RNS Number:9433T
Clean Air Power Limited
29 March 2007
For immediate release 29th March 2007
Clean Air Power Limited
("Clean Air Power" or "the Company")
Preliminary Results
for the year ended 31st December 2006
Clean Air Power Limited (AIM:CAP) the developer of Dual-FuelTM combustion
technology for heavy-duty diesel engines today announces its results for the 12
month period ended 31 December 2006.
Highlights
* 22% increase in annual sales to #4.07m, up from #3.33m in 2005.
* Gross margin increased substantially from 29% to 43%.
* Net loss narrowed by #1.04m (22%), to #3.73m from #4.77m in 2005.
* Successful admission to the AIM Market of the London Stock Exchange
("AIM"), raising gross proceeds of #10.60m.
* Launch of Genesis, a new retrofit product range for the UK and Europe in
May 2006. Available on the DAF CF85 and Mercedes Axor engines, the first
system was sold to Warburtons Bakery in June 2006. The system was trialled
by Tesco plc during the last four months of the year.
* The Group continues to develop new intellectual property and during the
year two additional patents were granted in key commercial areas.
* Demand continues to grow in the Australian market for the original C15
integrated system. 36 units sold in final quarter of 2006 and an order
worth #1.50m was received in December 2006 for 50 units for delivery
during 2007.
* Revenues in the Components division grew 45% with strong gross margins
aided by the increased global demand for CNG buses.
* The USA based Emissions Reduction division delivered a major project in
Louisiana, worth #0.66m on time and on budget.
* The Group continues to pursue its strategy towards incorporating its
technology into the products of major international truck engine
manufacturers.
Results
Year Ended Year Ended
31 December 2006 31 December 2005
#'000 #'000
Group Turnover 4,072 3,331
Operating Loss (pre
exceptional items) (3,690) (3,979)
Loss after tax (3,729) (4,767)
Basic and diluted loss per share (14.8p) (29.2p)
Commenting on Clean Air Power's full year results, John Pettitt, CEO said:
"In 2006 Clean Air Power increased revenues by 22% and gross profit by 85% and
simultaneously undertook a considerable restructuring of the Group to benefit
the long term growth prospects. Clean Air Power's technology delivers proven
reductions in carbon emissions along with very significant fuel cost savings to
truck operators. As such Clean Air Power is perfectly positioned to assist major
corporations and governments to deliver on their environmental commitments while
at the same time reducing transport overheads."
For further details please contact
Clean Air Power Tel: +44 (0)1494 527 110
John Pettitt, Chief Executive
Peter Rowse, Finance Director
Buchanan Communications Tel: +44 (0)20 7466 5000
Charles Ryland
Ben Willey
Canaccord Adams Limited Tel: +44 (0) 20 7050 6500
Robert Findlay
Erin Needra
Chairman's Statement
This year has seen tremendous change in the operations and structure of Clean
Air Power. Following the recruitment of a new UK-based executive management team
in 2005 the process of the restructuring and refocusing of the business began.
The year has seen the launch of our new Genesis product in the UK market and an
increase in demand for our Dual-FuelTM products in Australia.
Along with its main Dual-FuelTM business Clean Air Power increasingly derives
income from two other trading divisions based in the USA. Both of these
divisions, Components sales and Emissions Reduction solutions, produced
significant growth compared with the previous year and contributed cash to the
Group.
However, the main focus of our Research and Development and commercial activity
remains the Dual-FuelTM product range and our primary objective is to reach an
agreement with a truck manufacturer whereby the technology is incorporated on
their vehicles as a standard option. Clean Air Power continues to make progress
in its discussions with a number of such organisations although these
discussions are considered to be in their early stages.
Financial Results
Turnover increased by 22% for the year ended 31 December 2006 reaching #4.07m
from #3.33m the previous year. The growth was driven by sales from the Emissions
Reduction division which grew 222% from #0.28m to #0.90m and from the Components
division, where sales increased 45% from #0.98m to #1.43m. Vehicles sales fell
by 16% from #2.07m in 2005 to #1.74m in 2006 mainly due to the ending of the
product life cycle of the previous Dual-FuelTM product in the UK.
