RNS Number:8107R
Clean Air Power Limited
08 April 2008
For immediate release 8 April 2008
Clean Air Power Limited
("Clean Air Power" or "the Company")
Preliminary 2007 Results
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 2007.
Financial Highlights
*16% increase in Group revenue to �4.70m, up from �4.07m in 2006.
*74% increase in revenue from core Dual-FuelTM technology to �3.04m, up
from �1.74m in 2006.
*Gross profit increased by 15% to �2.03m, up from �1.76m in 2006.
*Net loss reduced by �0.83m to �2.90m (2006: �3.73m).
*Financing package worth up to �5.00m agreed in April 2008.
Operational Highlights
*Development of demonstration Dual-FuelTM vehicle in cooperation with
Volvo.
*Establishment of Australian subsidiary operation delivered 153% revenue
increase within the region.
*Commencement of delivery of �1.50m vehicle system order in Australia for
Mitchell Corp Pty Ltd.
*Follow up �0.90m order placed by Mitchells for delivery in 2008.
*�0.30m Wiseman Dairies order for Genesis vehicle system in the UK
demonstrates increased momentum.
*Order book in January 2008 stood at �2.70m, equating to 57% of 2007 Group
revenue.
Results
Year Ended Year Ended
31 December 2007 31 December 2006
�'000 �'000
Group Revenue 4,704 4,072
Operating Loss (3,067) (3,690)
Loss after tax (2,900) (3,729)
Basic and diluted loss per (10.8p) (14.8p)
share
Commenting on Clean Air Power's full year results and looking at Group
prospects, John Pettitt, CEO said:
"In 2007, Clean Air Power increased revenues from the core Dual-FuelTM vehicle
division by 74%, with sales of the Genesis product in the UK and considerable
sales traction being generated in Australia.
We continued to make good progress towards our goal of OEM cooperation and were
delighted to see a Volvo truck with Clean Air Power technology being exhibited
at a number of trade shows and conferences during the year. Clean Air Power's
technology delivers proven reductions in carbon emissions along with significant
fuel cost savings to truck operators. With the current environmental focus and
with fuel costs increasing 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
Bhavesh Patel
Notes to Editors:
About Clean Air Power
Clean Air Power is the developer and provider of Dual-FuelTM combustion
technology for heavy duty diesel engines. Dual-FuelTM engines substantially cut
fuel costs and carbon emissions without sacrificing the original engine's
characteristic efficiency or reliability. Clean Air Power is well positioned to
assist corporations and governments to deliver on their environmental
commitments while at the same time reducing transport operators overheads.
Initially founded in the USA in 1991, around �40m has been invested in
developing the technology with the result that 63 patents are currently held or
pending. The holding company of the Group is based in Bermuda with operational
subsidiaries in the UK, the USA and Australia. The Group was admitted to the AIM
market of the London Stock Exchange in February 2006.
Further information on Clean Air Power is available at www.cleanairpower.com
Chairman's Statement
This year has seen a material increase in sales momentum for our flagship
Dual-FuelTM technology and some exciting developments in our discussions with
manufacturers.
We believe that our progress with manufacturers has been driven by the
commercial success in 2007 of our Dual-FuelTM vehicle technology. Sales from our
Dual-FuelTM vehicle division increased by 74% to �3.04m in 2007 compared with
�1.74m in 2006.
In April 2008 the Company agreed a financing package to provide up to �5.00m
gross proceeds for the Company between April 2008 and June 2009. The funds
raised will be used to further advance in-house product development, provide
working capital to support existing operations and to provide resources for
potential manufacturer cooperation activity.
Financial Results
The Group has enjoyed a good year in terms of progress with manufacturers with
regard to future revenues, and has also seen revenue growth from its existing
Dual-FuelTM products. During the year, Group revenue was 16% higher than the
previous year at �4.70m (2006: �4.07m). This growth in revenue was generated
principally by Dual-FuelTM vehicle conversions in Australia.
Gross profit for the year was �2.03m compared to �1.76m in the prior year. The
gross margin for the year was 43% (2006: 43%).
