31 Aug 2010 07:00
31 August 2010
Hydrodec Group plc
("Hydrodec", the "Company" or the "Group")
Unaudited Interim Results
Hydrodec Group plc (AIM: HYR), the cleantech industrial oil refining group, today announces unaudited results for the six months ended 30 June 2010.
Financial Highlights
·; Revenues increased 82% to US$8.2 million (H1 2009: US$4.5 million), reflecting both higher SUPERfine sales volumes and sales prices
·; Gross profit of US$3.7 million (H1 2009: US$2.3 million)
·; Operating loss of US$2.9 million (H1 2009: US$3.8 million)
·; Operational cash-flow improvement from the second half of last year continues into the third quarter
Operational Highlights
·; SUPERfine sales up 147% to a 6 month record of 9.4 million litres (H1 2009: 3.8 million litres)
·; Expanded customer portfolio including the addition of major new original equipment manufacturer ("OEM") in the US
·; Demand for US SUPERfine exceeds current US capacity
·; Signs of improvement in US transformer oil market and strong performance in Australia
·; Improved operational reliability and efficiency at both plants
·; On track to receive US approval in the second half of the year from Environmental Protection Agency ("EPA") to process polychlorinated biphenyl ("PCB") contaminated oil
·; Entered strategic alliance with Kobelco Eco Solutions, a Kobe Steel group company, opening up multi-billion US dollar market in Japan and East Asia; first two Japanese plants identified
·; Strengthened management team with appointment of new CFO and COO
·; Very strong health and safety performance continues
Neil Gaskell, Chairman, commented: "Hydrodec has delivered a good first half performance with strong revenue growth and operational progress, despite facing continued tight cash constraints. SUPERfine sales were a record 9.4 million litres for the period, our plants in the US and Australia are performing well and trading conditions have improved from a sluggish start in 2010.
This progress has continued in the third quarter and sales are expected to exceed the record second quarter (6.0 million litres) with the Company approaching operational cash-flow breakeven towards the year end.
The Japan joint venture continues to make good progress on the initial two plants and there are indications that demand for a third plant may already exist confirming the strength and depth of the opportunity.
I am also delighted that our Board now includes both Stephen Harker, Chief Operating Officer, and Paul Manchester, Finance Director, who have greatly strengthened our management team and have contributed considerably to the improving results."
For further information please contact:
| Hydrodec Group plc | 020 7786 9810 |
| Neil Gaskell, Chairman Mark McNamara, Chief Executive Mike Preen, Company Secretary |
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| Numis Securities Limited | 020 7260 1000 |
| Nominated Adviser: Simon Blank Corporate Broker: David Poutney, Alex Ham |
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| Corfin Public Relations | 020 7596 2860 |
| Neil Thapar, Alexis Gore, Harry Chathli |
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Chief Executive's Report
Hydrodec is pleased to report a good performance in the first half of 2010 after withstanding extremely challenging trading conditions throughout 2009 and the early part of the current year. Total revenue increased by 82% to US$8.2 million (H1 2009: US$4.5 million), contributing to a reduced loss of US$4.3 million (H1 2009: US$5.0 million) in the period under review.
Market acceptance of Hydrodec's SUPERfine branded transformer oil continued to gain momentum as more power utilities and OEMs recognise its environmental advantages, price competitiveness and technical superiority. Significantly, during this period, one of the leading US OEMs presented its view of the premium quality of SUPERfine transformer oil to an audience of its utility customers.
Strategic alliance in Japan/Asia
In March, the Company entered into a transformational strategic alliance with Kobelco Eco Solutions, a subsidiary of Kobe Steel, to cover Japan, China, Taiwan, South Korea, India and Vietnam. The alliance, which initially covers the reprocessing and sale of transformer oil, enables the application of Hydrodec's patented cleantech technology to hazardous waste projects and expansion of the technology into other oil markets. It is estimated that there is at least one billion litres of PCB contaminated transformer oil treatment demand in Japan alone and Hydrodec's process is the only method so far approved by the Japanese Ministry of Environment for reprocessing contaminated transformer oil with 100% removal of PCBs, a substance banned under UN regulations.
