TIDMCAP
RNS Number : 9321S
Clean Air Power Limited
30 September 2014
30 September 2014
CLEAN AIR POWER LIMITED
("Clean Air Power" or "the Group")
Interim Results for the Six Month Period Ended 30 June 2014
Operational Highlights
-- Successful concept study with a global truck manufacturer to
develop a next-generation MicroPilot diesel-natural gas engine for
the South East Asian and other markets
-- Collaborative research program with Queens University, Belfast to develop a next-generation diesel-natural gas combustion process for small-cylinder engines targeting the light-duty automotive market.
-- Exhibited a UPS Prototype Vehicle fitted with Genesis-EDGE
Dual-Fuel(TM) technology at the world's largest Alternative Clean
Transportation EXPO in Long Beach, California
-- Successful trials of Genesis-EDGE Dual-Fuel(TM) systems with potential customers in Russia
-- 89 Genesis-EDGE Dual-Fuel(TM) systems delivered to
Sainsbury's, a major supermarket in the UK, and a global logistics
group, bringing both of their UK Dual-Fuel(TM) fleets to more than
100 trucks each
-- GBP0.3m components order to supply gas injectors for a global
truck manufacturer's new product launch into Russia
Financial Highlights
-- Group revenue for the period increased 9% to GBP4.5m (2013: GBP4.1m)
-- Revenue from Dual-Fuel(TM) system sales increased 17% to GBP3.2m (2013: GBP2.7m)
-- Underlying Gross Profit(1) remained stable at GBP1.3m (2013: GBP1.3m)
-- Underlying EBITDA(2) loss increased 18% to GBP1.3m (2013:
GBP1.1m) due to increased staff costs as we focus on new
markets
-- GBP3.2m period end cash balance (before GBP1.0m new equity raised in July 2014)
Post Period End
-- GBP1.0m equity raise (gross) successfully completed in July
2014 to provide additional working capital headroom that will allow
the Group to take advantage of opportunities as they arise
-- Signed a Letter of Intent with a global truck manufacturer to
commence the first phase of a production development program for a
next-generation MicroPilot diesel-natural gas engine for the South
East Asian and other markets
-- Technical issues in the base engine have led to a temporary
delay in external emissions testing of the US Genesis-EDGE
Dual-Fuel(TM)
-- Trading update released in September 2014 outlining
challenging outlook over the uncertainty and timing of future
orders and cash flows
__________
1 Underlying gross profit excludes development contract revenue
(GBP0.5m) recognised in the income statement where project costs
were capitalised against future commercial revenue streams and a
one-off provision release of (GBP0.2m) during 2013.
2 EBITDA includes total operating loss before non-cash items,
depreciation GBP0.05m (2013: GBP0.06m), amortisation GBP0.8m (2013:
GBP0.6m) and share-based payments GBP0.03m (2013: GBP0.01m). The
underlying EBITDA loss for 2013 excludes development contract
revenue recognised (GBP0.5m) and a one-off provision releases of
(GBP0.2m)
Commenting on the results, John Pettitt, Chief Executive,
said:
"We made a major step forward in our strategy to position Clean
Air Power as the design, development and delivery partner of choice
for OEMs and Tier 1 suppliers in the first half of 2014 with the
successful completion of a funded concept study with a global truck
manufacturer for a next-generation diesel-natural gas engine for
the South East Asian and other markets. This project demonstrates
the leap in performance that is now possible when our patented
MicroPilot system is applied to recent advances in diesel engine
technology. This success comes as our Genesis-EDGE Dual-Fuel(TM)
business is navigating a challenging transitional period moving
from a European market at the end of its product lifecycle towards
to two new, sizable and attractive markets in Russia and the US
where we are preparing product launches. Despite the short term
challenges as reported in our recent trading updates, our success
in September in securing the first phase of a production program
for South East Asia and other markets, underlines the real value
our technology and development partnerships can bring to OEMs and
Tier 1 suppliers."
