RNS Number:5229F
Clean Air Power Limited
03 July 2006
For Immediate Release 3 July 2006
Clean Air Power Limited
("Clean Air Power" or "the Company")
Correction to Final Results
In the announcement made by Clean Air Power Limited on the 27 June 2006, RNS
Number 1826F, the Company reported two incorrect figures in its Cash Flow
Statement, namely cash and cash equivalents at beginning of period were reported
as$3.810m, this figure should have been $1.874m and Cash and cash equivalents at
end of period were reported as $3.728m, this figure should have been $1.792m.The
balance sheet reflected the correct cash figure of $1.792m.
The Company's currently holds approximately $13m in cash as at 30th June 2006.
The following announcement reflects this amended figure.
Clean Air Power Ltd (AIM:CAP) the developer of Dual-FuelTM combustion technology
for heavy-duty diesel engines today reports the consolidated results for Clean
Air Power Inc. its pre flotation predecessor for the 12 month period ended 31
December 2005, which are broadly in line with expectations.
Clean Air Power Ltd was incorporated in November 2005, prior to its admission to
the AIM market of the London Stock Exchange. Immediately prior to admission it
acquired Clean Air Power Inc. as part of the group restructuring.
These summary results, therefore, relate to Clean Air Power's pre-flotation
predecessor, Clean Air Power Inc.
2005 Highlights
* Net Loss in line with expectations
* Revenues $6.1m (2004 $8.0m)
* Operating Loss $7.1m, (2004 $10.7m loss)
* Net Loss $12.4m* (2004 $13.5m loss**)
(* The 2005 loss includes one-off non cash refinancingcosts totalling
$4.2m and reorganisation costs of #0.4m)
(** 2004 loss includes $2.4m goodwill amortisation expense)
2006 Highlights to date
* Successful IPO on AIM, raising gross proceeds of #10.6m
* Commercial launch of the Genesis Dual-FuelTM system in May 2006
* First Genesis conversion sold to Warburtons bakery in June 2006
* Completion of our own Genesis Demonstration vehicle (DAF CF85) to support
marketing efforts
* New intellectual property granted in key commercial regions
John Pettitt, Chief Executive of Clean Air Power said:
"The successful IPO of Clean Air Power has been a major milestone in the
development of the Company. The funds are being be used to develop and market
both specific and generic Dual-FuelTM systems across key regions.
"The drive for lower emissions and more cost effective transportation makes our
products a compelling proposition for many customers and we look forward to
delivering new customer relationships and contracts over the coming year."
For further details please contact
Clean Air Power Tel: +44 (0) 1772 624499
John Pettitt, Chief Executive
Peter Rowse, Finance Director
Buchanan Communications Tel: +44 (0)20 7466 5000
Charles Ryland/Ben Willey/Ben Romney
2005 Financial Results
The twelve months to 31 December 2005 represented a period of transition for
Clean Air Power in a number of respects. The original core product range reached
the end of its life cycle, new management were appointed, and the Company
underwent a significant financial restructuring.
As a consequence of the end of the product life cycle, selling opportunities in
the UK and US were limited, thereby prompting the introduction of the Genesis
product. Also, accounting for the financial and legal restructuring of the group
prior to admission on AIM significantly impacted the Company's net income.
Sales for the period were $6.1m which generated an operating loss of $7.1m in
line with expectations.
The net income resulted in a loss of $12.4m, driven by non-cash and exceptional
charges. A significant non-cash expense of $4.2m relating to the accounting
treatment of warrant interest and beneficial conversion were the main components
of the interest charge of $5.0m. These warrants converted at admission in
February 2006 and the Company expects a further non-cash P&L charge in 2006 of
$1.3m relating to this item.
An exceptional charge for the legal reorganisation of the group amounted to
$0.4m. A further exceptional reorganisation expense of around $0.3m is expected
in 2006 as the process is completed.
Operational Review
Dual FuelTM
'Genesis' Development
Clean Air Power's patented Dual-FuelTM Technology allows a heavy duty diesel
truck engine to run on a combination of both diesel and natural gas, thereby
generating significant cost savings for the operator whilst considerably
reducing emissions and CO2.
The original application of this technology in trucks was carried out in
partnership with a single engine manufacturer. This route to market provided
certain engineering benefits but meant that Clean Air Power was commercially
restricted to the markets and operators where this manufacturer had a presence.
The 'Genesis' product was designed to address this commercial restriction. It is
designed to be generic and adaptable to fit any Euro III engine thereby
rendering a much wider market accessible to the Company.
In May of 2006 the first 'Genesis' model was completed, ready for sale to
Warburtons, the national bakery company. Warburtons, who have a large fleet of
heavy duty trucks, took delivery of the 'Genesis' truck in the first week of
June 2006.
Specific Fleet Developments
Clean Air Power is also targeting major supermarkets, logistics companies, local
authorities and haulage firms for its 'Genesis' product. We believe these types
of organisation will appreciate the financial benefits of converting their
vehicles to gas whilst also understanding that they will be making a positive
environmental impact.