The alliance now has firm plans for the location of the first operating site in Japan and local environmental testing required for construction approval at this site is well advanced. Three alternatives are under consideration for a second site. A first approach regarding a possible third plant has been received and demand exists for further plants.
Operational review
Demand for SUPERfine grew strongly during the first half of the year. After a difficult first quarter, SUPERfine sales hit a quarterly record at 6 million litres in the second quarter exceeding the previous quarterly high of 4.4 million litres set last year and reflecting the ramp-up in production and sales to major utilities and OEMs.
The Company is now supplying product and services to a growing range of blue chip power utilities and OEMs in the United States, Australia, Canada, Central America, South America and the Caribbean.
Through the end of this reporting period and immediately post period end, SUPERfine demand in the US has exceeded the Company's production capacity due to a combination of bulk demand from large OEMs, demand for small lots to utility and associated customers and export demand into South and Central America. Based on current excess demand, plans are now being implemented to focus on customers willing to pay prices reflecting the environmental advantages and superior quality of SUPERfine.
As announced previously, the Company has focused on reducing average feedstock cost by widening its procurement initiatives and further improving its customer mix through a concerted push into the utility sector. The benefit of these efforts is beginning to be felt in the current half through a broadening of the supplier base and the replacement of higher cost feedstock suppliers with lower cost, regional suppliers having better strategic alignment with the Company. The financial benefits of this strategy are expected to lead to further improvement in margins, which during the period were ahead of those achieved in 2009.
Throughout the first half significant emphasis was placed on furthering the improvement in finance monitoring and reporting systems. These efforts, in concert with ongoing development of operational management controls, have resulted in improved cash management and tighter management of capital. The progressive improvement in financial management and planning has contributed to the overall improvement in performance.
Technical and production reliability of the two operating plants, including operations management systems within the plants, continued to improve throughout the period. A programme of continuous improvement in operating cost and reliability is underway with the objective of lowering unit operating costs across the Group. A number of small capital expenditures capable of producing permanent reductions in processing costs have been identified.
The US EPA approval for Hydrodec to treat PCB contaminated feedstock, which will provide an additional revenue stream, is anticipated before the end of the year. A statutory bond of about US$0.4 million will have to be posted before finalisation of the approval.
The Company operates complex industrial plants involving hazardous conditions, substances and materials. As a consequence it places great emphasis on its environmental performance and the safety of its employees and broader communities. During the period it maintained its exemplary safety and environmental performance with no reportable environmental incidents. The Company is very proud of this performance and strives continuously to further improve in these areas.
Fundraisings
During the first half of 2010 the Company raised an additional £2 million (gross) through the issue of approximately 20 million new ordinary shares in a placing in March 2010.
Management changes
The senior management team was significantly strengthened during the period with the appointments of Stephen Harker as Chief Operating Officer in April 2010 and Paul Manchester as Chief Financial Officer in January 2010. In July they both joined the Board of the Company with Paul Manchester becoming Finance Director.
Balance sheet and cashflow
Operational cash-flow in the period, while still negative, improved significantly over the second half of last year despite a weak first quarter. Following the fund-raise in March, at the end of June the Company had approximately US$0.5 million cash available after paying interest on the loan notes and with no delayed payments to creditors. During the third quarter, cash generation has continued to improve and working capital remains manageable but tight, with only very limited cash available to develop the business. The Board continues to implement additional performance improvement programmes in both operations and sales in order to minimise the risk of a working capital shortfall at the year end.
Current trading
Trading to date in the third quarter of 2010 remains encouraging and the order pipeline for SUPERfine transformer oil continues to strengthen. The sales volumes secured in the second quarter are continuing into the second half and the Board expects third quarter volumes to exceed the record levels in the second quarter.
Gross margins have begun to improve further from the first half of the year and management expects margins to improve over the course of the second half of the year with improved feedstock procurement, repeat orders from OEMs and an improving market.
As a result of the growth in demand for SUPERfine oil the Company needs to source increasing quantities of feedstock to capitalise on its opportunities, secure future supplies and reduce average costs. The Company's ability to secure feedstock was constrained late in the period and immediately post period-end by the ongoing restrictive credit conditions in the US combined with the tight cash position of the Company.
Given the improving trading backdrop, the Board believes that there is scope to upgrade Hydrodec's existing sales and production capabilities and improve operating efficiencies in order that it may capitalise on the encouraging trends and order prospects.