For further information, please contact:
Clean Air Power Tel: +44 (0)1772
John Pettitt, Chief Executive 624 499
Neill Skinner, Chief Financial Officer
Citigate Dewe Rogerson
Chris Gardner / Malcolm Robertson Tel: +44 (0)20
7282 2867
Panmure Gordon
Corporate Finance: Freddy Crossley / Atholl
Tweedie
Corporate Broking: Tom Salvesen Tel: +44 (0)20
7886 2500
Peat & Co
Charlie Peat
Tel: +44 (0)20
3540 1721
NOTES
Forward Looking Statements
This report includes statements that are forward looking in
nature which involve known and unknown risks, assumptions,
uncertainties and other factors which may cause the actual results
of the Group to be materially different from any future results
expressed or implied by any such forward looking statements in this
report. Except as required by the AIM Rules for Companies and
applicable law, the Group undertakes no obligation to update,
revise or change any forward looking statements to reflect events
or developments occurring after the date of this report.
About Clean Air Power
Clean Air Power designs, develops and delivers
compression-ignited natural gas engines for heavy duty transport
applications. Clean Air Power's patented Dual-Fuel(TM) and
next-generation MicroPilot technology enables engines to run on
natural gas mixed with diesel (or any suitable combustion fuel)
providing the "spark" that ignites the gas. Substituting natural
gas for diesel cuts fuel costs, emissions of carbon, nitrous oxide
and particulates whilst retaining the original engine's power,
efficiency and reliability characteristics. Clean Air Power
operates in the US, Europe, Russia and Australia and has two
commercial divisions:
Dual-Fuel(TM) Vehicle Systems
Delivery of patented Dual-Fuel(TM) systems which include
fully-interfaced systems developed in partnership with truck
manufacturers and the Group's Genesis-EDGE system, developed
in-house as an after-market solution. Dual-Fuel(TM) is a type of
system that adapts diesel engines to run on a combination of diesel
and natural gas whilst retaining engine's basic infrastructure. The
Division sells systems to truck manufacturers for on-line assembly,
approved partners for after-market installation or direct to
customers through its own installation facilities. The Division
also undertakes design and development work for governments and
truck manufacturers on Dual-Fuel(TM) and next-generation
systems.
Components
Design and manufacture of innovative hydraulic valves, injectors
and filters for natural gas engines sold to truck manufacturers
around the world.
Initially founded in the USA in 1991, around GBP50m has been
invested in developing the technology with the result that 69
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.
BUSINESS REVIEW
Engine and Technology Development Partnerships
The focus of our strategy is to position Clean Air Power as the
design, development and delivery partner of choice for OEMs and
Tier 1 suppliers in developing compression-ignited natural-gas
engines for on-highway and off-highway applications.
In the first half of 2014 we took a major step forward in the
successful completion of a funded concept study with a global truck
manufacturer for a MicroPilot diesel-natural gas engine for the
South East Asian and other markets. A MicroPilot diesel-natural gas
engine is a next-generation, fully interfaced engine system that
takes advantage of the Group's patented MicroPilot technology and
modern diesel engine technology so that only very small (i.e.
"micro") quantities of diesel spray (i.e. "pilot") are needed to
ignite a mixture of natural gas and air, delivering levels of
performance that are a major advance on the Group's existing,
retro-fitted Dual-Fuel(TM) system technology.
This led to signing a Letter of Intent in September 2014 to
commence the first phase of a production development program which
will generate revenues of over GBP1.8m and last 6 months. If
successful, the program will move to a second phase targeting the
start of production in 2017. The program will continue to be
delivered in partnership with Ricardo and the success to date
demonstrates the value that our relationship with Ricardo can bring
to OEM and Tier 1 partners.
In May, we entered into a two to three year collaborative
research program with Queens University, Belfast, to develop an
advanced diesel-natural gas combustion process for small-cylinder
engines aimed at the light-duty automotive market. Funded by the
Department for Education and Learning and the Centre for Advanced
Sustainable Energy. This program complements an on-going funded
research programme undertaken with Brunel University aimed at
developing advanced diesel-natural gas combustion systems for
heavy-duty diesel engines.
