), one of the world's leading suppliers of industrial machinery to the metal processing industry. As with the Group's agreement with Converteam, the association with Bƒ¼ltmann, brings world class engineering expertise to the Group as well as initial channel to market for the HTS induction heater through Bƒ¼ltmann's existing commercial activities which have endowed it with extensive established relationships within the global metals industry.
The current addressable market for the Group's induction heaters is estimated at c. ¢â€š¬2 billion per annum.
Fault Current Limiter
I was delighted to be able to report, that on the penultimate day of the Period, that the U.S. Department of Energy had notified the Group`s wholly owned subsidiary, SC Power Systems, Inc. (`SC Power'), that it had been awarded an US$11million grant to contribute towards an overall project to design, test and install a high-voltage version of the Group's Fault Current Limiter (`HVFCL') into the Californian electricity grid.
The FCL is a scaled up version of the Group's ground breaking and proprietary medium voltage grid stability device ("MVFCL"), which will be tested in the second half of this year. The HVFCL grant has been awarded to SC Power as leader and co-ordinator of a project team, the major participants of which include other members of the Group, Los Alamos National Laboratory, Delta Star Inc., Southern California Edison (`SCE'), California`s largest utility, and the Consolidated Edison Company of New York Inc. (`Con Ed'), a subsidiary of Consolidated Edison Inc., the largest investor-owned energy company in the United States.
This substantial grant was the second received in the Period for the development of the Group's FCL devices and follows an initial US$0.5 million grant from the California Energy Commission to install and test the Group's existing MVFCL solution in California's electricity grid. This latest grant is for the subsequent installation and testing of a larger scale device designed specifically for the protection of higher-voltage electrical grid equipment falling outside of the initial criteria of the Group's existing device. Both of these FCLs will be scaled up versions of prototypes previously built, and successfully tested, by the Group.
An HTS FCL acts as a instantaneously (automated) resetting fuse that protects electrical power grids from damaging power surges, and is regarded by the US Federal Government to be an essential component of future self-healing - or self-regulating - `smart' electricity grids. Such `smart' grids are also considered to be central to the much needed modernisation of the US's national electricity grid, which are expected to become reliant upon the deployment of a range of HTS devices. The grant from the U.S DOE was part of a US$51.8 million investment in HTS research projects announced by the United States Government aimed at establishing a diverse and stable supply of reliable, affordable and environmentally responsible energy.
Investing in HTS FCLs is viewed by the US Federal Government as an essential means of safeguarding energy efficiency and ensuring economic security. A field test is expected to take place for the MVFCL in the Southern Californian grid, with Con Ed providing site selection support, specifications development and electricity grid testing.
The addressable global market for the Group's FCLs is expected to be worth up to US$5billion per annum.
2G Development
As described at the time of the Group's flotation, Zenergy has been developing its own proprietary 2nd Generation of HTS materials that it anticipates will enjoy far lower material costs and cheaper mass production techniques to alternative methods currently being developed by other industry participants. Our ongoing development of 2G materials is a parallel activity to the commercial activities described above and should ensure a market leadership position for the Group for many years to come.
Our 2G technical milestone for 2007 is to deliver a 10 metre wire produced using the Group's proprietary `all-chemical' process by Q4. It is the belief of the Board that the Group's decision to develop an `all-chemical' production process as opposed to alternative deposition techniques currently under development, will give it significant cost and scalability advantages over other industry participants.
In July we were pleased to receive the support of the German Ministry of Economics and Technology who notified the Group's wholly owned subsidiary, Trithor GmbH, that it had been awarded an ¢â€š¬825,000 development grant for the advancement of technical and theoretical development methodologies for 2G materials. These funds will aid the acceleration of our research programme for our 2G materials and processes and will enable us to strengthen the Group's patent portfolio.
The ongoing support of the German Ministry of Economics and Technology is viewed as a significant endorsement of the Group's commitment to the development of low-cost processes for the mass production of 2G wire, as well as the benefits which these processes can deliver to the power industry as a whole.
Summary of Research Staff and our Patent Portfolio
Zenergy has a leading research and development team boasting more than 24 employees with PhDs or advanced degrees, based in three countries and a patent portfolio comprising 22 patents and over 65 patent applications based on 40 patent families.