Operating losses for the year were down to �3.07m (2006: �3.69m).
The retained loss for the year after interest and taxation was �2.90m (2006:
�3.73m).
The basic and diluted loss per share was 10.8 pence (2006: 14.8 pence).
Cash on hand at 31 December 2007 was �1.81m demonstrating lower than expected
cash burn for the year.
The net assets of the Group at the year end totalled �3.74m (2006: �6.47m). Net
current assets at the year end amounted to �2.75m (2006: �5.93m) of which �1.81m
relates to cash balances (2006: �5.62m).
Business Review
In 2007 Clean Air Power increased revenues by 16% and reduced net loss by 22%
thanks to a growth in sales of the company's Dual-FuelTM products. The last
quarter of 2007 saw a considerable acceleration in sales in both the UK and
Australia. Most importantly, significant progress has been made as a result of
our marketing efforts with a view to reaching a cooperation agreement with a
major manufacturer.
Clean Air Power has 3 commercial divisions; Dual-FuelTM vehicles systems,
Components and Emissions Reduction systems.
1) 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.
2007 was a very successful year for this division with sales increasing by 74%.
The technology is currently available in two main variants; the interfaced
product currently marketed in Australia and the Genesis product marketed in
Europe.
- Interfaced vehicle system
In this solution Clean Air Power's technology is interfaced 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. The current product offering is certified to EPA 02 and it
can be fitted as an after-market solution to vehicles in the Australian and
South American markets along with markets of a number of developing countries.
In order to access the important US and European markets with an interfaced
product Clean Air Power will need to produce a new variant of this product which
complies with the latest engine emission regulations. The current strategy
envisages this new product being delivered under a cooperation agreement with a
major manufacturer although potentially the company could develop and market its
own engine to address opportunities in these key markets.
Demand for the solution is growing, driven by the desire to reduce greenhouse
emissions and the fuel cost savings available to operators. 31 units were sold
in the last quarter of 2007. During 2007 a further order from Mitchell Corp Pty
Ltd in Australia for �0.90m followed their 2006 order for �1.50m.
- Genesis vehicle system
The 'Genesis' system was developed specifically to be a retro fitted product
which can be installed without the need for formal cooperation of the engine
manufacturers. The solution does not interface directly with the vehicles own
engine management system and the emissions and fuel savings are therefore lower
than would be expected on a fully interfaced system, but still considerable.
However, the demonstrated reductions in carbon emissions and fuel costs have
proved the product to be commercially attractive.
To date Clean Air Power has developed the Genesis solution for both DAF and
Mercedes Euro III vehicles. Clean Air Power is targeting major supermarket
chains, 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 reducing emissions of CO2. Following an initial purchase of
two vehicles, the Company was very pleased to receive an order for 20 units
worth �0.30m from Robert Wiseman Dairies, one of the country's leading dairy
product suppliers. These 22 vehicles are expected to generate fuel savings of
�220,000 per year and around 260 tonnes of C02 per annum for Robert Wiseman
Dairies.
In 2008 Clean Air Power continues to sell the Euro III Genesis solution. The
Company is in the process of developing a Genesis solution that can be fitted to
Euro V emission compliant trucks and plans for its implementation in 2008 are in
place.
- OEM Developments
Our main strategic goal is to work with vehicle and engine manufacturers to
reach an agreement whereby the Dual-FuelTM technology is incorporated on their
vehicle as a standard option and develop it further with their full cooperation.
In this way the benefits of our technology can be maximised. The Group has been
actively pursuing this route to market with a number of such organisations.
An important and exciting event in 2007 was the development of a Dual-FuelTM
demonstration vehicle in conjunction with the Volvo Group. Volvo is one of a
number of manufacturers with whom Clean Air Power had been holding preliminary
discussions. The heavy duty Euro V diesel truck uses an improved version of
Clean Air Power's Genesis retrofit technology installed onto a Volvo 9 litre
diesel engine. This was developed without direct access to the ECU software, but
uses Controller Area Network (CAN) communication protocol that was jointly
developed to more closely integrate the Dual-FuelTM controls with the truck's
existing systems.