Gross profit for the year was #1.76m compared to #0.95m in the prior year. The
gross margin for the year was 43% (2005: 29%).
The results for the year ended 31 December 2006 include reorganisation expenses
of #0.20m (2005: #0.25m). The Group's reorganisation is now complete;
consequently no further charges are expected.
Operating losses for the year were down to #3.69m (2005: #3.98m).
The retained loss for the year after interest and taxation was #3.73m (2005:
#4.77m).
The basic and diluted loss per share was 14.8 pence (2005: 29.2 pence).
Cash on hand at 31 December 2006 was #5.62m demonstrating lower than expected
cash burn for the year.
The net assets of the Group at the year end totalled #6.47m (2005: net
liabilities #6.70m). Net current assets at the year end amounted to #5.93m
(2005: net current liabilities #3.30m) of which #5.62m relates to cash balances
(2005: #1.16m).
Business Review
The Group is ideally placed to take advantage of two significant and high
profile global issues: increasing fossil fuel cost and growing concern over
harmful emissions and CO2. The Clean Air Power technology delivers a marked
improvement in both of these areas and has been already proven on over 1,600
trucks worldwide.
Clean Air Power has 3 commercial divisions; Dual-FuelTM vehicles systems,
Components and Emissions Reduction systems.
Dual-FuelTM vehicles systems
The core technology of the Group gives rise to Clean Air Power's patented
Dual-FuelTM system which allows a heavy duty diesel truck engine to run on a
combination of both diesel and natural gas, thereby generating significant
reductions in NOx, particulate and CO2 emissions as well as generating cost
savings for the operator.
The technology is currently available in two main variants; the integrated
product currently marketed in Australia and the Genesis product marketed in
Europe.
Integrated vehicle system
In this solution Clean Air Power's technology is integrated with the
manufacturer's electronic engine management system. It requires the cooperation
of the manufacturer and maximises the benefits in terms of carbon emissions and
fuel cost savings. This engine is certified to EPA 02 which is the current
standard in the Australian market. Demand for this system is growing driven by
the desire to reduce greenhouse emissions and the fuel cost savings available to
the operators. The Australian system is being developed further with the aid of
a grant from the Australian Greenhouse Office.
In the last quarter of 2006 36 units were sold. Also late in 2006 an order for
50 units with a value of #1.50m was received for delivery during 2007.
Genesis vehicle system
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. The original application of the dual
fuel 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 these engines continue to be certified.
The 'Genesis' product was designed to address this commercial restriction. It is
designed to be generic and is ultimately adaptable to fit any Euro III engine
thereby rendering a much wider market accessible to the Group. In May of 2006
the first 'Genesis' model was completed. Warburtons, the national bakery
company, who have a large fleet of heavy duty trucks, took delivery of the
'Genesis' truck in the first week of June 2006.
Clean Air Power has now developed the Genesis solution for both DAF and Mercedes
Euro III vehicles and is actively marketing it using a fleet of 5 demonstration
vehicles to allow potential customers to gain first hand experience of a
Dual-FuelTM truck. Clean Air Power is targeting major supermarkets, logistics
companies, parcel carriers and local authorities 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. At present three major logistics
operators are trialling our technology in the UK.
We also believe that there are opportunities in Europe where certain markets
have more mature natural gas infrastructures or a more beneficial natural gas
versus diesel price differential. Our target markets include Germany, Italy and
the Netherlands.
