Vipera Regulatory News (VIP)

29 Apr 2008 07:30

Energy Asset Management PLC29 April 2008 Energy Asset Management Plc (the "Company") Final results for the year ended 31 December 2007 Highlights The Company: • has seen the number of installations and systems gaining momentum • has started benefitting from high operational gearing • consequently has since February 2008 achieved monthly profitability • consequently has now achieved monthly positive cash flow • is now ready to exploit a fast growing market which is being driven by both public and government awareness of the need for energy efficiency • has successfully raised further working capital to expand IT system and to fund accelerated expansion Chairman's Statement I have previously reported that we have been successful in negotiating andwinning contracts at a greater rate than previously anticipated. This continuesto be the case. However, the mobilisation of these contracts as previously advised hasthroughout 2007 been at a slower rate than we had anticipated, primarily becausewhen dealing with major corporates there is typically a thorough and prolongedlegal and implementation process to undertake. As a result, in the 12 months to31 December 2007 the Group made a loss after taxation of GBP 1,051,289 (2006 - loss GBP 2,782,270) representing a loss per share of 0.39p (2006 - loss 1.35pper share). Nevertheless, during the year we have demonstrated we can successfully concludetrials, win potentially substantial contracts from both gas suppliers and gasusers and also complete the installation of metering systems within demandingtimeframes. We have also seen the number of systems installations gaining momentum and cannow report that due to the flexibility within our business portfolio the Grouphas since February 2008 achieved monthly profitability and is also trading on apositive cash flow basis. Contract Awards During 2007 we signed several multi-utility contracts covering major high streetretailers, the public sector and also a leading Gas Transporter. Following thesuccessful implementation of its electricity metering project with Woolworth's,services provided by Energy Assets Limited ("EAL", a wholly-owned subsidiary ofEAM) were extended to include gas metering and data collection services,including the installation and management of a SMS-enabled gas meteringsolution. This is now completed. Similar success has been achieved on the Marks and Spencer gas meter datacollection contract. This has been successfully completed and has now beenextended to incorporate gas meter exchanges for a further 100 sites. Such is thesuccess of the gas metering project this has now been extended to specific Marksand Spencer electricity metering sites and water metering sites. Installationsare nearly completed. EAL's success with Woolworth's and Marks and Spencer has generated interest fromother similar high street retail groups and we are presently at varying levelsof negotiations with a number of these retail groups, with trials underway insome cases. Our strategic alliance with IMServ, a subsidiary of Invensys Plc, has inaddition introduced several high street and blue chip names to our portfolio,ranging from Local Authorities to public service and leading financialinstitutions. These prospects are existing customers of IMServ and we thereforeanticipate a smooth transition into these customers. EAL have recently successfully completed a significant gas meter exchange anddata collection programme on behalf of a major Local Authority. The directorsbelieve that this programme will be extended to position EAL as the LocalAuthority's 1st choice metering services provider. Such was the success of thisprogramme that EAL has been highly recommended to other adjacent Public Sectorgroups and Local Authorities. Energy Suppliers EAL has signed further long term contracts with established energy suppliers forthe provision of new and exchange metering services, data collection andmanagement services. Such contracts have high future potential in light of thepossibility that some of these suppliers are considering major AMR projects thatmay require substantial numbers of meter exchanges. Others A unique opportunity has been presented to EAL to collaborate with anindependent gas transporter. This opportunity introduces EAL to the potential of15,000-20,000 new domestic, industrial and commercial metering installations onan annual basis. Medium term contracts have been signed and implementation isunderway. This opportunity also extends to "smart metering" and the potential tobecome involved in social housing and fuel poverty projects which all attractGovernment grant funding. This one project in isolation has the ability todeliver EAL's original expectations and objectives over the coming 