2007 Development Milestones
At the end of last year we set out a number of definable milestones to mark our progression to commercialised products based around our core HTS intellectual property. For clarity these are set out again below:
1) Induction Heater: Construction and Test of an HTS Induction Heater leading to a launch product sale in Q3 2007;
2) Fault Current Limiter: Construction of a Distribution Voltage HTS Fault Current Limiter to be delivered and tested with a major national utility by Q4 2007; and
3) 2G HTS wire: A 10m `all-chemical' 2G HTS wire delivered by Q4 2007.
I am delighted to report that as announced in May 2007 our research and development team completed the construction and successful testing of the Group's ground breaking HTS induction heater ahead of its anticipated Q3 schedule.
I look forward to reporting on delivery of our two remaining technical milestones in the coming months.
Fund Raising
Following an institutional road show of the Group, 4,285,746 new ordinary shares of 1p each in the Group (`Placing Shares') were placed by Ambrian Partners with a number of institutional investors on 3 May 2007 at a price of 140p per Placing Share, raising a total of ‚£6,000,000 for the Group.
The Group will use the proceeds for general working capital purposes, including the acceleration of its ongoing research and development activities. In particular, the proceeds are being used in the groundbreaking work that the Group is conducting with Converteam to bring to market a range of highly efficient, lightweight and compact wind generators for the offshore wind market.
AIM Rule 26 Compliant Website
Zenergy confirms that the information required by Rule 26 of the AIM Rules for Companies (February 2007) is available under the heading "Rule 26" on the Group's website which is www.zenergypower.com.
Change of Adviser Name
Following its change of name from Teather & Greenwood Limited to Landsbanki Securities (UK) Limited with effect from 9 August 2007, the name of the Group's nominated adviser and joint broker has changed to Landsbanki Securities (UK) Limited.
Appreciation
The Period has been one of significant achievement for the Group which would not have been possible without the complete dedication and commitment of all of our employees. On behalf of the Board of Directors, I thank them sincerely for their extraordinary and continued efforts. I would also like to thank our shareholders for their continued support.
I look forward to reporting on the Group fulfilling its objectives in thesecond half of the year.Michael FitzgeraldChairman13 August 2007Further information:Dr. Jens Mƒ¼ller Zenergy Power Plc + 49 22 26 90 60 200 Chief Executive Officer Tom Hulme Landsbanki Securities +44 207 426 9000 (UK) Limited Andrew Tan Hansard Group + 44 207 245 1100 www.hansardgroup.co.uk -Ends- About Zenergy Group plc
Zenergy Power plc is a global specialist manufacturer and developer of commercial applications for superconductive materials. Comprising three operating subsidiaries located in Germany (Trithor), USA (SC Power Systems) and Australia (Australian Superconductors), Zenergy is developing a number of energy efficient applications to be adopted in renewable energy power generation, energy distribution and large scale, energy intensive industrial processes.
About superconductivity
Superconductive materials are capable of conducting electricity without any resistance and were first discovered in 1911 in what was to prove to be one of the most significant scientific breakthroughs of the 20th century.
The global HTS market is substantial and growing, with a number of market studies projecting multi-billion dollar markets for the application of HTS materials and products. The proliferation of the use of superconductor materials is largely being driven by the following key factors:
(a) HTS materials are highly complementary to energy efficient technologies as a substitute for copper
(b) HTS wires have power densities of over 100x that of copper
(c) Current developments are leading to substantially reduced costs in the production of HTS wires and are targeting to be cheaper than copper over the next few years.