A very important achievement for the Group was the successful conversion of a
Mercedes Axor truck for Tesco plc in the UK. This conversion project enjoyed the
support and cooperation of both Tesco and Mercedes. On completion of the
conversion Tesco began a trial of the vehicle which ran from mid-July until the
end of November. All parties agreed that the Clean Air Power Dual-FuelTM vehicle
met with all of Tesco's objectives, which include driver acceptability and
achieving certain operational performance benchmarks. Additionally, the trial
unit has achieved an annualised CO2 emission reduction equivalent to around 10
tonnes whilst reducing their fuel cost by more than 15%. The vehicle continues
to run in the Tesco fleet, based from the Harlow depot, operating mainly in
London. To date, Tesco have not ordered any further Dual-FuelTM vehicles. Tesco
have recognised the environmental benefits of Clean Air Power's Dual-FuelTM
technology and have expressed a willingness to support Clean Air Power with
their discussions with manufacturers. These discussions relate to looking to
secure the incorporation of Dual-FuelTM technology on Euro IV and Euro V
emission standard compliant trucks.
Genesis is a transitional product for the Group. Its objective is to bring the
benefits of Dual-FuelTM to operators in a current market situation where none of
the major truck manufacturers offer a dual fuel solution. Once the operators
begin to enjoy the financial and environmental benefits of running vehicles on
Dual-FuelTM the Clean Air Power strategy foresees two outcomes: an increased
demand for further Dual-FuelTM trucks from operators, and a demonstration of
real market demand to assist Clean Air Power in its negotiations with truck
manufacturers.
OEM Developments
Our longer term strategic goal is to work with truck manufacturers whereby the
Dual-FuelTM technology is incorporated on their vehicles as a standard option
and developed further with their full cooperation. In this way the benefits of
our technology can be maximised. The Group is actively pursuing this route to
market with a number of such organisations although we recognise that we are in
the early stages of this process.
The strategy involves encouraging the engine manufacturers to adopt our
technology in partnership with 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.
Some of these Dual-FuelTM vehicles have run for more than seven years and others
have completed more than a million kilometres running on systems.
The ultimate goal of the Group is to enter into an agreement whereby our
technology is incorporated as a standard option on a manufacturer's vehicles and
these plans can be described as being in their early stages.
Components Division
Clean Air Power manufactures a number of the components that are used in the
Group's Dual-FuelTM Technology. The Group also sells these components for spark
ignited gas engines and certain other applications. Global demand for these
engines is increasing as part of the overall shift towards alternative fuels.
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 and marketing
efforts in order to develop further opportunities for this area of our business.
Emissions Reduction Division
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 USA and we provide a solution whereby the emissions from large stationary
diesel engines are reduced, using Selective Catalytic Reduction technology and
diesel particulate filtering, usually in response to the requirements of local
legislation.
The business is mainly project based with a few large scale contracts generating
the majority of the revenue. In 2006 the Group increased its marketing efforts
in this area by adding a team of sales agents to its in-house sales resource.
Outlook
Overall, 2006 has been an exciting year for Clean Air Power Limited. Since
admission to AIM in February, the Group's plans for increased commercialisation
of its technology are continuing to progress. Clean Air Power increased sales
and gross profits compared with 2005 and further progress is expected during
2007 as the Group plans to build on the growth achieved in 2006.
As throughout 2006 the demand for our components remains strong, with growth of
spark ignited gas engines a main driver.
The cash burn rate to 31 December 2006 was slightly lower than expected and the
projected cash balance for the end of 2007 is projected to remain broadly in
line with the board's expectations.
The beginning of 2007 has seen the establishment of a new Clean Air Power
company in Australia. The Group is recruiting management, sales and technical
staff in order to support the Group's growth plans in this exciting market. In
the UK a number of major national and international organisations are trialling
the Genesis product although we would like to see further progress.
The primary objective of the Group is to implement the Dual-FuelTM technology as
a standard option with a truck or engine manufacturer. Clean Air Power continues
to make progress in its discussions with a number of such organisations although
these discussions are considered to be in their early stages.