The Volvo demonstration truck was displayed by the Volvo Group in a presentation
in Stockholm before going on to a similar demonstration in Brussels and trade
shows in northern Europe. The vehicle was exhibited by Volvo in October at the
RAI show in Amsterdam, the largest truck show in Europe.
In early March 2008 Clean Air Power produced another Dual-FuelTM demonstration
vehicle for the Volvo Group. A 13 litre heavy duty Mack truck was converted and
exhibited by Volvo Group at WIREC 2008 (Washington International Renewable
Energy Conference). Mack Trucks Inc. is owned by Volvo Group.
Clean Air Power believes that its technology could provide Volvo, and other
manufacturers, with solutions applicable to a number of different types of
vehicles on a global basis. The Volvo Group truck brands include Renault, Mack,
Nissan Diesel and Volvo. In addition to trucks the Volvo Group product range
includes marine applications, buses, and construction equipment.
Clean Air Power has submitted proposals to Volvo for the further development and
commercialisation of its technology. The Company understands the decision making
lead times involved in such discussions with manufacturers but remains
optimistic that the proven environmental and economic benefits of its technology
will prove compelling.
2- 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. W
ith sales mainly in Europe and the USA, strong margins and a customer base
including international OEMs, this is an important contributor to the overall
Clean Air Power business.
2007 sales grew from �1.43m in 2006 to �1.48m. In 2007 marketing efforts have
been increased for this division and we expect to strengthen marketing activity
further in 2008 in order to improve awareness of our product offering. This
business tends to operate with long initial order lead times but thereafter
receives regular ongoing revenues once customers have specified one of our
products into their engines. Repeat orders can then be expected, often for the
life of the vehicles. Late 2007 saw increased interest in this product area with
new business being gained which is expected to continue into 2008. Growth in the
Components division will also coincide with anticipated growth of the Group's
Dual-FuelTM vehicle conversion sales.
3- 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, although a strategy is in place to develop revenue
from smaller, more regular contracts.
2007 was a rather lean year for the division with sales of �0.19m being 79%
below the 2006 level of �0.90m. This reduction was due to a single large project
being delivered in 2006 but no similar type of project being available in 2007.
However, in January 2008 Clean Air Power announced a �0.50m order for this
division due to be delivered in the first half of the year.
Outlook
The sales growth generated during the last quarter of 2007 has been very
encouraging and sales in the first quarter of 2008 continue to be strong. We
have significantly strengthened our Australian team throughout 2007 and early
2008. We believe that this demonstration of commitment to the market has been
well received and will help us build on the sales increase delivered in
Australia during 2007.
The Company plans to continue to market its existing Dual-FuelTM solutions in
the UK and Australia in the coming year. In 2008 Clean Air Power plans to
develop a Dual-FuelTM solution for the UK and European market that can be fitted
to a Euro V emissions compliant vehicle, a vehicle which has to meet the latest
EU Emissions Regulations. Additionally in late 2008, the Company plans to launch
a US04 emissions compliant product for Australia. Development of these products
is already underway.
In November 2007 the Company announced that significant progress had been made
with a major manufacturer concerning possible adoption of Clean Air Power's
Dual-FuelTM technology into their engines. These discussions are ongoing and the
Company believes that the flexible nature of its technology offers potential
solutions for a range of vehicles including heavy duty trucks, mid range trucks,
buses but also for generators and, in theory, any diesel engine application.
In January 2008 Clean Air Power won a �0.50m order for our emissions division
based in Houston, Texas and the Company's overall order book was strong, with
orders of �2.70m being received in January 2008.
In April 2008 the Company agreed a financing package to provide up to �5.00m
gross proceeds for the Company between April 2008 and June 2009. Endeavor,
Capital Management LLC, a longstanding and major shareholder in the Company,
currently holding 18.5% of the Company's shares, has conditionally agreed to
provide up to �4.65m of the new funds. The remaining funds will be provided by
another institutional investor which has agreed to invest approximately �0.25m
and the Company's management which is investing a further �0.10m. The funds
raised will be used to further advance in-house product development, provide
working capital to support existing operations and to provide resources for
potential manufacturer cooperation activity.