(d) HTS applications deliver exceptional energy efficiencies and thus reduced power consumption and running costs
(e) HTS technology is set to play a significant role in reducing CO2 emissions in line with international targets
(f) HTS applications are capable of delivering vastly increased levels of power with increased reliability and reduced material usage
Consolidated income statement
For the six months ended 30 June 2007
Note Unaudited 6 Unaudited 6 Audited non months to months to statutory 30 June 30 June reporting 2007 2006 period 12 months to 31 December 2006 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Revenue 3 94 103 119 Cost of sales (67) (93) (107) Gross profit 27 10 12 Other operating income 206 142 667 Distribution expenses (179) (210) (471) Administrative expenses: - Equity settled (230) (73) (542)share-based payment expenses - Other admin expenses (1,190) (361) (1,511) Administrative expenses (1,420) (434) (2,053) Research & development (632) (774) (2,219)expenses Operating loss (1,998) (1,266) (4,064) Net financial income 4 141 2 8 Loss before tax (1,857) (1,264) (4,056) Taxation 13 2 12 Loss for the period 3 (1,844) (1,262) (4,044)attributable to equity holders of the Parent Earnings per share (Euros) Basic and fully diluted 5 (0.05) (0.14) (0.21)loss per share
Consolidated statement of recognised income and expense
For the six months ended 30 June 2007
Note Unaudited Unaudited Audited 6 months 6 months to 30 June to 30 June non 2007 2006 statutory reporting period 12 months to 31 December 2006 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Foreign exchange translation 8 (40) 14 (47)differences Net income recognised directly in (40) 14 (47)equity Loss for the period (1,844) (1,262) (4,044) Total recognised income and expense (1,884) (1,248) (4,091) Total recognised income and expense (1,884) (1,248) (4,091)for the period attributable to the equity holders of the parent Consolidated balance sheet Note Unaudited Unaudited Audited At 30 June 30 June 31 2007 2006 December 2006 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Non-current assets
Property, plant and equipment 6 1,484 1,155 1,155
Goodwill 7 1,391 1,450 1,415 Other intangible assets 7 2,997 2,151 2,122 5,872 4,756 4,692 Current assets Inventories 339 76 123 Trade and other receivables 786 1,070 532 Cash and cash equivalents 7,488 1,997 2,722 8,613 3,143 3,377 Total assets 14,485 7,899 8,069 Current liabilities Trade and other payables (844) (1,330) (1,168) Non current liabilities Deferred tax liabilities (718) (786) (750) Total liabilities (1,562) (2,116) (1,918) Net assets 12,923 5,783 6,151 Equity attributable to equity holders of the parent Share capital 8 595 1 532 Share premium 8 18,409 1,770 10,046 Translation reserve 8 (87) 14 (47) Warrant reserve 8 200 - 200 Capital and other reserves 8 - 6,065 - Retained earnings 8 (6,194) (2,067) (4,580) Total equity attributable to 12,923 5,783 6,151shareholders
Consolidated cash flow statement
For the six months ended 30 June 2007
Note Unaudited Unaudited Audited non 6 months 6 months statutory to 30 June to 30 June reporting 2007 2006 period 12 months to 31 December 2006 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Cash flows from operating activities Loss for the period (1,844) (1,262) (4,044) Adjustments for:
Depreciation, amortisation and 6,7 272 94 334 impairment
Foreign exchange gains/ (losses) 12 (1) (4) Financial income (141) (2) (47) Financial expense - - 39 Equity settled share-based 230 73 542payment expenses Taxation (13) (2) (12)
Cash flows from operations before (1,484) (1,100) (3,192) changes in working capital and
provisions (Increase)/decrease in trade and (237) 106 (98)other receivables (Increase)/decrease in stock (216) (4) (51) Increase in trade and other (322) 578 869payables Cash absorbed by operations (2,259) (420) (2,472) Tax paid - - (1) Net cash outflow from operating (2,259) (420) (2,473)activities Cash flows from investing activities Interest received 53 2 47 Acquisition of subsidiary, net of 2 - (501) (501)cash acquired Acquisition of a business - - -
Acquisition of property, plant 6 (542) (306) (585) and equipment
Development expenditure 7 (984) (43) (118)capitalised and other intangible assets acquired Net cash outflow from investing (1,473) (848) (1,157)activities Cash flows from financing activities Interest paid - - (14) Proceeds from the issue of share 8 8,426 - -capital Proceeds from the issue of loan - 2,790 7,200notes Listing expenses - - (858) Proceeds from new loan - - - Repayment of borrowings - - (448) Net cash inflows from financing 8,426 2,790 5,880activities Net increase in cash and cash 4,694 1,522 2,250equivalents Cash and cash equivalents at 2,722 475 475start of period Effect of exchange rate 72 - (3)fluctuations on cash held Cash and cash equivalents at end 7,488 1,997 2,722of period Notes1. Basis of preparation
The condensed consolidated interim financial statements for the six months ended 30 June 2007 have been prepared under applicable International Financial Reporting Standards adopted by the European Union (`IFRS`), which include International Accounting Standards (`IAS`) and interpretations issued by the International Accounting Standards Board (`IASB`) and its committees, which are expected to be endorsed by the European Union.
