REG-Voller Energy Group Preliminary Results for year - Part 1
Released: 01/10/2008
com:20081001:RnsA7671E
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RNS Number : 7671E
Voller Energy Group PLC
01 October 2008
1 October 2008
Voller Energy Group Plc
("Voller" or "the Company")
Preliminary Results for the year ended 30 June 2008
Voller Energy Group Plc a leader in portable fuel cell systems and one of the
first companies in the world with deliverable technology, announces its
preliminary results for the year ended 30 June, 2008.
Highlights
. First commercial shipments of the Emerald 1kW Auxiliary Power Unit achieved
}} Welfare cabin, supplied by GenQuip Plc
}} CCTV camera for traffic monitoring
}} Mobile information sign for the Dutch Ministry of Works
. Manufacturing facility extended in Basingstoke, England
. Loss for the year before taxation of £2.8 million (2007: £2.2 million) ,
better than budget
. Core patents filed strengthening Intellectual Property
. Development commenced on the next generation of Emerald Product
. Additional funding is required to develop the business for the future and the
directors have sufficient reason to believe that the strategic review which
commenced in February 2008 will, if successful, achieve this. The options
include, but are not limited to, strategic alliances, mergers or a sale of the
business.
Robin Francis, Chief Executive Officer, commented:
"This year has seen encouraging progress by the Company and we have passed the
important milestone of shipping the first commercial Emerald units to customers.
The Company is therefore excellently placed to meet the large and growing demand
for environmentally friendly power generation systems. However, securing
additional financing to take the company to the next stage of development
remains of critical importance. While we have a number of ongoing discussions
with interested partners and are optimistic that these will lead to a positive
conclusion, the ultimate outcome of these discussions remains uncertain."
www.voller.com
For further information please contact:
Robin Francis, Chief Executive
Voller Energy Group Plc
Tel: +44 (0) 1256 813 900
John Depasquale
Seymour Pierce
Tel: +44 (0) 207 107 8010
Voller Energy Group Plc
Chairman's statement
I am pleased to report that encouraging progress has been achieved in the year
to 30 June 2008. The Group has begun shipping pilot commercial units of the
Emerald 1kW APU (Auxiliary Power Unit) system running from LPG.
The Emerald system is being installed in a number of differing customer
situations in the target markets of construction, leisure and infrastructure
management. These include the installation of units in welfare cabins supplied
by GenQuip Plc, the installations of a unit to power a CCTV camera in a traffic
monitoring system and the installation of a unit in a mobile information sign
for the Dutch Ministry of Works. The units delivered to GenQuip represented the
initial batch of 5 systems as part of the total order received from them for
twenty units.
I can also report that following the successful participation of Voller's
Beneteau Oceanis 411 yacht in the Atlantic Rally for Cruisers it is considered
that the marketing profile of the product in the marine market has been
successfully accomplished and as a consequence the yacht has been sold. This
race and other trials have proven the utility of the Emerald system in the
marine and leisure space and the extensive interest in the product in these
applications is reflected in the initial units ordered by our appointed
distributors in our target geographic markets.
The Emerald units are manufactured at the Group's facility in Basingstoke which
was extended in October 2007. In addition further development work has resulted
in the filing of new patents on the Emerald system and a further strengthening
of the Group's intellectual property.
The feedback from our customers is very encouraging and this feedback combined
with our ongoing testing programme, is being used to make further improvements
to the product. The manufactured cost of the initial units has not been recouped
in its entirety from the revenue generated and a gross loss has been sustained
per unit, which was in accordance with the financial plan for the year. As sales
increase a reduction in the cost of components will be secured which together
with continuing re-design of the product will minimise the excess of cost over
revenue. Nonetheless the absorption of this cost together with continuing
development expenditure and other overhead costs continues to deplete the cash
resources of the Company.
Financial results
These financial results are the first results following the adoption of
International Financial Reporting Standards (IFRS) as adopted by the European
Union.