Looking ahead
On the back of strong technical performance at the production plants and matching demand for SUPERfine, the Company is implementing strategies and initiatives focussed on seeing Hydrodec move to positive net cash generation during the first half of 2011. Achievement of this target is expected to set the scene for implementation of growth plans for both the Australian and US businesses during next year.
Mark McNamara
Chief Executive
CONSOLIDATED CONDENSED STATEMENT OF INCOME
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| 6 months to 30 June 2010 | 6 months to 30 June 2009 | Year to 31 December 2009 |
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| USD'000 | USD'000 | USD'000 |
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| (unaudited) | (unaudited) | (audited) |
| Continuing operations |
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| Revenue | 8,245 | 4,520 | 10,393 |
| Cost of sales | (4,540) | (2,228) | (6,725) |
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| Gross profit | 3,705 | 2,292 | 3,668 |
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| Administrative costs | (6,581) | (6,134) | (15,134) |
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| Operating loss | (2,876) | (3,842) | (11,466) |
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| Exceptional item - profit on sale of asset Interest income | - | 1 | 595 3 |
| Interest costs | (1,426) | (1,154) | (2,691) |
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| Loss before tax | (4,302) | (4,995) | (13,559) |
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| Income tax expense | - | - | - |
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| Loss for the period | (4,302) | (4,995) | (13,559) |
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| ================================= | ================================== | ================================== |
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| Basic loss per share | (1.50) cents | (2.16) cents | (5.46) cents |
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CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
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| Loss for the period | (4,302) | (4,995) | (13,559) | ||
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| Exchange differences on translation of foreign operations | (1,793) | 7,740 | 3,013 | ||
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| Total comprehensive (loss) / profit for the period | (6,095) | 2,745 | (10,546) |
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| ================================= | ================================== | ================================== |
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CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
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| As at 30 June 2010 | As at 30 June 2009 | As at 31 Dec 2009 |
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| USD'000 | USD'000 | USD'000 |
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| (unaudited) | (unaudited) | (audited) |
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| Non-current assets |
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| Property, plant and equipment | 23,562 | 25,090 | 24,543 |
| Goodwill | 3,519 | 3,459 | 3,760 |
| Other intangible assets | 21,518 | 24,819 | 23,748 |
| Prepaid royalty | - | 4,118 | - |
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| 48,599 | 57,486 | 52,051 |
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| Current assets |
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| Inventories | 277 | 587 | 403 |
| Trade and other receivables | 2,612 | 3,072 | 1,902 |
| Cash and cash equivalents | 552 | 4,978 | 384 |
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| 3,441 | 8,637 | 2,689 |
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| Total assets | 52,040 | 66,123 | 54,740 |
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| Current liabilities |
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| Trade and other payables | 3,674 | 4,750 | 3,419 |
| Borrowings - bank overdraft | 249 | - | 123 |
| Short-term borrowings | 61 | 119 | 7 |
| Short-term provisions | 208 | 53 | 219 |
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| Total current liabilities | 4,192 | 4,922 | 3,768 |
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| Non-current liabilities |
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| Long-term provisions | 34 | - | 28 |
| Long-term borrowings | 7,882 | 7,380 | 7,973 |
| Deferred tax liabilities | 3,125 | 3,460 | 3,338 |
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| Total non-current liabilities | 11,041 | 10,840 | 11,339 |
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| Total liabilities | 15,233 | 15,762 | 15,107 |
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| Net assets | 36,807 | 50,361 | 39,633 |
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Equity attributable to equity holders of the parent |
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| Share capital | 2,722 | 2,533 | 2,734 |
| Share premium account | 53,746 | 52,853 | 54,223 |
| Equity reserve | 13,322 | 16,240 | 14,232 |
| Merger reserve | 44,668 | 49,463 | 47,718 |
| Treasury reserve | (40,327) | (44,655) | (43,083) |