About Clean Air Power
-----------------------
Clean Air Power is pioneering the move towards using natural gas to power heavy
goods vehicles by developing patented Dual-FuelTM technologies. These
technologies allow an existing diesel engine to operate on a combination of
diesel and natural gas with minimal change required to the base engine. The
solutions provided by Clean Air Power maintain diesel engine performance and
efficiency while delivering significant fuel cost savings along with a marked
reduction in carbon emissions. The Clean Air Power Dual-FuelTM technology is
proven in that around 1,600 vehicles have already been fitted with the
Dual-FuelTM products worldwide. Some of these vehicles have completed more than
a million kilometres and some have been running for more than seven years.
Clean Air Power's technology delivers proven reductions in carbon emissions
along with very significant fuel cost savings to truck operators. As such Clean
Air Power is perfectly positioned to assist major corporations and governments
to deliver on their environmental commitments while at the same time reducing
operator's transport overheads.
The holding Company of the Group is now based in Bermuda and there are
subsidiaries in the UK and the USA. The Group reorganisation began in October
2005 with the establishment of a Bermudan based Company, Clean Air Power Limited
(the "Company"). At that time the Group consisted of a USA based parent Company,
Clean Air Power Inc. and a UK registered subsidiary, Clean Air Power Limited.
The Group reorganisation concluded on 27 February 2006 when the Bermuda based
Company acquired 100% of the share capital of both Clean Air Power Inc. and
Clean Air Power Limited (UK registered). The resultant Group structure has Clean
Air Power Limited, the Bermudan based parent, and its two wholly-owned
subsidiaries; Clean Air Power Limited (UK registered) and Clean Air Power Inc.
Initially founded in the USA in 1991, around #28m has been invested in
developing the technology with the result that 56 patents are currently held or
pending.
A new executive management team was recruited in 2005 and the effective
commercial re-launch of Clean Air Power was completed on 28 February 2006 with
its admission to AIM raising gross proceeds of #10.6m. The first objective for
the new team has been to adapt the technology in order that it may be applied to
a larger range of heavy duty vehicles thereby increasing the potential market.
Clean Air Power is actively selling its technology in the UK and Australia. The
Group plans to develop significantly its sales volumes and potential markets
further by entering into an agreement whereby its technology is adopted by an
engine or truck manufacturer. This is the single most important objective of the
Group.
In addition to its core Dual-FuelTM products the Group has two other valuable
business divisions contributing both sales and gross margin:
-The Components division which sells specialised automotive components to
vehicle manufacturers, mainly for spark ignited natural gas engines. Global
demand for these engines is increasing as part of the overall shift towards
alternative fuels.
-The Emissions reduction division provides solutions to manage emissions from
very large stationary diesel engines such as those used in pumping stations. Our
current market is mainly in the USA and we provide a solution whereby the
emissions from large stationary diesel engines are reduced, using Selective
Catalytic Reduction technology and diesel particulate filtering, usually in
response to the requirements of local legislation.
In the UK the Group has an administration centre in High Wycombe and an
engineering and production facility in Leyland. In the USA Clean Air Power has
an R&D and production facility in San Diego, California along with an Emissions
Reduction facility in Houston, Texas.