Sales for the year of £105k (2007:£42k) included for the first time revenue
generated from the sales of the Emerald 1Kw APU. This is encouraging progress
and reflects on the initial successful delivery of commercial product.
Research and development expenses of £1.1m remained in line with the previous
year of £1.0m reflecting the continued work on the development of the Emerald
product.
Administrative expenses of £2.795m (2007:£2.543m) increased during the year
primarily as a result of the costs of the manufacturing operation expanded at
our Basingstoke facility during the current year and the increased charge for
Share Options.
Interest receivable fell as a consequence of the reduction in the cash balance.
The loss before taxation for the year of £2.799m (2007:£2.248m) was better than
budget.
At the end of year the group had cash in hand of £1.948m (2007: £4.732 million)
and, as indicated in my comments below, additional funding is required to enable
the Group to complete its development programme.
Voller Energy Group Plc
Chairman's statement (Continued)
People
During the year we have strengthened our development team but have taken action
to reduce sales and marketing personnel as we focus on a more targeted approach
of limited key accounts.
All of our employees make a valued contribution to the Group's activities and I
would like to thank them for all their continued contribution. As announced on 5
August 2008, Stephen Voller stepped down as the CEO to pursue other business
interests and Robin Francis, the Group's Chief Technology Officer, took over as
CEO.
Strategic Review
In February 2008 the Group announced that a strategic review of the options open
to the Group would be undertaken by Deloitte Corporate Finance. The objective of
this Strategic Review was to maximise shareholder value. The Company announced
in February that these options may include, but were not limited to, strategic
alliances, mergers, refinancing or a sale of the business. In February we said
that this process may or may not lead to an offer being made for the Company.
Whilst this review has been in progress action has been taken to reduce overhead
cost wherever possible without damaging the future development of the business.
Headcount in Sales & Marketing has been reduced which, along with other overhead
savings, will reduce the cost base for the new financial year. However there is
no doubt that progress of putting the Emerald units into the market place has
been slower than we would have wished; therefore the Company will not have the
cash resources to achieve its development programme and further funding will be
required, which is why we engaged Deloitte Corporate Finance to assist in the
process of securing the necessary funding to allow the Group to continue in
operation.
Whilst the outcome of the process remains uncertain, in the opinion of the
directors, there is sufficient reason to believe that the outcome, if
successful, could provide sufficient funding for the Company to develop the
business for the foreseeable future. Accordingly the financial statements have
been prepared on a going concern basis.
John Brown FCCA
Chairman
1 October 2008
Voller Energy Group Plc
Chief Executive's review
The Group's clean, environmentally friendly power systems address two topics of
particular importance for both users and the wider world: the desire to reduce
fuel costs, and the need to reduce harmful atmospheric emissions. As concern
grows over the rising cost of fuel and the environmental impact of energy
generation, the market and demand for these products will only get stronger.
In 2005 following our initial AIM listing we began the programme of developing a
fuel cell system that runs from available fuels, which we refer to as the
Emerald product family. The first of the Emerald products, a 1kW fuel cell
system running from LPG (liquefied petroleum gas, propane or Calor Gas) has
begun to be shipped. Emerald acts as an automatic and intelligent battery
charger, providing a far more fuel efficient system than an equivalent diesel or
LPG generator.
The emissions from Emerald are considerably lower than those from a conventional
generator. Emissions of the main greenhouse gas carbon dioxide are substantially
reduced, while emissions of noxious emissions such as nitrogen oxide, sulphur
dioxide and carbon monoxide are almost zero.
There are two aspects of Voller's developments that make them unique :
Hydrogen is not required; use available fuels
Many fuel cell developers still rely on very pure hydrogen to fuel their
products. Hydrogen remains a difficult fuel to obtain, and is costly to store
and transport. In the markets that Voller operate in; being construction,
traffic management and leisure, there is no widespread adoption of hydrogen, nor
is it likely that there will be any widespread adoption of the fuel in the near
future.