Looking ahead the company aims to finalise a cooperation agreement with a major
manufacturer during the coming year. Discussions are currently ongoing, and
although progress has been somewhat slow in formalising such an agreement, we
are encouraged by the recent progress that has been made to date.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Revenue 4,704 4,072
Cost of Sales (2,677) (2,314)
Gross profit 2,027 1,758
Administrative expenses (4,933) (4,689)
Share-based payments charge (161) (759)
Operating loss (3,067) (3,690)
Reorganisation expenses - (196)
Loss on ordinary activities before net (3,067) (3,886)
finance revenue and taxation
Finance revenue 171 274
Finance costs (4) (117)
Loss on ordinary activities before (2,900) (3,729)
taxation
Tax expense - -
Loss for the financial period (2,900) (3,729)
Basic and diluted loss per share 10.8p 14.8p
All items dealt with in arriving at operating loss above relate to continuing
operations.
CONSOLIDATED BALANCE SHEET
At 31 December 2007
31 December 2007 31 December 2006
�'000 �'000
Assets
Non-current assets
Plant and equipment 284 116
Intangible assets 715 426
999 542
Current assets
Inventories 1,488 1,090
Trade and other receivables 1,635 1,159
Cash and cash equivalents 1,814 5,617
4,937 7,866
TOTAL ASSETS 5,936 8,408
Equity and liabilities
Equity attributable to equity holders of
the parent
Ordinary share capital 15 15
Accumulated loss (39,151) (36,412)
Other reserves 33,504 33,410
Share premium 8,982 8,982
Translation reserve 391 476
Total equity 3,741 6,471
Non current liabilities
Other payables 7 -
7 -
Current liabilities
Trade and other payables 1,750 1,130
Provisions 438 807
2,188 1,937
TOTAL LIABILITIES 2,195 1,937
TOTAL EQUITY AND LIABILITIES 5,936 8,408
CONSOLIDATED CASH FLOW STATEMENT
For the Year Ended 31 December 2007
Year ended Year ended
Consolidated cash flow statement 31 December 2007 31 December 2006
�'000 �'000
Cash flows from operating activities
Loss before taxation (2,900) (3,729)
Adjustments for:
Net finance income (167) (157)
Depreciation of plant and equipment 55 161
Amortisation of intangibles 311 140
Share-based payments 161 759
Increase in trade and other receivables (334) (496)
Increase/(decrease) in trade and other payables 503 (465)
Increase in inventories (398) (95)
Decrease in provisions (369) (45)
Other non-cash movements 12 6
Net cash outflow from operating activities (3,126) (3,921)
Investing activities
Interest received 171 274
Sale of plant and equipment - 2
Payments to acquire plant and equipment (226) (94)
Payments to acquire intangible assets (600) (535)
Net cash outflow from investing activities (655) (353)
Financing activities
Interest paid (4) (78)
Proceeds from the issue of ordinary share capital - 10,587
Share issue costs - (1,599)
Payment of loan notes - (182)
Net cash (outflow)/inflow from financing (4) 8,728
activities
Net(decrease)/increase in cash and cash (3,785) 4,454
equivalents
Net foreign exchange differences (18) -
Cash and cash equivalents at 1 January 5,617 1,163
Cash and cash equivalents at 31 December 1,814 5,617
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2007
Issued Share Translation Other Retained Total
capital premium reserve reserves earnings equity
�'000 �'000 �'000 �'000 �'000 �'000
Balance at 1 January 2006 7 - - 26,734 (33,442) (6,701)
Translation movements - - 476 - - 476
Total income and expense - - 476 - - 476
for the year recognised
directly in equity
Loss for the year - - - - (3,729) (3,729)
Total income and expense - - 476 - (3,729) (3,253)
for the year
Share-based payments - - - - 759 759
On cancellation of shares - - - 6,997 - 6,997
and loan notes
On issue of new shares 8 10,581 - (321) - 10,268
Share issuance costs - (1,599) - - - (1,599)
Balance at 31 December 2006 15 8,982 476 33,410 (36,412) 6,471
Translation movements - - (85) - - (85)
Foreign Exchange Movements - - - 94 - 94
Total income and expense - - (85) 94 - 9
for the year recognised
directly in equity
Loss for the year - - - - (2,900) (2,900)
Total income and expense - - (85) 94 (2,900) (2,891)
for the year
Share-based payments - - - - 161 161
Balance at 31 December 2007 15 8,982 391 33,504 (39,151) 3,741
NOTES :
1. Segment information
The Board believes the Group has three distinct business classes, Vehicle
Conversions, Components and Emissions Reduction.