We also continued to strengthen our intellectual property
portfolio with the granting of US Patent No. 8,688,351
"Modification of Engine Control Signal Timing by Emulation of
Engine Position Sensors". This technology further improves Clean
Air Power's engine control mechanism and delivers practical
advantages in terms of improved gas utilisation and engine
performance.
Dual-Fuel(TM) Vehicle Systems
Europe
The first half of 2014 saw a major transition for the European
business. In early 2014, our European OEM partner brought an end to
its Euro 5 diesel-natural gas production program(3) following the
introduction of the Euro 6 emissions standard across the European
Union, which became effective at the start of 2014 for all new
truck sales. As a result, the business mix has shifted to our
Genesis-EDGE Dual-Fuel(TM) retro-fit system which is sold directly
into the after-market and installed at our facilities in the UK or
through approved partners in Mainland Europe.
We enjoyed some notable successes in the first half of the year
with existing customers, fitting 50 Genesis-EDGE systems for
Sainsbury's and 39 systems for the UK division of a global
logistics group, bringing the number of Clean Air Power
Dual-Fuel(TM) vehicles in both customer fleets to over 100.
However, despite these notable successes, trading was very
difficult, primarily due to the lack of a coherent natural gas
strategy across Europe and falls in the price of natural gas in the
UK lagging behind falls in the price of diesel, thus impacting
customers' business cases.
US and Russia
With Europe now on Euro 6, our near-term strategy has been to
adapt our Genesis-EDGE Dual-Fuel(TM) product for the US market,
which has different emissions standards, and the Russian market,
which we expect to remain on Euro 5 for the foreseeable future.
These are new sizeable markets and have committed to natural gas as
a road fuel. In the US, the number of operating natural gas filling
stations grew 14% to 1,483 at the end of June 2014, and in Russia,
a government-backed national conversion program is making it a
requirement that 30% of heavy duty trucks must run on natural gas
by 2020, a move that has led Gazprom and Rosneft to commit
significant investment to build a modern natural gas fuelling
infrastructure.
In May, we exhibited a UPS Prototype Vehicle fitted with
Genesis-EDGE Dual-Fuel(TM) technology at the world's largest
Alternative Clean Transportation EXPO in Long Beach, California,
generating much interest from visitors. UPS is operating 10 trucks
fitted with our prototype Genesis-EDGE system and the operational
data on performance and reliability has been an invaluable part of
our development program. On 25 September 2014, we announced that
whilst our US Genesis-EDGE Dual-Fuel(TM) test engine had met all
Environmental Protection Agency (EPA) emission requirements in
internal testing at company facilities in Leyland, UK, and was then
subsequently shipped to the US for formal and independent testing
by Ricardo Inc., in pre-certification testing, technical issues
with the selective catalytic reduction (SCR) after-treatment system
on the base diesel engine has prevented the completion of a full
test cycle. The engine has been temporarily withdrawn from testing
whilst the issue is resolved and will be returned to complete
certification at the earliest opportunity.
__________
3 Our European OEM partner's diesel--natural gas program was an
on-line manufactured Euro 5 460bhp truck incorporating Clean Air
Power's Dual-Fuel(TM) technology and distributed by our European
OEM partner through its European network of dealers.
In Russia, we delivered two systems to the Russian business of
our European OEM partner, for use on trial vehicles, and have
delivered a further three systems for trials. The customer trials
have performed well and we have taken our first small orders for
installation of customer vehicles.
Sales of our legacy Caterpillar C15 system in the US and
Australia have been disappointing and below expectations. Although
this is a legacy system, it delivers high levels of performance and
there is an attractive niche market with independent truck
operators. We have, therefore, invested in our marketing and data
capability in the US and are conducting targeted marketing
campaigns at state level.
