CALL.L Regulatory News (CALL)

12 August 2011

Zenergy Power plc

("Zenergy" or "the Company" or "the Group")

Interim Results

for the Six Month Period ended 30 June 2011

Zenergy Power (AIM:ZEN.L), the superconductor energy technology company, announces its interim results for the six month period ended 30 June 2011 ('the Period').

Simon Cleaver, Chairman, commented:

"Following the board reorganisation, Zenergy is concentrating on discussions with a number of major industrial technology companies with a view to concluding value-enhancing licensing and strategic deals.

"Last month, the Company announced significant progress with the development of its 2G HTS wire plus the award of a €3.5m German Government grant to assist in scaling up the 2G wire manufacturing process.

"The Company remains confident that considerable value exists within its portfolio of technologies and work is continuing apace to secure the right licensing and strategic deals across our product range and shareholders will be updated as appropriate."

Financial Overview

*Cash and cash equivalents excluding net cash from financing activities

Further information

Chairman's Statement

The consolidated pre-tax loss for the period was reduced to €4,364,000 (6 months to June 2010: €6,145,000). These result benefited from a reversal of past share option expenses of €777,000 (6 months to June 2010: €30,000 expense). Adjusting for this, the loss was €5,141,000 (6 months to June 2010: €6,115,000). The loss in H1 2011 also benefitted from a financial income of €211,000 compared to H1 2010 which experienced a financial expense of €854,000 in respect of foreign exchange movements on cash held.

As a result of the loss, working capital movements and capital and development spend of €1,067,000 (6 months to 30 June 2010: €1,424,000), there was a consequential reduction in cash and cash equivalents of €6,189,000 in the period (6 months to June 2010: €6,665,000 before proceeds from the issue of share capital of €22,375,000) leaving the Group with cash and cash equivalents of €8,954,000 at June 2011.

Net assets were €25,235,000 at 30 June 2011 (30 June 2010: €36,908,000) reflecting both the loss for the period and a loss on foreign exchange translation in respect of the subsidiaries balance sheets charged to the statement of comprehensive income of €1,127,000 (30 June 2010: €2,442,000 gain) as the US$ and sterling lost ground against the Euro.

Basic and fully diluted loss per share reduced to €0.06 per share (6 months to 30 June 2010: €0.10) as set out in Note 5.

Interim Results

For the six months ended 30 June 2011

Consolidated income statement

For the six months ended 30 June 2011

Consolidated statement of Comprehensive Income

For the six months ended 30 June 2011

Consolidated balance sheet

Consolidated statement of changes in equity

For the six months ended 30 June 2011

The aggregated current and deferred tax relating to items that are charged or credited to equity is €Nil.

Consolidated cash flow statement

For the six months ended 30 June 2011

Notes

1. Basis of preparation

The condensed consolidated interim financial statements for the six months ended 30 June 2011 have been prepared under applicable International Financial Reporting Standards adopted by the European Union ('IFRS') and in accordance with IAS 34 Interim Financial Reporting. They do not include all the of the information required for full annual financial statements and should be read in conjunction with the financial statements of the group for the year ended 31 December 2010.

The interim financial statements have been prepared under the same accounting policies as those used for the financial statements for the year ended 31 December 2010. Numerous IFRS's and Interpretations have been endorsed by the EU in the period to 30 June 2011 and although they have been adopted by the Group, none of them has had a material impact on the Group's financial statement.

The Group's 2010 annual report provides full details of significant judgements and estimates used in the application of the Group's accounting policies. There have been no significant changes to these judgements and estimates during the period.

The financial information included in this document is unaudited and does not comprise statutory accounts within the meaning of section 498 of the Companies Act 2006.  The comparative figures for the financial year ended 31 December 2010 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did include a reference to matters to which the auditor drew attention by way of emphasis without qualifying their report (see below), and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Going Concern

The financial statements for the year ended 31 December 2010 drew attention to the significant uncertainties surrounding whether the company would be able to continue as a going concern. Since those financial statements were published the Board has been replaced and the new Board is considering all options for the Company to maximise value for shareholders. The new Board is focused on developing joint ventures and strategic alliances to help commercialise Zenergy's products. As no agreement has been entered at the date of signing these interim statements this does indicate the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

The directors consider that the Group is well placed in its current discussions with interested parties in respect of some form of transaction and, having implemented various cost reduction measures, has adequate cash resources to enable it to meet its obligations in the short term. Therefore, the interim statements are prepared on a going concern basis. The interims do not include the adjustments that would result if the Group were unable to continue as a going concern.

2. Operating Segments

The Group has four operating segments which are described below, which are the Group's subsidiary entities. The subsidiaries are managed separately and have separate functions within the Group. For each of the subsidiaries the Group CEO, who is considered to be the Group's Chief Operating Decision Maker, reviews the management accounts on a monthly basis as well as the annual budgets.