3 years. The timetable incurred in negotiating and implementing contracts has beenprotracted. However, the level of contract gain activity has proven to be at amuch higher rate than previously anticipated. As a result and as previously indicated, further to the trading statement madeon 7 December 2007, the Company issued 54,000,000 new ordinary shares at 1 penceper share to raise gross proceeds of GBP 540,000 on 16 January 2008. The Group is increasingly able to deliver its clients a complete energy solutionaddressing both electricity and gas remote automated meter reading. This isencouraged by proposed Government legislation announced in a White Paper and sowe can progress forward on a much firmer base and with increased confidence. The rate of installation is continuing to increase on a monthly basis andexpected to grow substantially in 2008 and 2009 on the basis purely of signedcontracts and clients' expectations. As previously stated the Group has high operational gearing and as our activitygrows so should cash and profit generation. We are operating in a market sectorthat has great prospects supported by both public and Government awareness andsupport of the need for energy efficiency. It has been a tough and hard mountain to climb but as we get nearer the top weare excited at what we see ahead. We are also excited and encouraged at the potential alliances and contracts weare in the course of discussing and negotiating and can only look forward toreporting to you our progress and to thank you for your patience and support. Stephen J BarclayCHAIRMAN29 April 2008 Consolidated income statement- by function of expensefor the year ended 31 December 2007 Year ended Year ended 31 December 31 December 2007 2006 GBP GBPRevenue 667,860 20,768Cost of sales (360,374) (10,664) ---------- ----------Gross Profit 307,486 10,104Operating expenses (1,363,668) (2,811,165) ---------- ----------Operating loss (1,056,182) (2,801,061)Finance income 4,893 18,791 ---------- ----------Loss before taxation (1,051,289) (2,782,270)Taxation - - ---------- ----------Loss after taxation (1,051,289) (2,782,270) ---------- ----------Retained loss for the period (1,051,289) (2,782,270) ---------- ----------Attributable toEquity holders of the Company (1,058,734) (2,774,375)Minority interest 7,445 (7,895) ---------- ----------Retained loss for the period (1,051,289) (2,782,270) ---------- ----------Loss per share basic and diluted (0.39)p (1.35)p Consolidated balance sheetat 31 December 2007 31 December 31 December 31 December 31 December 2007 2007 2006 2006 GBP GBP GBP GBPAssetsNon current assetsProperty, plant andequipment 476,092 20,405Intangible assets -Goodwill 745,475 745,475 ---------- ---------Total non currentassets 1,221,567 765,880Current assetsTrade and otherreceivables 95,200 53,335Cash and cashequivalents 17,101 249,095Inventories 131,984 9,360 ---------- ---------Total current assets 244,285 311,790 --------- ----------Total Assets 1,465,852 1,077,670 --------- ----------Equity and liabilitiesattributable to equityholders of the CompanyShare capital and reservesIssued capital 2,787,684 2,467,684Share premium account 1,163,929 1,083,929Reserves (3,526,468) (2,580,880) ---------- --------- 425,145 970,733Minority interest - (7,445) --------- ----------Total equity 425,145 963,288 --------- ----------Non - current liabilitiesBorrowings 425,374 -Current liabilitiesBorrowings 40,605 -Trade and otherpayables 574,728 114,382 --------- ----------Total currentliabilities 615,333 114,382 --------- ---------- --------- ----------Total equity andliabilities 1,465,852 1,077,670 --------- ---------- Statement of changes in equity Share Capital Share Premium Reserves Minority Total Equity InterestGroup GBP GBP GBP GBP GBP Balance at 1January 2007 2,467,684 1,083,929 (2,580,880) (7,445) 963,288 Loss for yearattributableto equityholders _ _ (1,058,734) _ (1,058,734) Loss for yearattributableto minorityinterest _ _ _ 7,445 7,445 Share basedpayments _ _ 113,146 _ 113,146 Shares issued 320,000 80,000 _ _ 400,000 Balance at31st December2007 2,787,684 1,163,929 (3,526,468) _ 425,145 Consolidated cash flow statementFor the year ending 31 December 2007 Year to Year ended 31 December 31 December 2007 2006 GBP GBPCash flows from operating activitiesOperating loss for the year as per incomestatement (1,056,182) (2,801,061)Depreciation of non current assets 22,576 33,175Impairment of goodwill - 1,734,544Share based payments 113,146 218,381 -------------- ---------- (920,460) (814,961)Movements in working capitalIncrease in trade and other receivables (41,865) (37,045)Increase in inventories (122,594) (9,360)Increase/(decrease) in trade and other payables 460,316 (13,868) -------------- ----------Net cash applied to operations (624,603) (875,234)Cash