Overall Dual-Fuel(TM) Vehicle System Sales
In total, 106 Dual-Fuel(TM) systems were delivered in the first
half of 2014, compared to 172 for the same period last year, a
decrease of 38%. However, excluding sales to our European OEM
partner's diesel-natural gas program, units sold directly into the
after-market increased from 23 in the first half of 2013 to 101 in
the first half of 2014.
Revenue from system sales was GBP3.2m compared to GBP2.7m for
the same period in 2013. Total revenue, including other services
increased to GBP3.7m compared to GBP3.1m for the previous year,
reflecting the different sales mix as the business transitioned
from sales of component kits to our European OEM partner for
on-line production to a full installation service for the
Genesis-EDGE after-market system.
Components
Revenues were GBP0.8m compared to GBP1.0m in the previous year,
although the Components division received an order for GBP0.3m to
supply gas injectors for a global truck manufacturer's new product
launch into Russia which represents potential for further orders
into this growing market.
FINANCIAL REVIEW
The six month period to 30 June 2014 has seen revenues increase
to GBP4.5m from GBP4.1m from the same period in 2013. This uplift
has been the result of a change in sales mix following an increase
in sales of our Genesis-EDGE product in the UK during the first
half of 2014.
Costs of sales were higher in the period at GBP3.2m compared to
GBP2.1m for the same period in 2013. The increase was due to a
change in sales mix and the release of a one-off provision within
the Components segment.
Gross profit was lower at GBP1.3m compared to GBP2.0m in the
first six months of 2013. Included within gross profit for the
first half of 2013 is GBP0.5m of development contract revenue
recognised in the income statement where project costs were
capitalised against future commercial revenue streams and a one-off
provision release of GBP0.2m relating to historic provisions in the
Components business; there were no similar items in the current
period. Adjusting the 2013 comparative for these two items shows an
underlying gross profit of GBP1.3m in 2013.
EBITDA loss increased to GBP1.3m from GBP0.4m. As noted above,
GBP0.7m was attributable to development contract revenue and
one-off provision releases, and the remaining GBP0.2 increase is
mostly due to increased staff costs as we focus on new markets. For
the same reasons, plus an GBP0.2m increase in amortisation as we
transitioned from our European OEM partner's diesel-natural gas
program into the Genesis-EDGE Dual-Fuel(TM) program, our operating
loss increased to GBP2.2m from GBP1.1m in 2013.
There was no income tax credit during the period (2013:
GBP0.2m).
The net loss after tax for the period was a loss of GBP2.2m, a
GBP1.3m increase on the GBP0.9m loss for the same period in 2013.
The basic loss per share for the period was 0.96p (2013:
0.53p).
Inventories reduced from GBP1.8m at 31 December 2013 to GBP1.1m
following the end of European OEM production and sales of
Genesis-EDGE systems during the first half of 2014.
Trade receivables reduced to GBP1.7m from GBP2.8m at 31 December
2013 following the collection of amounts outstanding under funded
development agreements.
Capital expenditure amounted to GBP1.1m for the period compared
with GBP1.0m in the first half of 2013. In 2014, this relates to
capitalisation of labour and expenses incurred in developing
Genesis-EDGE variants for the US and Russian markets.
The cash position as at 30 June 2014 was GBP3.2m as analysed in
the cash flow statement on page 8, compared with GBP4.0m at 31
December 2013. This excludes the GBP1.0m gross proceeds raised
during the July 2014 placing.
OUTLOOK
On 19 September 2014 we issued a trading update outlining that
our business is in a difficult and challenging transitional period
as we try to work with the increasing "lumpiness" of operating in a
European market at the end of its product lifecycle whilst managing
the build up to product launch in two new, sizable and attractive
markets in the US and Russia.