The Company is in the process of converting a Mercedes Axor truck for Tesco.
This project is ongoing and enjoys the support and cooperation of Tesco. The
process is proving challenging but we remain confident of reaching a solution
for Tesco within the next two months.
OEM Developments
The 'Genesis' system has been specifically developed to be an after market retro
fitted product which can be installed without the need for formal cooperation of
the engine manufacturers.
Our strategic aim is to work with an OEM to reach an agreement whereby the Dual
FuelTM technology would be licensed to them and developed further with their
full cooperation. The Company is actively pursuing this route to market although
we recognise that we are in the early stages of this process.
The strategy involves persuading the engine manufacturers to adopt our
technology with the aid of a combination of interested parties. Truck operators,
environmental bodies and governments would all benefit from the widespread
adoption of our Dual FuelTM technology. By demonstrating the benefits of our
technology to these parties we expect to enlist their support thereby building a
compelling proposition for the manufacturers.
Australia
We are excited by the potential opportunities in Australia. The market enjoys
active government support, with the benefits of a Clean Air Power product being
well recognised within the industry. There are also plans to improve the
availability of natural gas by improving the country's gas infrastructure.
Existing Dual-FuelTM operators are achieving significant savings and we are in
active discussions with some of Australia's largest fleet operators regarding
trials of our product.
Intellectual Property Developments
The Company holds 35 patents covering various aspects of its technology. During
2006 two important new patents were granted relating to areas of technology the
Company believes will be useful as we develop our future product ranges. The
first covers the application of homogeneous charge compression ignition (HCCI)
to the patented Dual-FuelTM system. HCCI is a significant technology that will
be used to reduce emissions from internal combustion engines in the future.
The second, entitled "Gas-Fueled, Compression Ignition Engine with Maximized
Pilot Ignition Intensity" covers Clean Air Power's MicropilotTM technology.
Micropilot: the use of high-energy ultra-low quantities of diesel to ignite a
charge of natural gas, has been demonstrated to dramatically reduce emissions
from Dual-FuelTM engines. This technology is an integral part of the solution
offered by Clean Air Power to enable diesel engines to operate on clean natural
gas and meet the emissions and performance challenges of the next decade.
Components Business
Clean Air Power manufactures a number of the components included in the kits
that are sold incorporating the Company's Dual-FuelTM Technology.
The Company also sells these components for spark ignited gas engines, and
certain other applications.
With sales mainly in Europe and the USA, strong margins and a customer base
including international OEMs this is an important supplement to the overall
Clean Air Power business. We expect to strengthen our sales force to develop
further opportunities for this area of our business.
Our components sales generated revenue of $1.5m, around 24% of total revenue in
2005.
Emissions Reduction Business
This area of our business provides solutions to very large stationary diesel
engines such as those used in pumping stations. Our current market is mainly in
the US and we provide a service whereby the emissions from such installations
are reduced, usually in response to changes in local legislation.
In 2005 revenue of $0.5m, around 8% of the total was generated by this business
segment. In 2006, following a refocusing of the business, we have already agreed
a contract for $1.2m.
Outlook
2006 continues to be an exciting year for Clean Air Power. Since our admission
to AIM in February the Company's plans for increased commercialisation of its
technology are progressing well.
The Company is ideally placed to take advantage of two significant and high
profile global issues. Those issues being the increasing fossil fuel cost and
growing concern over harmful emissions and CO2. The Clean Air Power Dual-FuelTM
technology delivers a marked improvement in both of these areas and has been
proven on over 1,600 trucks worldwide.
We are delighted to have completed and delivered our first Genesis conversion to
Warburtons and are now working to develop different Genesis variants which will
expand our potential market further.
We have recruited new staff to strengthen both the sales and engineering teams
as Clean Air Power drives forward to develop its commercial and technological
expertise.
Clean Air Power, Inc.
Consolidated Statements of Operations for the Year to 31st December 2005
Twelve-Month Twelve-Month
Period Ended Period Ended
December 31, December 31,
2005 2004
$'000 $'000
_______________________________
Revenues:
Sales $ 5,298 $ 7,932
Contract and grant 767 72
_______________________________
Total revenues 6,065 8,004
Costs and expenses:
Cost of sales 4,337 7,063
Research and product development 1,416 1,777
Selling, general and administrative 7,409 9,819
_______________________________
Total costs and expenses 13,162 18,659
_______________________________
Loss from operations (7,097) (10,655)
Other income (expense):
Interest and other expense* (4,957) (472)
Interest and other income 68 62
Total other income (expense)
Net loss from continuing operations (11,985) (11,065))
Reorganisation costs** (401) -
Asset impairment charge*** 2,387
_______________________________
Net loss $ (12,387) $ (13,452)
===============================
* This includes a significant one off non-cash element - warrant interest and
beneficial conversion charges of $4.2m. These warrants were mainly issued in
2005 as part of a refinancing of the company. The accounting treatment of this
expense is in line with EITF 00-27 under US GAAP.