flows from investing activitiesInterest received 4,893 18,791Net purchase of subsidiary undertaking - (260,190)Cash acquired with subsidiary - 4,353Purchase of non current assets (478,263) (53,580) -------------- ----------Net cash outflow from investing activities (473,370) (290,626)Cash flows from financing activitiesNet proceeds from issue of equity shares 400,000 1,102,577Inflow from new leases 475,853 -Capital element of finance lease rental payments (9,874) - -------------- ----------Net cash flows from financing activities 865,979 1,102,577 -------------- ----------Net decrease in cash and cash equivalents (231,994) (63,283)Cash and cash equivalents at the beginning offinancial period 249,095 312,378 -------------- ----------Cash and cash equivalents at end of period 17,101 249,095 -------------- ---------- Notes on the Preliminary Results 1. The financial information incorporated in this announcement does not constitute full statutory financial statements within the meaning of the Companies act 1985. Full financial statements for the year ended 31 December2007 will be filed with the Registrar of Companies in due course. 2. Key accounting policies Basis of preparation The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards, as approved by the European Union, IFRICinterpretations and parts the Companies Act 1985 applicable to companiesreporting under IFRS. The financial statements have been prepared under thehistorical cost convention. The preparation of the financial statements requires management to makeestimates and assumptions that affect the reported amounts of revenues,expenses, assets and liabilities, and the disclosure of contingent liabilitiesat the date of the financial statements. If in the future such estimates andassumptions which are based on management's best judgement at the date of thefinancial statements, deviate from the actual circumstances, the originalestimates and assumptions will be modified as appropriate in the year in whichthe circumstances change. Where necessary, the comparatives have beenreclassified or extended from the previously reported results to take intoaccount presentational changes. The Group has assessed pronouncements issued by the International AccountingStandards Board that were in issue but not in force at 31 December 2007. IFRS 8 - Operating segments. IFRIC 11 / IFRS 2 - Group and treasury share transactions. IFRIC 12 - Service concession arrangements. IFRIC 13 - Customer loyalty programmes. IFRIC 14 / IAS 19 - The limit on a defined benefit asset, minimum fundingrequirement and their interaction. The Directors anticipate that the adoption of these standards andinterpretations in future periods will have no material impact on the financialstatements of the Group. Basis of consolidation The financial statements of the Company and its Group undertakings have beenconsolidated to 31 December 2007.The results and cash flows of subsidiaryundertakings are included in the income statement and consolidated cash flowstatement from the date of acquisition. 3. Tax on loss on ordinary activities Tax charge for the year No taxation arises on the result for the year because of the trading loss. Factors affecting the tax charge for the year The tax charge for the year does not equate to the loss for the period at thestandard rate of UK small companies corporation tax of 19%. The differences areexplained below: Year ended Year ended 31 December 31 December 2007 2006 GBP GBPLoss for the year before taxation (1,051,289) (2,782,270) ------------ ----------Loss for the year before tax multiplied by theapplicable rate of UK small companies corporationtax of 19% (199,745) (528,631)Depreciation in excess of capital allowances (18,428) 3,758Expenses not deductible for tax 29,910 339,490Tax losses for the year not relieved 188,263 185,383 ------------ ---------- - - ------------ ---------- Factors affecting the tax charge of future years Tax losses available to be carried forward by the Group at 31 December 2007against future profits are estimated at £1,967,000. There is an unprovideddeferred tax asset based on these losses of £551,000. It is difficult to determine with certainty when the available tax losses willbe utilised. Therefore, the element of the potential deferred tax asset relatingto available tax losses has not been recognised in the financial information. 4. Loss per share The calculation of basic loss per share is based on the loss attributable toequity holders of GBP 1,058,734 (31 December 2006 - loss GBP 2,774,375) dividedby the weighted average number of ordinary shares in issue being 271,403,999 (31December 2006: 205,497,607) during the year. As the Company has incurred a lossfor the year, no option or warrant is potentially dilutive, and hence basic anddiluted loss per share are the same. 54,000,000 new ordinary shares were issued after the year end. If these shareshad been issued prior to 31 December 2007, this would have altered the weightedaverage number of ordinary shares in issue as calculated above. 