The operating segments are as follows:

·; Zenergy Power GmbH - is responsible for the manufacture of superconducting coils and magnets which are used in all of the Group's products, as well as being responsible for sales of the MBH and renewable coils worldwide. Zenergy Power GmbH is also responsible for the development of 2G wire as well as the Group's intellectual property strategy.

·; Zenergy Power, Inc. - is responsible, for the FCL product for the entire group including sales, engineering, integration and final assembly of the product, which incorporates components from both Zenergy Power GmbH and third party suppliers.

·; Zenergy Power Pty Ltd is partly responsible for the development and design efforts for the Fault Current Limiter including modelling and simulation experiments. Zenergy Power, Inc. is responsible for the activities of Zenergy Power Pty Ltd.

·; Zenergy Power plc - is the Group holding company and is responsible for Group finances and Treasury, investor relations and marketing. The company also acts as an agent for sales of the Group's products in the UK.

The accounting policies of all segments are consistent with Note 1.

Information regarding each operating segment, which are also our reporting segments, is included below. Segments are assessed based on revenues and loss before tax, as included in the internal management accounts that are reviewed by the Group CEO. Inter-segment pricing is determined on an arm's length basis.

Information about reportable segments

Information about geographical areas

The operating segments identified above, being the Group's subsidiary entities are organised according to geographical locations, Zenergy Power GmbH is located in Germany, Zenergy Power, Inc. is located in USA, Zenergy Power Pty Ltd is located in Australia and Zenergy Power plc is located in the United Kingdom. The disclosures presented above therefore are also geographical disclosures. Additional geographical disclosures are noted below:

Revenue by location of customer

The Group does not hold assets in any countries other than those countries where the operating segments of the Group are domiciled. The assets of each operating segment are located solely in the country in which the subsidiary is domiciled, with the exception of inventory of €287,000 (2010: €322,000) held at Zenergy Power GmbH on behalf of Zenergy Power Inc.

How operating and reporting segments are determined

All reporting to the CODM is prepared at the subsidiary level which is our operating segments and our reportable segments. This is the lowest level of information reviewed by the CODM for the purposes of resource allocation. The Group has three end product areas, namely Magnetic Billet Heater, Fault Current Limiters and coils for Renewable generators however for all products Zenergy's component is Superconducting Coils and Magnets which are all produced by Zenergy Power GmbH. Revenues and gross margins are reviewed by product but this is not used for resource allocation purposes all other information is reviewed at a subsidiary level due to the current size of the Group.

3. Other operating income

4. Finance income and expense

5. Earnings per share

Basic earnings per share

The calculation of basic earnings per share for the six months ended 30 June 2011 is calculated as follows:

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:

In the period 1 January to 30 June 2011 the following changes to the share options have occurred: 4,651,000 (2010: 22,000) new options have been granted, 3,016,000 options have been surrendered (2010: 390,000); nil options have been exercised (2010: 79,000), and 208,000 share options have lapsed (2010: 4,000).

6. Property, plant and equipment

No assets are held under finance leases.

There are no restrictions on title associated with the group's fixed assets. No assets are pledged as security and there are no contractual commitments to purchase.

7. Intangible assets

Amortisation charge

The Group amortisation charge is recognised in Research & development expenses in the income statement to the extent it does not relate to sales made in the period. An allocation of amortisation is included in the overhead rates included in cost of sales.

Goodwill

Goodwill arose on the following acquisitions: Zenergy Power GmbH €170,000, Zenergy Power, Inc. €1,063,000 (US$1,535,000) and Zenergy Power Pty Ltd €101,000 (Australian Dollars 136,000). Goodwill is denominated in the currency of the acquired entity.

Development rights and capitalised development expenditure

The Group's intangible assets relate to development rights acquired through business combinations and subsequent development expenditure meeting the criteria for capitalisation as required by IAS 38.

Significant expenditure has been incurred during the period in respect of research and development activities. In respect of costs relating to the Magnetic Billet Heater, Fault Current Limiter and superconducting coils the directors have concluded that the expenditure meets the IAS38 criteria for capitalisation and as such these costs have been capitalised, €745,000 has been capitalised in 2011 (€1,669,000 of internal costs net of €924,000 of grants receivable).

8. Capital and reserves

Share capital

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 22 January 2010 16,700,000 new ordinary 1p shares were issued, at a price per share of £1.20, raising £20.04 million (net £19.2 million after fees of £0.8 million), which at the exchange rate prevailing on the date the shares were admitted to trading was equivalent to €23.3 million (net €22.3 million after fees of €1.0 million).

On 18 March 2010 52,035 shares were issued in respect of an exercise of options resulting in proceeds of £15,611 (€17,461).

On 30 March 2010 38,568 shares, with a value of £44,000 (€49,000), were issued to the non executive directors in lieu of their surrendered options.

On 15 April 2010 26,795 shares were issued in respect of an exercise of options resulting in proceeds of £8,039 (€9,129).

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.