CONSOLIDATED PROFIT & LOSS ACCOUNT
Consolidated Profit & Loss Account for the Year Ended 31 December 2006
Year ended Year ended
Note 31 December 31 December
2006 2005
----------------------------------- ---------- ----------
#000's #000's
Turnover 5 4,072 3,331
Cost of Sales (2,314) (2,379)
---------- ----------
Gross profit 1,758 952
Administrative expenses (4,689) (4,931)
Share-based payment charge (759) -
---------- ----------
Group operating loss (3,690) (3,979)
Reorganisation expenses (196) (249)
---------- ----------
Loss on ordinary activities
before interest and taxation (3,886) (4,228)
Interest receivable 274 22
Interest payable (117) (561)
---------- ----------
Loss on ordinary activities
before taxation (3,729) (4,767)
Taxation - -
---------- ----------
Loss on ordinary activities after
taxation (3,729) (4,767)
---------- ----------
Loss for the financial period 6 (3,729) (4,767)
---------- ----------
Basic and diluted loss per share 9 14.8p 29.2p
---------- ----------
All items dealt with in arriving at operating loss above relate to continuing
operations
Consolidated Statement of Total Recognised Gains and Losses for the Year Ended
31 December 2006
Year ended Year ended
31 December 31 December
2006 2005
----------------------------------- ---------- ----------
Loss for the period (3,729) (4,767)
Currency translation differences on retranslation
of subsidiary undertakings 476 36
---------- ----------
Total losses recognised for the period (3,253) (4,731)
---------- ----------
CONSOLIDATED BALANCE SHEET
Consolidated Balance Sheet at 31 December 2006
----------------------------------- ---------- ----------
Note 31 December 31 December
2006 2005
----------------------------------- ---------- ----------
#000's #000's
Fixed assets
Intangible assets 408 -
Tangible assets 134 241
---------- ----------
542 241
Current assets
Stocks 1,090 998
Debtors 1,159 663
Cash at bank and in hand 5,617 1,163
---------- ----------
7,866 2,824
Creditors: amounts falling due
within one year (1,130) (5,272)
Provisions for liabilities and
charges (807) (852)
---------- ----------
Net current assets /
(liabilities) 5,929 (3,300)
---------- ----------
Total assets less current
liabilities 6,471 (3,059)
Creditors: amounts falling due
after more than one year - (3,642)
---------- ----------
Net assets / (liabilities) 6,471 (6,701)
---------- ----------
Capital and reserves
Called up share capital 15 7
Share premium account 6 8,982 -
Other reserves 6 33,886 26,734
Profit and loss account 6 (36,412) (33, 442)
---------- ----------
Shareholders' funds / (deficit) 6,471 (6,701)
---------- ----------
CONSOLIDATED CASH FLOW STATEMENT
Consolidated Cash Flow Statement for the Year Ended 31 December 2006
Year ended Year ended
Consolidated cash flow statement Note 31 December 31 December
------------------------------- ----- 2006 2005
---------- ----------
#'000 #'000
---------- ----------
Net cash outflow from operating
activities 7 (3,725) (3,022)
---------- ----------
Return on investments and servicing of
finance
Interest received 274 22
Interest paid (78) (294)
---------- ----------
Net cash outflow from returns on
investment and servicing of
finance 196 (272)
---------- ----------
Capital Expenditure
Purchase of intangible fixed
assets (516) -
Purchase of tangible fixed assets (113) (24)
Sale of tangible fixed assets 2 13
---------- ----------
Net cash outflow on capital
expenditure (627) (11)
---------- ----------
Acquisitions and disposals
---------- ----------
Group reorganisation costs (196) (256)
---------- ----------
---------- ----------
Net cash outflow before financing (4,352) (3,561)
---------- ----------
Financing
Issue of ordinary shares 10,587 -
Issue of preference shares - 1,162
Share issue costs (1,599) -
Proceeds on notes payable - 2,686
Payments on notes payable (182) (182)
-
---------- ----------
Net cash inflow from financing 8,806 3,666
---------- ----------
---------- ----------
Increase in cash 4,454 105
---------- ----------
1. Group Reorganisation
Under a Group reorganisation on 27 February 2006, the Company, Clean Air Power
Limited (Bermuda) acquired the whole of the share capital of Clean Air Power
Inc. and Clean Air Power Limited.(UK registered) in exchange for shares. The
reorganisation has been accounted for in accordance with the principles of
merger accounting set out in Financial Reporting Standard 6 'Acquisitions and
mergers' (FRS 6). The preliminary results have been prepared as if Clean Air
Power Inc. and Clean Air Power Limited (UK registered) had been owned and
controlled by the Company throughout the periods ended 31 December 2005 and 31
December 2006.
2. Basis of Preparation and Consolidation
The preliminary results of Clean Air Power Limited are prepared under the
historical cost convention, and in accordance with United Kingdom Generally
Accepted Accounting Practice (UK GAAP).