The financial information included in this document is unaudited and does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative figures for the year ended 31 December 2006 are extracted from the statutory financial statements for that financial period which have been filed with the Registrar of Companies and on which the auditor gave an unqualified report, without any statement under section 237(2) or (3) of the Companies Act 1985.
The interim financial statements have been prepared under the same accounting policies as those used for the financial statements for the period ended 31 December 2006.
2. Acquisitions of subsidiaries and businesses
Acquisition of subsidiaries
On 1 June 2006 Zenergy Power plc (`Zenergy Power') acquired SC Power Systems, Inc. (`SC Power').
SC Power was formed in 2004 to acquire the underlying business known as Australian Superconductors from Metal Manufacturers Limited. SC Power was owned by Jane Capital Partners, LLC (32,500 shares), Metal Manufacturers Limited (32,500 shares) and Woody Gibson (10,000 shares). On 7 December 2005 Metal Manufacturer's shares were repurchased by SC Power and held in treasury stock. The repurchase was funded by a loan from Cloverleaf Holdings Limited (`Cloverleaf') of $560,000.
Zenergy Power acquired 42,500 shares in SC Power in exchange for 28,111 Ordinary Shares credited as paid up to ¢â€š¬63 per share. The remaining 32,500 shares in SC Power are held in treasury by SC Power. SC Power is effectively a wholly owned subsidiary of Zenergy Power. SC Power has a wholly owned subsidiary Australian Superconductors Pty Limited (`Australian Superconductors').
23,867 of the Ordinary Shares issued were allotted to the former shareholders of SC Power. The remaining 4,244 were allotted to Cloverleaf. These shares were allotted in recognition of the increase in value of SC Power since the date of the original loan provided by Cloverleaf Holdings Limited.
In a separate private transaction, Cloverleaf allotted the 4,244 shares by way of a call option to certain key management in Trithor GmbH.
Effect of acquisitions
The acquisitions had the following effect on the Group's assets andliabilities. Acquiree's Fair value Acquisition book values amounts adjustments ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Acquiree's net assets at the acquisition date: Property, plant and equipment 183 - 183 Patents and Trademarks - 818 818 Development rights - 1,247 1,247 Trade and other receivables 11 - 11 Cash and cash equivalents 286 - 286 Trade and other payables (13) - (13) Deferred tax liability - (785) (785) Net identifiable assets and liabilities 467 1,280 1,747 Goodwill on acquisition 1,276 Total consideration 3,023 Consideration paid in shares 2,236 Consideration satisfied in cash 787(Including legal fees of ¢â€š¬61,000) Cash (acquired) (286) Net cash outflow 501
Consideration paid in shares includes: 28,111 shares credited as paid up to ¢â€š¬63 per share, ¢â€š¬1,771,000 and ¢â€š¬465,000 Series B loan notes issued in consideration for the loan provided by Cloverleaf to enable SC Power to repurchase its own shares (See Note 8).
Goodwill has arisen on the acquisition because the employees transferred were considered to be valuable to the Group for development of future intellectual property and customer relationships.
A deferred tax liability at the US effective tax rate of 38% has been recognised in respect of the intangible assets, as the tax base of these assets is nil.
3. Segmental reportingGeographic segments
For management purposes, the Group is currently organised into four geographical regions based on the location of the Group's assets - Germany, USA, Australia and UK. These geographical regions are the basis on which the Group reports its primary segment information.
Business segment
The Group has one business segment, being the development and production of high temperature superconducting wires, components and applications.