The following tables present revenue, profit and certain assets and liability
information regarding the Group's business segments for the years ended 31
December 2007 and 31 December 2006:
Year ended 31 December 2007 �'000
Vehicle Components Emissions Adjustments and Total
Conversions Reduction Eliminations
Revenue
Third party 3,039 1,476 189 - 4,704
Inter-segment 986 91 - (1,077) -
Total revenue 4,025 1,567 189 (1,077) 4,704
Results
Depreciation and (321) (34) (11) - (366)
amortisation
Segment (loss)/ (3,139) 85 (260) 414 (2,900)
profit
Assets
Capital 746 75 5 - 826
expenditure
Operating assets 4,207 729 143 (142) 4,937
Provisions 421 18 40 (41) 438
Operating 1,873 280 76 (41) 2,188
liabilities
1. Inter-segment revenues are eliminated on consolidation.
2. Capital expenditure consists of additions to plant and equipment and
intangible assets.
3. Revenue from one customer amounted to �1,270,080 (2006: nil), arising from
sales related to the vehicle conversions segment.
4. Adjustments and eliminations relate to consolidation eliminations and Holding
Company items.
Year ended 31 December 2006 �'000
Vehicle Components Emissions Adjustments and Total
Conversions Reduction eliminations
Revenue
Third party 1,744 1,427 901 - 4,072
Inter-segment - 86 - (86) -
Total revenue 1,744 1,513 901 (86) 4,072
Results
Depreciation and (175) (79) (47) - (301)
amortisation
Segment (loss)/ (3,215) (433) (472) 391 (3,729)
profit
Assets
Capital 596 21 12 - 629
expenditure
Operating assets 6,671 790 428 (23) 7,866
Provisions 739 24 44 - 807
Operating 1,432 298 207 - 1,937
liabilities
1. Inter-segment revenues are eliminated on consolidation.
2. Capital expenditure consists of additions to plant and equipment and
intangible assets.
3. Adjustments and eliminations relate to consolidation eliminations and Holding
Company items.
Geographical Information
The following table presents revenue information regarding the Group's
geographical segments for the years ended 31 December 2007 and 31 December 2006.
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Revenues from external customers:
UK 947 537
USA 1,195 2,323
Australia 1,705 674
Rest of Europe 658 529
Rest of World 199 9
4,704 4,072
2. Loss per Share
Basic
Basic loss per share is calculated by dividing net loss for the year
attributable to equity holders of the parent by the weighted average number of
Common Shares in issue during the year.
2007 2006
Loss for the period (2,900) (3,729)
Weighted average number of shares 26,905,479 25,134,312
Basic and diluted loss per share (10.8p) (14.8p)
The loss for the period and the weighted average number of ordinary shares for
calculating the diluted earnings per share for the period to 31 December 2007
are identical to those used for the basic earnings per share. This is because
the outstanding share options would have the effect of reducing the loss per
ordinary share and would therefore not be dilutive.
3. 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.
4. 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.
5. Accounting Polices
Prior to 2007 the Group prepared its annual financial statements under UK GAAP.
For the year ended 31 December 2007 the Group is required to prepare its annual
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS). 2006 has been restated accordingly. Reconciliations
between previously reported accounts are included in the June 2007 interim
report along with the Group's IFRS accounting policies.
The preliminary results for the year ended 31 December 2007 have been approved
by the Directors. Our auditors have issued an unqualified audit report on the
results for the year ended 31 December 2007. 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
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