| Employee benefit trust | (1,214) | (1,345) | (1,298) |
| Option reserve | 5,270 | 5,474 | 5,513 |
| Profit and loss account | (46,536) | (38,093) | (44,812) |
| Translation reserve | 5,156 | 7,891 | 4,406 |
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| Total equity | 36,807 | 50,361 | 39,633 |
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| ================================== | ================================== | ================================== |
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
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| Share capital | Share premium | Equity reserve | Merger reserve |
Foreign exchange reserve | Profit and loss account | Share option reserve | Treasury reserve | Employee benefit trust | Total |
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| USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | |||||||
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| At 1 January 2009 | 2,014 | 38,500 | 13,645 | 43,058 | 8,336 | (31,545) | 4,210 | (38,873) | (1,170) | 38,175 |
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| Exchange differences | 299 | 6,334 | 2,031 | 6,405 | (9,112) | - | - | (5,782) | (175) | - |
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| Share-based payment | - | - | - | - | - | - | 638 | - | - | 638 |
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| Issue of shares | 210 | 8,054 | - | - | - | - | - | - | - | 8,264 |
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| Issue costs | - | (400) | - | - | - | - | - | - | - | (400) |
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| Transactions with owners | 509 | 13,988 | 2,031 | 6,405 | (9,112) | - | 638 | (5,782) | (175) | 8,502 |
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| Exchange differences | - | - | - | - | 8,667 | (1,553) | 626 | - | - | 7,740 |
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| Loss for the period | - | - | - | - | - | (4,995) | - | - | - | (4,995) |
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| Total Comprehensive |
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| Income | - | - | - | - | 8,667 | (6,548) | 626 | - | - | 2,745 |
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| Conversion of loan stock | 10 | 365 | 564 | - | - | - | - | - | - | 939 |
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| At 30 June 2009 | 2,533 | 52,853 | 16,240 | 49,463 | 7,891 | (38,093) | 5,474 | (44,655) | (1,345) | 50,361 |
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| Exchange differences | (81) | (2,158) | (552) | (1,745) | 2,917 | - | - | 1,572 | 47 | - |
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| Share-based payment | - | - | - | - | - | - | 209 | - | - | 209 |
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| Issue of shares | 258 | 2,815 | - | - | - | - | - | - | - | 3,073 |
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| Issue costs | - | (117) | - | - | - | - | - | - | - | (117) |
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| Transactions with owners | 177 | 540 | (552) | (1,745) | 2,917 | - | 209 | 1,572 | 47 | 3,165 |
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| Exchange differences | - | - | - | - | (6,402) | 1,845 | (170) | - | - | (4,727) |
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| Loss for the period | - | - | - | - | - | (8,564) | - | - | - | (8,564) |
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| Total Comprehensive |
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| Income | - | - | - | - | (6,402) | (6,719) | (170) | - | - | (13,291) |
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| Conversion of loan stock | 24 | 830 | (1,456) | - | - | - | - | - | - | (602) |
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| At 31 December 2009 | 2,734 | 54,223 | 14,232 | 47,718 | 4,406 | (44,812) | 5,513 | (43,083) | (1,298) | 39,633 |
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| Exchange differences | (175) | (3,473) | (910) | (3,050) | 4,768 | - | - | 2,756 | 84 | - |
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| Share-based payment | - | - | - | - | - | - | 110 | - | - | 110 |
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| Issue of shares | 163 | 3,138 | - | - | - | - | - | - | - | 3,301 |
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| Issue costs | - | (142) | - | - | - | - | - | - | - | (142) |
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| Transactions with owners | (12) | (477) | (910) | (3,050) | 4,768 | - | 110 | 2,756 | 84 | 3,269 |
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| Exchange differences | - | - | - | - | (4,018) | 2,578 | (353) | - | - | (1,793) |
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| Loss for the period | - | - | - | - |
| (4,302) |
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| Total Comprehensive |
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| Income | - | - | - | - | (4,018) | (1,724) | (353) | - | - | (6,095) |
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| Conversion of loan stock | - | - | - | - | - | - | - | - | - | - |
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| At 30 June 2010 | 2,722 | 53,746 | 13,322 | 44,668 | 5,156 | (46,536) | 5,270 | (40,327) | (1,214) | 36,807 |
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CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