Six months to 30 June Germany USA Australia UK Eliminations Consolidated2007 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Revenue Total revenue 180 - - - (86) 94 Result Segment result being (745) (674) (189) (353) (37) (1,998)loss from operations Financial income - 1 1 140 (1) 141 Loss before tax (745) (673) (188) (213) (38) (1,857) Tax - - - - 13 13 Loss for the period (745) (673) (188) (213) (25) (1,844) Other information Capital additions 798 592 119 17 - 1,526 Depreciation and (161) (98) (13) - - (272)amortisation Balance sheet Segment assets 2,208 926 310 19,076 (8,035) 14,485 Segment liabilities (420) (1,998) (633) (213) 1,702 (1,562) Net assets/(liabilities) 1,788 (1,072) (323) 18,863 (6,333) 12,923 6 months to June 2006 Germany USA Australia UK Eliminations Consolidated ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Revenue Total revenue 103 - - - - 103 Result Segment result being loss (1,050) (168) (42) 150 (156) (1,266)from operations Financial income 2 - - - - 2 Loss before tax (1,048) (168) (42) 150 (156) (1,264) Tax - - - - 2 2 Loss for the period (1,048) (168) (42) 150 (154) (1,262) Other information Capital additions 331 18 - - - 349 Depreciation and (78) (14) (2) - - (94)amortisation Balance sheet Segment assets 2,175 260 121 8,916 (3,573) 7,899 Segment liabilities (319) (45) (2) (964) (786) (2,116) Net assets/(liabilities) 1,856 215 119 7,952 (4,359) 5,783
4. Finance income and expense
6 months to 30 6 months to non statutory June 2007 30 June 2006 reporting period 12 months to 31 December 2006 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Financial income Interest income - bank 74 2 46 Interest reversal - ATQ - - 1Holdings Limited Net foreign exchange gain 67 - - Financial income 141 2 47 Financial expense Interest expense - ATQ Holdings - - -Limited Net foreign exchange loss - - (25) Other interest expense - - (14) Financial expense - - (39) Net financial income 141 2 8 5. Earnings per shareBasic earnings per share
The calculation of basic earnings per share for the six months ended 30 June 2007 was based on the loss attributable to ordinary shareholders of ¢â€š¬1,844,000 (Six months ended 30 June 2006: ¢â€š¬1,262,000) and a weighted average number of Ordinary Shares outstanding during the period of 37,535,000 (Six months ended 30 June 2006: 9,044,000) calculated as follows:
Thousand of shares 6 months to 6months to Non statutory 30 June 2007 30 June 2006 reporting period 12 months to 31 December 2006 Issued ordinary shares at start 36,091 41 41of period Shares issued in respect of the - 4 16acquisition of SCP Effect of the 199:1 bonus issue - 8,999 11,351on 7 August 2006 Effect of Series A loan notes - - 3,616 Effect of Series B loan notes - - 534 Effect of Series C loan notes - - 2,893 Effect of Series D loan notes - - 1,042 New placing 1,444 - - Weighted average number of 37,535 9,044 19,493ordinary shares Diluted earnings per share
Share options and warrants have not been included in the calculation of fully diluted earnings per share since these are anti-dilutive. The instruments that could potentially dilute the basic earnings per share in the future, but were not included because they were anti-dilutive for the periods presented are:
Thousand of shares 30 June 30 June 2006 31 December 2007 2006 Warrants in respect of the working capital 160 - 160facility from Cloverleaf Holdings Limited (issued 16 August 2006)
Share options (issued on various dates 1,220 400 1,320 from 1 March 2006 to 27 September 2006)
Total potential dilutive instruments 1,380 400 1,480
100,000 share options have lapsed in the period 1 January 2007 to 30 June 2007.
6. Property, plant and equipment
Technical Office Assets under Total plant and and construction equipment business equipment ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Cost 1 January 2006 729 66 39 834 Acquisitions through business 126 56 - 182combinations Other acquisitions - internally - - 47 47developed Other acquisitions - externally 189 70 - 259purchased Balance at 30 June 2006 1,044 192 86 1,322 1 January 2007 1,186 259 65 1,510 Other acquisitions - internally 98 14 82 194developed
Other acquisitions - externally 186 25 137 348 purchased
Effect of movements in foreign (5) 2 - (3)exchange Balance at 30 June 2007 1,465 300 284 2,049 Depreciation and impairment Balance at 1 January 2006 (57) (27) - (84) Depreciation charge for the (51) (32) - (83)period Balance at 30 June 2006 (108) (59) - (167) Balance at 1 January 2007 (279) (76) - (355) Depreciation charge for the (164) (48) - (212)period Effect of movements in foreign 2 - - 2exchange Balance at 30 June 2007 (441) (124) - (565) Net book value At 30 June 2006 936 133 86 1,155 At 30 June 2007 1,024 176 284 1,484
No assets are held under finance leases.