In preparing the preliminary results for the current year, the Group has adopted
Financial Reporting Standard 20 'Share-based payments' (FRS 20). The adoption of
FRS 20 has resulted in a change in accounting policy for share-based payment
transactions. FRS 20 requires the fair value of options and share awards which
ultimately vest to be charged to the profit and loss account over the vesting
period or performance period. For equity-settled transactions the fair value is
determined at the date of the grant using an appropriate pricing model. As there
was no share based payment plan in place during 2005, the adoption of the
standard has not resulted in the re-statement of the comparative figures.
3. US to UK GAAP Conversion
The Clean Air Power Inc. 2005 financial information was originally prepared in
$US and in accordance with United States Generally Accepted Accounting Practice
(US GAAP). However since Clean Air Power Limited publishes results in sterling
and in accordance with UK GAAP the information has been translated for
consistency and ease of comparison.
The 2006 information has been translated at an average $US to # rate of 1.84295
(2005: 1.82069) for the Profit and Loss Account and Cash Flow Statement and a
closing $US to # rate of 1.95910 (2005: 1.72080) for the Balance Sheet. The main
adjustment to the Clean Air Power Inc. financial information is due to the
application of the requirements of Financial Reporting Standard 25 'Financial
instruments' (FRS 25) to the convertible promissory notes previously issued by
Clean Air Power Inc.
4. Accounting Policies
Turnover
Turnover represents the amounts derived from the supply of goods and services
which fall within the Group's activities, and is stated net of value added tax
and excludes inter-company sales. Turnover is recognised when the significant
risks and rewards of ownership of the goods have passed to the buyer, usually on
dispatch of the goods.
Depreciation
Depreciation is provided to write off the cost, less estimated residual values,
of all tangible fixed assets over their expected useful lives. It is calculated
using the following rates:
Short leasehold improvements 20 - 33% per annum
Plant and equipment 20% per annum
Fixtures and fittings 20 - 33% per annum
Stocks and work in progress
Stocks and work in progress are valued at the lower of cost and net realisable
value. Cost includes all costs incurred in bringing each product to its present
location and condition as follows:
Raw materials, consumables and goods for resale - valued on an average costs
basis
Work in progress and finished goods - cost of direct raw materials and labour
Net realisable value is based on estimated selling price less any further costs
expected to be incurred to completion and disposal.
Leasing and Hire Purchase Commitments
Rentals payable under operating leases are charged in the profit and loss
account on a straight line basis over the lease term. Lease incentives are
recognised over the shorter of the lease term and the date of the next rent
review.
Foreign currency
Foreign currency transactions of individual companies are translated at the
rates ruling when they occurred. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet date. Any
differences are taken to the profit & loss account with the exception of
inter-company transactions which are taken directly to reserves.
The financial statements of overseas subsidiary undertakings are translated at
the rates of exchange ruling at the balance sheet date. The exchange differences
arising on the retranslation of opening net assets/liabilities are taken
directly to the reserves. All other translation differences are taken to the
profit & loss account.
Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses.
Intangible assets acquired separately from a business are carried initially at
cost. Expenditure on internally developed intangible assets, excluding
development costs, is taken to the income statement in the year in which it is
incurred. Development expenditure is recognised as an intangible asset only
after its technical feasibility and commercial viability can be demonstrated.
Intangible assets with a finite life are amortised on a straight line basis over
their expected useful lives, as follows:
Development expenditure - 2 to 3 years
The carrying value of the intangible assets is reviewed for impairment whenever
events or changes in circumstances indicate the carrying value may not be
recoverable. In addition, the carrying value of capitalised development
expenditure is reviewed for impairment annually before being brought into use.
Investments
Investments in subsidiary undertakings are stated at cost less any provision for
any impairment that the directors consider necessary.