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6 months ended 30 June 2010 |
6 months ended 30 June 2009 |
Year to 31 December 2009 |
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| USD'000 | USD'000 | USD'000 |
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| (unaudited) | (unaudited) | (audited) |
| Cashflows from operating activities |
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| Loss before tax |
| (4,302) | (4,995) | (13,559) |
| Depreciation |
| 660 | 584 | 1,296 |
| Amortisation of other intangible assets |
| 784 | 536 | 1,954 |
| Finance costs |
| 1,426 | 1,153 | 2,688 |
| Profit on disposal of assets |
| - | (533) | (595) |
| Share based payment expense |
| 111 | 638 | 828 |
| Foreign exchange movement |
| (469) | (490) | (1,541) |
| Increase/(decrease) in inventories |
| 127 | (452) | (268) |
| Increase in amounts receivable |
| (718) | (113) | (269) |
| Increase in amounts payable |
| 257 | 1,419 | 697 |
| Net cash outflow from operating activities |
| (2,124) | (2,253) | (8,769) |
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| Cashflows from investing activities |
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| Purchase of property, plant and equipment |
| (63) | (1,557) | (1,403) |
| Sale of property, plant and equipment |
| - | 487 | 865 |
| Sale of investment |
| - | 432 | 432 |
| Net cash outflow from investing activities |
| (63) | (638) | (106) |
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| Cashflows from financing activities |
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| Issue of new shares |
| 3,301 | 8,264 | 11,337 |
| Costs of share issue |
| (142) | (408) | (517) |
| Interest paid |
| (808) | (15) | (1,737) |
| Bank interest and other income received |
| - | 5 | 3 |
| Repayment of lease liabilities |
| (122) | (80) | (53) |
| Net cash inflow from financing |
| 2,229 | 7,766 | 9,033 |
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| Increase in cash and cash equivalents |
| 42 | 4,875 | 158 |
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| Movement in net cash |
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| Cash |
| 384 | 352 | 352 |
| Bank overdraft |
| (123) | (249) | (249) |
| Opening cash and cash equivalents |
| 261 | 103 | 103 |
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| Increase in cash and cash equivalents |
| 42 | 4,875 | 158 |
| Closing cash and cash equivalents |
| 303 | 4,978 | 261 |
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NOTES TO THE UNAUDITED INTERIM REPORT
1 Basis of Preparation
Hydrodec Group plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of Hydrodec Group plc's registered office is 4th Floor, 120 Moorgate, London, United Kingdom. Hydrodec Group plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.
Hydrodec's consolidated interim financial statements are presented in United States Dollar (USD). The principal rates used for translation are:
| In US dollars: | June 2010 | June 2010 | Dec 2009 | Dec 2009 | June 2009 | June 2009 |
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| Closing | 6 mth avg | Closing | 12 mth avg | Closing | 6 mth avg |
| British pounds | 0.66 | 0.66 | 0.62 | 0.64 | 0.60 | 0.67 |
| Australian dollars | 1.17 | 1.12 | 1.12 | 1.26 | 1.23 | 1.40 |
These consolidated condensed interim financial statements have been approved by the Board of Directors on 27 August 2010.
The interim consolidated financial statements for the six months ended 30 June 2010, which are unaudited, do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Accordingly, this condensed report is to be read in conjunction with the Annual Report for the year ended 31 December 2009, which has been prepared in accordance with IFRS's as adopted by the European Union, and any public announcements made by the Group during the interim reporting period.
The statutory accounts for the year ended 31 December 2009 have been reported on by the Group's auditors, received an unqualified audit report but included an emphasis of matter modification regarding going concern, and have been filed with the registrar of companies at Companies House. The unaudited condensed interim financial statements for the six months ended 30 June 2010 have been drawn up using accounting policies and presentation expected to be adopted in the Group's full financial statements for the year ending 31 December 2010, which are not expected to be significantly different to those set out in note 1 to the Group's audited financial statements for the year ended 31 December 2009.
The financial statements have been prepared on the going concern basis, which assumes that the group will have sufficient funds to continue in operational existence for the foreseeable future.
Currently, the Group is dependent upon its two plants to produce sufficient SUPERfine oil at satisfactory margins to generate sufficient cash to meet the Group's forecast requirements. Margins are affected by, amongst other things, the world price for oil and demand for transformer oil which are beyond the Directors' control and about which there is material uncertainty. The plants are also reliant on satisfactory production rates which are dependent on the availability of sufficient feedstock, and at the appropriate cost. Sensitivity to change on both criteria have been assessed by the Board.