Many analysts are now agreed that unless hydrogen is produced from a sustainable
source, using hydrogen as a distributed fuel source has a very limited positive
effect on the environment and may even have a negative effect. This is because
the energy needed to produce, compress, store and transport the fuel is a very
high proportion of the energy ultimately delivered. Sustainable sources of
hydrogen are very limited at present.
A much more effective way to produce hydrogen is by using a reformer based
system, where a conventional hydrocarbon fuel such as propane is converted to
hydrogen and carbon species. The hydrogen produced is used directly in the fuel
cell system so that expensive storage and transportation cost are avoided.
Every Emerald system has a reformer system inside so that a standard bottle of
propane or LPG can be connected to the system and used directly. Propane is a
universally available, familiar and economic fuel.
Systems and hybrid approach
Fuel cells make very efficient battery chargers, and all of Voller's systems use
a combination of fuel cell and battery technology. Batteries are low-cost and
reliable, and provide an effective way of meeting peak power demands, while the
fuel cell is used to service the average power demands.
Voller is a systems integrator, providing a complete and easy system for our
customers. The Emerald units are designed as 'fit and forget' systems that are
easy to install. Inside the unit is a complex system that uses Ballard fuel cell
stack technology at its heart; however this component is one of many inside the
Emerald system. As stack technology evolves, Voller will be able to further
enhance the Emerald system.
Voller Energy Group Plc
Chief Executive's review (continued)
Technology Review
This year has seen the 1kW Emerald product moving from laboratory pre-production
prototypes into pilot manufacture and the installation of these units in a
number of platforms. These include the first site welfare cabins supplied by
GenQuip PLC, a traffic monitoring system used by the Highways Agency on the A38
in Somerset, England, and a mobile traffic sign platform under a Dutch
government programme. These installations, following on from the successful
field trials last year, have convincingly demonstrated the utility and
attractiveness of the Emerald system in both mobile and static off-grid
applications and represent the important step of placing the units in the hands
of "real users" in the actual application environments.
The Emerald system is designed to operate as an automatic battery charger and to
replace conventional generators in a variety of static and mobile applications.
The Emerald system provides reliable power to users with none of the noise,
smell and vibration associated with generator systems. Furthermore, the low
servicing needs and fuel efficiency of the units means the overall lifetime
costs to users are projected to be lower, despite a higher up front capital
cost.
In the construction market segment we have been working with our partner GenQuip
Plc to prove the application of the Emerald system within their range of welfare
site cabins. A number of units have been installed and used by GenQuip personnel
for several months and the first commercial units are now being distributed to
GenQuip's preferred hire company partners.
In the transport infrastructure market we have installed two units in
government-funded trials, one in the UK and one in Holland. These trials will
prove the performance of the units in these applications prior to larger scale
roll-out.
In the leisure market our field trials during the past year have helped us to
prove the basic performance of the units in the application space and to develop
the products further. Along with our distribution partners, we are looking
forward to shipping the first units in the next year.
Over the year we have continued to strengthen our intellectual property
position. We have filed three core patents on the Emerald system and have
further filings in progress relating to continuing improvements in the system
design. Additionally, Emerald is controlled and monitored by our proprietary
software package "Emerald Talk", which forms an integral part of the system.
Looking further into the future work has begun on the next generation of Emerald
products. The Company's product development strategy is based around the
expansion of the Emerald product platform in two main directions:
* The development of higher power systems with a net electrical power output of
up to 5kW; and
* The development of systems capable of operating on liquid fuels, in
particular diesel.
Higher power systems will allow Voller to target additional market segments with
greater power requirements than can be supported by the current Emerald product.
These include some parts of the back-up power market, the materials handling
market, and many specialist vehicle applications. Furthermore these systems will
expand the range of applications which can be served in the core markets for
Emerald, for example larger marine craft and Recreational Vehicles (RV), larger
static cabins in the construction market, and large permanent traffic signs. We
have identified the core components for this product range and expect commercial
systems to be available in approximately two years.