As mentioned in the trading update, our opportunities in Europe
are now consolidating around a small number of operators who
continue to run large fleets of compatible Euro 5 vehicles. Despite
a number of successful trials where our Genesis-EDGE Dual-Fuel(TM)
system has proven its ability to generate significant fuel savings,
factors outside of our control, such as ongoing delays in
homologation in some European countries and limited fuelling
facilities, have led customers to delay orders or reconsider their
fleet strategies. We will continue to pursue a number of material
opportunities, but it is not possible to predict with any certainty
the timing or quantum of future orders in Europe and, as a result,
we will accelerate plans to restructure the European business
around the Russian program and build further distribution
partnerships to capitalise on any of these opportunities should
they crystallise in the future.
The temporary delay in the certification of our US Genesis-EDGE
Dual-Fuel(TM) system due to technical issues in the base engine is
frustrating, but we remain confident in achieving EPA approval once
testing is resumed. The trading update issued on 19 September 2014
was already very cautious on US sales in 2014, but this does create
further uncertainty over the timetable for achieving EPA
certification testing and therefore the first sales into the US
market.
In order to be able to manage the business with these inherent
uncertainties in the sales projections, we are implementing
measures to restructure the business to reflect the end of product
lifecycle in the UK and Europe and are preparing detailed plans for
further cost savings should future sales be delayed or lower than
expectations. We are also discussing trade financing options with
finance providers in order to provide greater flexibility in the
Group's ability to support growth in the US and Russia and are
considering alternative ways of funding future development programs
and financing the business.
These, however, represent short term challenges. We remain
confident about the US and Russian markets and whilst it is also
difficult to predict precisely the rate at which we expect these
markets to grow, by working through distribution partners who
understand their local markets and retain strong customer
relationships, we believe we have the right operating model to
capitalise on these sizable markets that are committed to natural
gas as a road fuel.
Furthermore, our success in securing the first phase of a
next-generation development program for South East Asia and other
markets, which has now started, is a major step forward in our
strategy to position the business as a designer and developer of
systems where we are less exposed to development cost risk and can
benefit from licencing our IP. This win demonstrates the quality of
our technology and the value that our relationship with Ricardo can
bring to OEM partners and, with natural gas now gaining acceptance
as an alternative fuel in the US, Russia and Asia, we are seeing
momentum with truck manufacturers and Tier 1 suppliers and we
continue to progress discussions around new programs to develop our
patented technology for applications in these markets.
John Pettitt
Chief Executive
30 September 2014
INTERIM CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to Year to
Note 30 June 2014 30 June 2013 31 December 2013
GBP'000 GBP'000 GBP'000
Revenue 6 4,503 4,121 9,930
Cost of sales (3,219) (2,135) (5,562)
Gross profit 1,284 1,986 4,368
Administrative expenses (3,477) (3,084) (6,321)
Share-based payments charge 8 (31) (12) (44)
Operating loss/loss on ordinary activities
before finance revenue, finance costs and
taxation (2,224) (1,110) (1,997)
Finance revenue 9 1 9
Finance costs (2) - (13)
Loss on ordinary activities before taxation (2,217) (1,109) (2,001)
Income tax credit (Research & Development
related) 5 - 162 326
Loss for the period attributable to Equity
holders of the parent 6 (2,217) (947) (1,675)
-------------- -------------- --------------------------------
Basic and diluted loss per share (0.96p) (0.53p) (0.85p)
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 June 2014 30 June 2013 31 December 2013
GBP'000 GBP'000 GBP'000
Loss for the period (2,217) (947) (1,675)
-------------- -------------- ----------------------------------
Other comprehensive loss to be reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of foreign
operations (138) 172 (156)
Total comprehensive loss for the period (2,355) (775) (1,831)
-------------- -------------- ----------------------------------
Attributable to:
-------------- -------------- ----------------------------------