Deferred Tax
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more, tax, with the following exceptions:
* provision is made for tax on gains arising from the revaluation (and
similar fair value adjustments) of fixed assets, and gains on disposal of
fixed assets that have been rolled over into replacement assets, only to the
extent that, at the balance sheet date, there is a binding agreement to
dispose of the assets concerned. However, no provision is made where, on the
basis of all available evidence at the balance sheet date, it is more likely
than not that the taxable gain will be rolled over into replacement assets
and charged to tax only where the replacement assets are sold;
* provision is made for deferred tax that would arise on remittance of the
retained earnings of overseas subsidiaries, associates and joint ventures
only to the extent that, at the balance sheet date, dividends have been
accrued as receivable;
* deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
Financial Assets and Liabilities
Interest bearing loans and borrowings
All loans and borrowings are initially recorded at fair value net of issue costs
associated with the borrowing.
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
amortised cost basis and charged to the Profit and Loss Account using the
effective interest method and are added to the carrying amount of the instrument
to the extent that they are not settled during the period in which they arise.
Capital instruments
Capital instruments issued by the company are recorded at the proceeds received,
net of direct issue costs.
Capital instruments are all instruments that are issued by the company as a
means to raising finance, including shares, debentures, debt instruments and
options and warrants that give the holder the right to subscribe for or to
obtain capital instruments. An equity instrument is any contract that evidences
a residual interest in the assets of an entity after deducting all of its
liabilities. All equity instruments are included in shareholders funds. Other
instruments are classified as financial liabilities if they contain a
contractual obligation to transfer economic benefits. The finance costs incurred
in respect of a capital instrument, other than equity shares, are charged to the
Profit and Loss Account over the term of the instrument at a constant percentage
rate to the carrying value.
Preference Shares have been classified as liabilities in accordance with FRS 25.
Share-based payments
Equity settled transactions
The cost of equity-settled transactions with employees is measured by reference
to the fair value at the date at which they are granted and is recognised as an
expense over the vesting period, which ends on the date on which the relevant
employees become fully entitled to the award. Fair value is determined by using
an appropriate pricing model. In valuing equity-settled transactions, no account
is taken of any vesting conditions, other than conditions linked to the price of
the shares of the company (market conditions).
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether or not the market condition is satisfied,
provided that all other performance conditions are satisfied.
Share-based payments
Equity settled transactions
At each balance sheet date before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has expired and management's
best estimate of the achievement or otherwise of non-market conditions number of
equity instruments that will ultimately vest or in the case of an instrument
subject to a market condition, be treated as vesting as described above. The
movement in cumulative expense since the previous balance sheet date is
recognised in the income statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on the
difference between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had vested on
the date of cancellation, and any cost not yet recognised in the income
statement for the award is expensed immediately. Any compensation paid up to the
fair value of the award at the cancellation or settlement date is deducted from
equity, with any excess over fair value being treated as an expense in the
income statement.
5. Segmental analysis
Turnover by business segment:
The Board believes the Group has three distinct business classes, Vehicle
Conversions, Components and Emissions Reduction.
Year ended 31 December 2006 #'000
------------------ -----------------------------------
Vehicle Conversions Components Emissions Reduction Total
------------------ ------------ ---------- --------- ---------
Turnover 1,744 1,427 901 4,072
Year ended 31 December 2005 #'000
------------------ -----------------------------------
Vehicle Conversions Components Emissions Reduction Total
------------------ ------------ ---------- --------- ---------
Turnover 2,067 984 280 3,331
Turnover by geographical segment:
Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
------------------------------------ --------- ---------
Turnover by geographical sales destination:
UK 537 1,412
USA 2,323 1,695
Australia 674 224
Rest of Europe 529 -
Rest of World 9 -
--------- ---------
4,072 3,331
--------- ---------
Turnover by geographical segment:
Year ended 31 December 2006 #'000
UK USA Total
---------------------------- ---------- ---------- ---------
Turnover 561 3,597 4,158
Inter-segment sales - (86) (86)
---------- ---------- ---------
561 3,511 4,072
---------- ---------- ---------
Year ended 31 December 2005 #'000
UK USA Total
Turnover 1,412 2,134 3,546
Inter-segment sales - (215) (215)
---------- ---------- ---------
1,412 1,919 3,331
---------- ---------- ---------
Segmental analysis does not include profit or loss or net assets by segment as
the information could not be accurately determined.