5. Property, plant and equipment Office Meters & Total Equipment Loggers GBP GBP GBPCostOpening balance as at 1 January2007 53,580 - 53,580Additions in year 5,670 472,593 478,263Closing balance as at 31December 2007 59,250 472,593 531,843DepreciationOpening balance as at1 January2007 33,175 - 33,175Charge in year 7,907 14,669 22,576Closing balance as at 31December 2007 41,082 14,669 55,751Net book value as at 1 January2007 20,405 - 20,405 ----------- ----------- ----------Net book value as at 31 December2007 18,168 457,924 476,092 ----------- ----------- ---------- Gas meters and data loggers are leased to customers via financing arrangementsusing third party finance companies. Under these arrangements, the Group sellsgas meters and data loggers for cash to the finance company and at the same timecustomers enter into contracts with the Group for the provision, installationand maintenance of the gas metering and ancillary equipment together with dataprovision services as applicable. Under the terms of a deed of assignmentbetween the Group, the customer and the finance company, customers are requiredto make regular payments to the finance company who in turn remit the funds tothe Group. Under the customer contracts with the Group, the Group is required tomaintain the gas meters and data loggers for the duration of the contract. At the end of the contract between the finance company and the Group, the Grouphas the option to buy back the gas meters and data loggers from the financecompany at a nominal amount. The Directors currently intend to exercise theiroption to acquire these units and lease them directly to customers over theirremaining useful economic life. Accordingly, the Directors have accounted for these units so that the FinancialStatements reflect the substance of the transaction, rather than its legal form,as follows: i. Gas meters and data loggers initially purchased by the Group and sold to the finance companies are included in fixed assets at their purchase price, which includes installation costs and attributable overheads where appropriate. Such assets are depreciated over the Directors' estimate of their useful economic life. ii. In accordance with the terms of the finance agreement between the Group and the finance company, the Group assigns its title and interest to the assets and the customer rentals to the finance company for the duration of the lease agreement. The Group is however required to insure and maintain the assets over the duration of the lease agreement and administer the collection of the rental payments from the customer. The Group indemnifies the finance company for all amounts due under the terms of the lease and customer agreements. The rental charge for gas meters and data loggers, together with data provisionservices, is recognised in the income statement over the period in which thecustomer has use of the assets and data services are provided. 6. Share capital 31 December 31 December 2007 2006 GBP GBPAuthorised500,000,000 Ordinary shares of 1p each 5,000,000 5,000,000Allotted, issued and fully paid278,768,383 Ordinary shares of 1p each 2,787,684 2,467,684 On 26 March 2007 the Company issued 32,000,000 new ordinary shares of 1p at anissue price of 1.25p each, to raise GBP 400,000 before expenses. Options No options were granted during the year ended 31 December 2007 or subsequent tothe date of approval of the financial statements Warrants No warrants were granted during the year ended 31 December 2007 or subsequentlyto the date of approval of the financial statements 7. Post balance sheet events On 16 January 2008 the Company issued 54,000,000 new ordinary shares of 1p eachat par to raise GBP 540,000 before expenses. These shares rank pari passu with all existing issued ordinary shares. 8. Registered Office and copies of Financial Statements The registered office of the Company is 3 Hardman Square, Spinningfields,Manchester M3 3EB. Copies of the Annual Report and Financial Statements, will bemailed to shareholders along with the notice of the AGM shortly. Notice is hereby given that the Annual General Meeting of Energy AssetManagement Plc will be held at 1 Westferry Circus, Canary Wharf, London E14 4HAon 26 June 2008. Enquiries Energy Asset Management Plc Stephen Barclay, ChairmanTel: 07767 444114 Alan McKeating, Managing DirectorTel: 07843 231372 Ruegg & Co Limited, Nominated Adviser Brett Miller/ Gavin BurnellTel 0207 584 3663 This information is provided by RNS The company news service from the London Stock Exchange