The development of diesel systems will allow increased penetration of market
segments where diesel is preferred over LPG. This includes segments such as
larger marine craft, truck Auxiliary Power Unit (APU) systems and the military.
The Company is also working on a diesel-reforming system in a collaboration with
the University of Cambridge, along with other collaborations and in-house
research.
Voller Energy Group Plc
Chief Executive's review (continued)
Ultimately these developments will result in a family of "transportable" or
small stationary products with power outputs ranging from 1-5kW and which
operate from a variety of fuels.
Outlook
The Company has demonstrated the basic effectiveness of the Emerald system in
its chosen markets and is well positioned in the growing market for low-emission
technology. The Company has built considerable Intellectual Property (IP) and
know-how in this complex area. The focus now is to achieve follow-on sales in
the chosen markets and to consolidate our supply position with strategic
customers in our target markets.
The future of the Company is however dependent upon additional funding. Further
details are given in both the Chairman's statement under "Strategic Review" and
in Note 2 attached to this announcement.
Robin Francis
Chief Executive Officer
1 October 2008
Voller Energy Group Plc
Consolidated income statement for the year ended 30 June 2008
Restated
Note 2008£'000 2007£'000
Revenue 105 42
Cost of sales (310) (40)
Gross (loss)/profit (205) 2
Administrative expenses (2,795) ( 2,543)
Operating loss (3,000) (2,541)
Investment revenues 201 293
Loss before taxation (2,799) (2,248)
Taxation 5 260 238
Retained loss for the financial year (2,539) (2,010)
Basic and diluted loss per ordinary share 6 (11.03)p (8.74)p
All amounts relate to continuing operations.
Consolidated statement of total recognised income and expense
Restated
2008£'000 2007£'000
Retained loss for the financial year (2,539) (2,010)
Prior year adjustment 3 (28)
Total recognised income and expense for the period (2,567)
Voller Energy Group Plc
Consolidated balance sheet at 30 June 2008
Restated Restated
2008£'000 2008£'000 2007£'000 2007£'000
Non current assets
Property, plant and equipment 175 257
175 257
Current assets
Inventories 210 30
Trade and other receivables 526 312
Cash and cash equivalents 1,948 4,732
Total current assets 2,684 5,074
Trade and other payables (307) (345)
Net current assets 2,377 4,729
Net assets 2,552 4,986
Equity
Called up share capital 459 459
Share premium account 8,884 8,884
Merger reserve 161 161
Share option reserve 132 27
Retained loss (7,084) (4,545)
Total equity 2,552 4,986
The financial statements were approved by the Board on 1 October 2008
Voller Energy Group Plc
Consolidated cash flow statement for the year ended 30 June 2008
Note 2008£'000 2008£'000 2007£'000 2007£'000
Net cash outflow from operating activities 4 (2,989) (2,231)
Investing activities
Interest received 201 293
Purchase of property, plant & equipment (66) (120)
Disposal of property, plant & equipment 70 6
Net cash from financing activities 205 179
Decrease in cash and cash equivalents in the year (2,784) (2,052)
Cash and cash equivalents at beginning of the year 4,732 6,784
Cash and cash equivalents at end of the year 1,948 4,732
Notes
1. Basis of accounting
The financial statements have been prepared under the historical cost convention
and are in accordance with the measurement and recognition criteria of
International Reporting Financial Standards ("IFRS") as adopted by the European
Union. The consolidated group financial statements incorporate the results of
Voller Energy Group Plc and of its subsidiary undertaking, Voller Energy
Limited, as at 30 June 2008.
This announcement does not itself contain sufficient information to comply with
IFRS. The Company expects to publish full financial statements that comply with
IFRS in October 2008.