7. Intangible assets Goodwill Patents Development Total and rights Trademarks ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Cost 1 January 2006 170 30 16 216 Acquisitions through business 1,276 818 1,247 3,341combinations
Other acquisitions - internally - - 43 43 developed
Effect of movements in foreign 4 4 5 13exchange Balance at 30 June 2006 1,450 852 1,311 3,613 1 January 2007 1,415 855 1,317 3,587
Other acquisitions - internally - - 916 916 developed
Other acquisitions - externally - 68 - 68purchased Effect of movements in foreign (24) (20) (31) (75)exchange Balance at 30 June 2007 1,391 903 2,202 4,496 Amortisation and impairment Balance at 1 January 2006 - - (1) (1) Amortisation charge for the - (8) (3) (11)period Effect of movements in foreign - - - -exchange Balance at 30 June 2006 - (8) (4) (12) Balance at 1 January 2007 - (46) (4) (50) Amortisation charge for the - (40) (20) (60)period Effect of movements in foreign - 2 - 2exchange Balance at 30 June 2007 - (84) (24) (108) Net book value At 30 June 2006 1,450 844 1,307 3,601 At 30 June 2007 1,391 819 2,178 4,388
Amortisation and impairment charge
The amortisation and impairment charge is recognised in other admin expenses. Patents and Trademarks are amortised over a 15 year period. Development rights are amortised over a five year period, commencing when the product under development is available for sale.
Goodwill
Goodwill is allocated as follows: Trithor ¢â€š¬170,000, SC Power ¢â€š¬1,135,000 and Australian Superconductors ¢â€š¬86,000, the entities are considered to be the smallest cash generating unit to which goodwill can be allocated. Goodwill is tested annually for impairment. Goodwill is denominated in the currency of the acquired entity.
Government grants
¢â€š¬344,000 of Government grants receivable have been netted against the internally developed intangibles acquired in the six months to 30 June 2007 (6 months to June 2006: ¢â€š¬28,000).
8. Capital and reserves
Reconciliation of movement in capital and reserves
Share Share Translation Capital Retained Total reserve and equity capital premium other earnings reserves ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Balance at 1 January 2006 1 - - 2,000 (878) 1,123 Total recognised income - - 14 - (1,262) (1,248)and expense Series B loan notes - - - 465 - 465 Equity-settled share based - - - - 73 73payment transactions Series C loan notes - - - 3,600 - 3,600 Paid in share capital - Acquisition of - 1,770 - - - 1,770subsidiary Balance at 30 June 2006 1 1,770 14 6,065 (2,067) 5,783 Share Share Translation Warrant Retained Total reserve reserve equity capital premium earnings ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 ¢â€š¬000 Balance at 1 January 2007 532 10,046 (47) 200 (4,580) 6,151 Total recognised income - - (40) - (1,844) (1,884)and expense Equity-settled share based - - - - 230 230payment transactions Paid in share capital - Placing 63 8,363 - - - 8,426 Balance at 30 June 2007 595 18,409 (87) 200 (6,194) 12,923 The aggregated current and deferred tax relating to items that are charged orcredited to equity is ¢â€š¬Nil.Share capital 30 June 2007 30 June 2006 31 December 2006 Ordinary shares in thousands of shares On issue at start of period 36,091 41 - Issued for cash 4,285 - 41 Issued for acquisition of - 24 28subsidiary Bonus issue - - 13,666 Series B loan notes - - 1,476 Issued for cash (Series A, C and - - 20,880D loan notes) On issue - fully paid 40,376 65 36,091 30 June 30 June 30 June 30 June 31 31 December December 2007 2007 2006 2006 2006 2006 ‚£000 ¢â€š¬000 ‚£000 ¢â€š¬000 ‚£000 ¢â€š¬000 Authorised Ordinary shares of ‚£ 1,000 1,484 10 15 1,000 1,4840.01 each Allotted, called up and fully paid Ordinary shares of ‚£ 404 599 1 1 361 5320.01 each Shares classified in 599 1 532equity
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Group.