The Directors are satisfied that at projected production, sales and margin rates the Group's operating cash flow requirements will be met.
The Directors believe that it is appropriate to prepare the interim consolidated financial statements on a going concern basis as they believe that the operating parameters outlined above will be met or exceeded.
2 TAXATION
There is no tax charge for the period.
3 EARNINGS PER SHARE
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| 6 months ended 30 June 2010 | 6 months ended 30 June 2009 | Year to 31 December 2009 |
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| USD'000 | USD'000 | USD'000 |
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| Loss for the financial period |
| (4,302) | (4,995) | (13,559) |
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| Number of shares | Number of shares | Number of shares |
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| Weighted average number of shares in issue* |
| 292,191,927 | 230,755,436 | 248,398,044 |
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* The weighted average shares in issue have been reduced by the weighted average number of shares held by a member of the Group (which are disenfranchised) and also shares held by the Employee Benefit Trust |
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| Basic loss per share |
| (1.50) cents | (2.16) cents | (5.46) cents |
4 movement in share capital
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| As at 30 June 2010 No. |
| Authorised |
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| Ordinary shares of 0.5 pence each | 800,000,000 |
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| Issued and fully paid - ordinary shares of 0.5 pence each |
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| At 31 December 2009 | 340,188,872 |
| Issued for cash | 21,665,659 |
| At 30 June 2010 | 361,854,531 |
The Company issued the following ordinary shares at 0.5 pence each during the period:
| Date of issue | Number of shares | Issue price | | Total consideration |
| | | | | £ |
| 13 January 2010 | 1,405,800 | 12 pence | | 168,696 |
| 29 March 2010 | 17,000,000 | 10 pence | | 1,700,000 |
| 14 April 2010 | 3,259,859 | 10 pence | | 325,986 |
| | | | | 2,194,682 |
56,673,333 ordinary shares are held by a member of the Group and are therefore disenfranchised. As a result, the total number of ordinary shares with voting rights in the Company as at 30 June 2010 is 305,181,198.
5 Geographic analysis
Revenue and assets for each period are wholly attributable to the Group's sole activity of the treatment of used transformer oil and the sale of SUPERfine oil, which are deemed to be continuing activities.
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| USA | Australia | Unallocated | Total |
| Six months ended 30 June 2010 | USD'000 | USD'000 | USD'000 | USD'000 |
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| Revenue | 5,129 | 3,116 | - | 8,245 |
|
|
|
|
|
|
| Non-current assets | 16,099 | 14,426 | 18,074 | 48,599 |
|
|
|
|
|
|
|
| USA | Australia | Unallocated | Total |
| Six months ended 30 June 2009 | USD'000 | USD'000 | USD'000 | USD'000 |
|
|
|
|
|
|
| Revenue | 2,316 | 2,204 | - | 4,520 |
|
|
|
|
|
|
| Non-current assets | 17,668 | 14,691 | 25,127 | 57,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| USA | Australia | Unallocated | Total |
| Year ended 31 December 2009 | USD'000 | USD'000 | USD'000 | USD'000 |
|
|
|
|
|
|
| Revenue | 6,408 | 3,985 | - | 10,393 |
|
|
|
|
|
|
| Non-current assets | 16,494 | 15,422 | 20,135 | 52,051 |
|
|
|
|
|
|
|
|
|
|
|
|
All revenue comprises amounts earned on amounts receivable from external customers.
6 long term borrowings
|
| As at 30 June 2010 | As at 30 June 2009 | As at 31 Dec 2009 |
|
| USD'000 | USD'000 | USD'000 |
|
|
|
|
|
| Convertible loan stock | 7,292 | 6,541 | 7,139 |
| Finance lease liabilities due within five years | 590 | 839 | 834 |
|
| 7,882 | 7,380 | 7,973 |
During the six months to 30 June 2010, there were no loan notes converted into share capital of the Company. There are £12.79 million nominal value of loan notes outstanding which are convertible into ordinary shares in the Company at the option of loan note holders at 16.66p per share, at any time between April 2008 and November 2012. Those elements not converted into shares by this date are repayable between 1 November 2012 and 31 October 2014. Interest is charged at a fixed rate of 8% per annum on the value of the unconverted loan.