** Relates to the legal reorganisation of the Clean Air Power Group
*** Relates to the write off of goodwill relating to the acquisition of Harris
International Sales Corp. which was purchased in 2002
Clean Air Power, Inc.
Consolidated Balance Sheet as at Year to 31st December 2005
December December
31, 2005 31, 2004
$'000 $' 000
______________________
Assets
Current assets:
Cash and cash equivalents $ 1,792 $ 1,875
Cash and cash equivalents - restricted 210 165
Accounts receivable, net 487 728
Inventories, net 1,740 3,352
Other current assets 2,050 440
______________________
Total current assets 6,279 6,560
Property and equipment, net 416 1,519
______________________
Total assets $ 6,695 $ 8,079
======================
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable $ 1,484 $ 2,100
Accrued liabilities 3,432 3,193
Current portion of notes payable 6,167 1,712
______________________
Total current liabilities 11,083 7,005
Notes payable, net current portion 97
Commitments:
Convertible preferred stock, $0.001 par value,
1,107,660,000 shares authorized:
Redeemable series A3 voting preferred stock 19,252
Series A-4 non-voting preferred stock 2,031
Redeemable series B-1 voting preferred stock 10,981
Series B-2 Non-voting preferred stock 729
Redeemable Series C-1 Voting Preferred Stock, 784,425 4,020 6,155
and 766,133 issued and outstanding at December 31,
2005 and September 30, 2005, respectively; $8,040,356
and $7,852,863 liquidation preference at December 31,
2005 and September 30, 2005, respectively
Series C-2 Non voting preferred stock 278
Series D-1 Non-Voting Preferred Stock, net of issuance 1,999 -
costs of $500,586 and $0 at December 31, 2005 and
September 30, 2005, respectively; 38,261,399 and no
shares issued and outstanding at December 31, 2005 and
September 30, 2005, respectively; $5,000,000 and $0
liquidation preference at December 31, 2005 and
September 30, 2005, respectively
______________________
6,019 39,426
______________________
Stockholders' deficit:
Voting common stock, $0.001 par value, 561,000,000 8 2
shares authorized; 8,352,806 and 8,365,806 shares
issued and outstanding at December 31, 2005 and
September 30, 2005, respectively
Non-voting common stock, $0.001 par value, 561,000,000 1
shares authorized; 635,481 shares issued and
outstanding at December 31, 2005 and September 30, 2005
Treasury Stock, 13,000 shares and no shares at -
December 31, 2005 and September 30, 2005, respectively
Additional paid-in capital 52,064 11,646
Accumulated deficit (62,503) (50,116)
Accumulated other comprehensive income 22 19
______________________
Total stockholders' deficit (10,408) (38,449)
______________________
Total liabilities and stockholders' deficit $ 6,695 $ 8,079
======================
Clean Air Power, Inc.
Consolidated Statements of Cash Flow for Year to 31st December 2005
Twelve Twelve
Month Month
Period Period
Ended Ended
December December
31, 2005 31, 2004
$'000 $'000
______________________
Operating activities
Net loss $ (12,387) $ (13,452)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 460 500
Net gain on disposal of property and equipment (12)
Interest expense in connection with preferred stock 4,211 333
warrants and beneficial conversion
Stock compensation 10
Write down of assets 2,387
Changes in operating assets and liabilities:
Accounts receivable 241 1,766
Inventories 1,612 83
Other assets 319 (373)
Accounts payable (616) 197
Accrued liabilities 395 (280)
______________________
Net cash used in operating activities (5,776) (8,829)
Investing activities
Notes Receivable from officer 268
Purchases of property and equipment (46) (162)
Proceeds from the sale of property and equipment 26 2
Cash and cash equivalents - restricted (45) (134)
______________________
Net cash provided by (used in) investing activities (65) (26)
Financing activities
Proceeds from notes payable 4,622 1,000
Payments on notes payable (326) (1,757)
Deferred offering costs (540)
Proceeds from equity financings, net of issuance costs 1,999 6,347
______________________
Net cash provided by financing activities 5,755 5,590
Effect of exchange rate changes on cash 3 8
Net increase (decrease) in cash and cash equivalents (82) (3,257)
Cash and cash equivalents at beginning of period 1,874 5,132
______________________
Cash and cash equivalents at end of period $ 1,792 $ 1,875
======================
Supplemental information
Interest paid $ 46 $ 115
======================
Conversion of debt and accrued interest to equity $ 169 $ 101
======================
Compound accrued interest into debt $ 227
======================
Deferred offering cost accrued $ 74
======================
- The 2005 results are extracted from the audited consolidated financial
statements of Clean Air Power Inc. prepared in US dollars under US GAAP.
- These consolidated statements include the results of Clean Air Power Ltd,
the UK subsidiary.
- This report does not constitute statutory financial statements within the
meaning of section 240 of the Companies Act 1985.
- The company will issue consolidated interim financial statements for Clean
Air Power Ltd (the entity listed on AIM) covering the first half of 2006 in
due course.
- In line with the dividend policy of Clean Air Power Ltd, Clean Air Power
Inc does not intend to pay a dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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