6. Reconciliation of movement in reserves - Group
Other reserves Share premium Profit and loss Total
account account
#000 #000 #000 #000
At 1 January 2006 26,734 - (33,442) (6,708)
On cancellation of shares and
loan notes 6,997 - - 6,997
On issue of new shares (321) 10,581 - 10,260
Share issuance costs - (1,599) - (1,599)
Share based payments - - 759 759
Loss for the year - - (3,729) (3,729)
Translation movements 476 - - 476
---------------------------- --------- --------- -------- ------
At 31 December 2006 33,886 8,982 (36,412) 6,456
---------------------------- --------- --------- -------- ------
7. Reconciliation of operating (loss) to operating cash flows
2006 2005
#000 #000
Operating (loss) (3,690) (3,979)
Depreciation 193 253
Amortisation of capitalised development expenditure 108 -
Share based payment charge 759 -
(Increase)/decrease in stock (95) 783
(Increase) in debtors (496) (104)
(Decrease)/increase in creditors (465) 83
(Decrease) in provisions (45) -
Non cash movements 6 (58)
------------------------------------ --------- ---------
Net cash (outflow) from operating activities (3,725) (3,022)
------------------------------------ --------- ---------
Reconciliation of net cash flow to movement in net debt
2006 2005
#000 #000
Increase in cash during the period 4,454 105
Issued debt - (2,686)
Payments on notes payable 182 182
------------------------------------ --------- ---------
Changes in net debt resulting from cash flows 4,636 (2,399)
Foreign exchange translation differences 43 (118)
Conversion of debt to equity 3,238 98
Net (debt)/ funds at the beginning of the year (2,300) 119
------------------------------------ --------- ---------
Net funds/(debt) at 31 December 2006 5,617 (2,300)
------------------------------------ --------- ---------
The above schedule excludes from debt convertible preference shares valued at
#21.8m and #3.5m at 31 December 2004 and 31 December 2005 respectively. No
preference shares remain at 31 December 2006.
8. Commitments and guarantees
At the year end the Group had contacted Ricardo plc, an engineering consultancy
company, to develop an engine management system to be used on its future
Dual-FuelTM products. The total cost of the project is expected to be around
#270,000, of which #121,638 has been spent to date. The project will be
completed during 2007.
9. Loss per Share
Basic loss per share is calculated by dividing net loss for the year
attributable to ordinary equity holders of the parent by the weighted average
number of Common shares outstanding during the year.
Year ended Year ended
31 December 31 December
2006 2005
Loss for the period (#000) (3,729) (4,767)
Weighted average number of shares 25,134,312 16,318,479
Basic and diluted loss per share (14.8p) (29.2p)
The weighted average number of shares at 31 December 2005 16,318,479 is the
weighted average number of shares attributable to the ordinary equity holders
prior to the merger and admission to AIM.
The basic and diluted loss per share are the same because losses have been
incurred which result in all potentially dilutive shares being treated as
anti-dilutive.
There have been no other transactions involving Common shares or potential
Common shares between the reporting date and the date of completion of these
financial statements.
10. Dividend Policy
In accordance with the Company's policy as set out in its admission document the
Company does not propose to declare a dividend.
11. Registered Office
Copies of this statement are available at the registered office of Clean Air
Power Limited at;
Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
The preliminary results for the year ended 31 December 2006 have been approved
by the Directors. Our auditors have issued an unqualified audit report on the
results for the year ended 31 December 2006. The financial information set out
above does not constitute statutory accounts within the meaning of section 240
of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PUUWGWUPMGRR
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