The financial information set out in the announcement does not constitute
statutory accounts as defined in S240 of the Companies Act 1985, for the years
ended 30 June 2008 or 30 June 2007 but is derived from these accounts, which
have been reported upon by the Company's auditors. Statutory accounts for 2007
have been delivered to the Registrar of Companies and those for 2008 will be
delivered following the Company's Annual General Meeting. The auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under S237(2) or S237(3) of the Companies Act 1985. The audit report
for the year ended 30 June 2008 included an emphasis of matter paragraph
consistent with the explanation in Note 2 below.
The preliminary announcement has been prepared on the basis of the accounting
polices as stated in the financial statements for the year ended 30 June 2008.
2. Basis of preparation
The financial statements have been prepared on a going concern basis, which
assumes that the company will continue in operational existence for the
foreseeable future.
As a result of ongoing investment in the development of the Emerald product
range and the recognition that it has not been possible during the current
financial year, nor is it likely that it will be possible during the next
financial year, to recover the whole of the manufactured cost of the product,
the Company continues to be loss-making.
The Company currently does not have sufficient cash resources to continue
trading in its current form for a period of at least 12 months from the date of
this announcement and, therefore, there is a material uncertainty regarding the
Group's ability to continue in operation for the foreseeable future without
obtaining further funding. The Company appointed Deloitte Corporate Finance in
February 2008 to conduct a strategic review of the options available to raise
further funding. Whilst the outcome of the process remains uncertain, in the
opinion of the directors there is sufficient reason to believe that the outcome,
if successful, could provide sufficient funding for the Company to develop the
business for the foreseeable future.
Consequently, the Company is dependent upon future investments to continue as a
going concern. Without these anticipated cash inflows, the company may be unable
to realise its assets and discharge its liabilities in the normal course of
business.
3. Explanation of transition to IFRS
This is the first year in which the Company has presented its financial
statements under IFRS. The following disclosures are required in the year of
transition. The last financial statements under UK GAAP were for the year ended
30 June 2007 and the date of transition to IFRS was therefore 1 July 2006.
Management has undertaken an assessment of the impact of IFRS and had identified
the following adjustments:
IAS 19 "Employee Benefits", this requires companies to make an accrual for
holiday payment. At the date of transition no adjustment was required; however
as of 30 June 2007 a £15,000 holiday pay accrual was recognised, representing a
charge to the comparative income statement.
IAS 17 "Leases", this requires that any benefits received and receivable as an
incentive to sign an operating lease are spread from the inception to the
termination of the lease, whereas under UK GAAP the incentives are spread over
the period up to the break point under the lease. At the date of transition no
adjustment was required;
3. Explanation of transition to IFRS (continued)
however as of 30 June 2007 a £13,000 non current liability was recognised,
representing a charge to the comparative income statement.
A corresponding adjustment has been made to retained earnings in respect of both
of these items. These adjustments have no cash impact.
4. Note to the consolidated cash flow statement
2008 2007
£'000 £'000
Operating loss (3,000) (2,541)
Depreciation 78 60
Taxation 213 140
Increase in stock (180) (1)
Increase in debtors (172) (24)
Increase in creditors 72 135
Net cash outflow (2,989) (2,231)
5. Taxation
The tax credit of £260,000 in the accounts represents the Research and
Development Grant claim for the year ended 30 June 2008 of £245,000, together
with an additional £15,000 received in respect of the year ended 30 June 2007 in
excess of the amount recognised in those accounts.
6. Loss per share
Loss per share for the year of 11.03p (2007: 8.74p) has been calculated on the
basis of the loss after taxation of £2,539,000 (2007: £2,010,000) and the
weighted average number of shares in issue for 2008 and 2007 of £23,000,513.
IAS 33 requires presentation of diluted EPS when a company could be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding share options, net loss would only be
increased by the exercise of out-of-the-money options. Since it seems
inappropriate to assume that the option holders would act irrationally, no
adjustment has been made to diluted EPS for out-of-the-money share options.
7. Research and Development
The R & D expenditure incurred during the year was £1,101,000 (2007:
£1,031,000). This was recognised in the income statement.
This information is provided by RNS
The company news service from the London Stock Exchange
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