On 1 June 2006, the Group allotted 23,867 Ordinary Shares in the Group, credited as paid up to ¢â€š¬63 per share to the former shareholders of SC Power.
On 1 June 2006, the Group allotted 4,244 fully paid up Ordinary Shares in the Group credited as paid up to ¢â€š¬63 per share to Cloverleaf. These shares were issued in recognition of the appreciation of the value of SC Power and were issued to Cloverleaf as they had funded the repurchase of 32,500 shares from Metal Manufacturers on 7 December 2005. As the acquisition of SC Power had been contemplated and planned at the date of the original loan, the shares were allotted to Cloverleaf rather than the former shareholders of SC Power.
On the same date Cloverleaf allotted these shares to certain management in Trithor, in a private transaction by way of a call option exercisable by each individual option holder at an aggregate exercise price of ¢â€š¬1 per option holder for a period of 10 years.
On 7 August 2006, the authorised share capital of the Group was increased from ‚£10,000 to ‚£1,000,000 by the creation of 99 million new Ordinary Shares. On the same date, by way of a capitalisation of part of the Group's accrued share premium account, the Group issued 13,665,728 Ordinary Shares through a bonus issue of new Ordinary Shares at par, pro-rata to its existing Shareholders on the basis of 199 new Ordinary Shares for each existing Ordinary Share held on the record at the date of issue.
On 30 May 2006, pursuant to the Series A Loan Note Instrument, the Group issued ¢â€š¬2,000,000 of Series A convertible loan notes to ATQ Holdings Limited which were subsequently transferred to Cloverleaf Holdings Limited and the other underlying shareholders of ATQ Holdings Limited. These loan notes automatically converted to Ordinary Shares on Admission at a conversion price of ¢â€š¬0.20 per share (which price was automatically adjusted from the original conversion price of ¢â€š¬40 per share following completion of the 199:1 bonus issue). These loan notes were treated as a capital contribution in the 2005 Accountant's report included in the Admission document as the loan note holder had irrevocably committed to convert this debt to loan notes prior to the period end, the cash for which had been advanced prior to the period end.
On 1 June 2006, pursuant to the Series B Loan Note Instrument, the Group issued ¢â€š¬465,000 of Series B convertible loan notes to Cloverleaf Holdings Limited. These loan notes automatically converted into Ordinary Shares on Admission at a conversion price of ¢â€š¬0.315 per Ordinary Share (which price was automatically adjusted from the original conversion price of ¢â€š¬63 per Ordinary Share following completion of the 199:1 bonus issue).
On 1 June 2006, pursuant to the Series C Loan Note Instrument, the Group issued ¢â€š¬3,600,000 of Series C convertible loan notes to various investors. These loan notes automatically converted into Ordinary Shares on Admission at a conversion price of ¢â€š¬0.45 per Ordinary Share (which price was automatically adjusted from the original conversion price of ¢â€š¬90 per Ordinary Share following completion of the 199:1 bonus issue).On 4 August 2006, pursuant to the Series D Loan Note Instrument, the Group issued ¢â€š¬3,600,000 of Series D convertible loan notes pro-rata to the investors in the Series C Loan Notes. These loan notes automatically converted into Ordinary Shares on Admission at a conversion price of ¢â€š¬1.25 per Ordinary Share (which price was automatically adjusted from the original conversion price of ¢â€š¬250 per Ordinary Share following completion of the 199:1 bonus issue).
On 3 May 2007, 4,285,746 new Ordinary Shares were issued at ‚£1.40 per share raising ‚£6,000,000 (‚£5,750,000 net of fees and directly attributable expenses, equivalent to ¢â€š¬8,426,000).
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.
Warrant reserve
The warrant reserve comprises the fair value of the equity component of warrants issued by the Group.
ZENERGY POWER PLC