Equity holders of the parent (2,355) (775) (1,831)
-------------- -------------- ----------------------------------
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
Note 30 June 2014 30 June 2013 31 December 2013
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Plant and equipment 7 264 298 286
Intangible assets 7 4,409 4,088 4,276
-------------- -------------- ----------------------------------
4,673 4,386 4,562
-------------- -------------- ----------------------------------
Current assets
Inventories 1,070 1,387 1,759
Trade and other receivables 1,705 1,153 2,755
Cash and cash equivalents 4 3,206 2,007 4,006
-------------- -------------- ----------------------------------
5,981 4,547 8,520
-------------- -------------- ----------------------------------
TOTAL ASSETS 10,654 8,933 13,082
-------------- -------------- ----------------------------------
Equity and liabilities
Equity attributable to equity holders of
the parent
Ordinary share capital 144 109 144
Share premium 27,042 22,344 27,001
Translation reserve 668 1,134 806
Other reserves 33,504 33,504 33,504
Accumulated loss (53,623) (50,725) (51,421)
-------------- -------------- ----------------------------------
Total equity 7,735 6,366 10,034
-------------- -------------- ----------------------------------
Non-current liabilities
Trade and other payables 4 10 5
Provisions 38 43 43
-------------- -------------- ----------------------------------
42 53 48
-------------- -------------- ----------------------------------
Current liabilities
Trade and other payables 1,945 1,876 1,804
Provisions 903 560 912
Deferred revenue 29 78 284
-------------- -------------- ----------------------------------
2,877 2,514 3,000
-------------- -------------- ----------------------------------
TOTAL LIABILITIES 2,919 2,567 3,048
-------------- -------------- ----------------------------------
TOTAL EQUITY AND LIABILITIES 10,654 8,933 13,082
-------------- -------------- ----------------------------------
Director
INTERIM CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Year to
6 months to 30 31 December
6 months to June 2013 (as 2013 (as
30 June restated - see restated - see
2014 Note 2) Note 2)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss for the period (2,217) (947) (1,675)
Adjustments for:
Income tax credit - (162) (326)
Net finance (revenue)/cost (7) (1) 4
Depreciation of plant and equipment 48 59 153
Amortisation of intangibles 842 599 1,212
Share-based payments 31 12 44
Decrease/(increase) in trade and other
receivables 1,050 (51) (1,653)
Increase in trade and other payables 135 161 89
Decrease/(increase) in inventories 689 (179) (428)
Write back of inventory - - (124)
(Decrease)/increase in provisions (14) 135 487
(Decrease)/increase in deferred revenue (255) (4) 202
Other non-cash foreign exchange
movements 3 21 (181)
------------ --------------- ---------------
Net cash generated/(used) by operations 305 (357) (2,196)
Income taxes received - 162 326
Interest income received 9 1 9
Interest expense paid (2) - (13)
Net cash inflow/(outflow) from
operating activities 312 (194) (1,874)
------------ --------------- ---------------
Investing activities
Payments to acquire plant and equipment (31) (105) (202)
Sale of plant and equipment - - 3
Payments to acquire intangible assets (1,066) (902) (1,844)
Net cash outflow from investing
activities (1,097) (1,007) (2,043)
------------ --------------- ---------------
Financing activities
Proceeds from the issue of ordinary
share capital 41 - 5,104
Share issue costs - - (414)
Net cash inflow from financing
activities 41 - 4,690
------------ --------------- ---------------
Net (decrease)/increase in cash and
cash equivalents (744) (1,201) 773
Effect of exchange rates on cash and
cash equivalents (56) 4 29
Cash and cash equivalents at the
beginning of the period 4,006 3,204 3,204
------------
Cash and cash equivalents at end of
period 3,206 2,007 4,006
------------ --------------- ---------------
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2014
Ordinary
Share Share Translation Other Accumulated Total
Capital Premium Reserve Reserves loss Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- ------------ --------- ------------ ----------
Balance at 1
January 2013 109 22,346 962 33,504 (49,790) 7,131
--------- --------- ------------ --------- ------------ ----------
Comprehensive
income
Loss for the
period - - - - (947) (947)
--------- --------- ------------ --------- ------------ ----------
Other
comprehensive
income
Exchange
differences
on
retranslation - - 172 - - 172
of overseas
operations
--------- --------- ------------ --------- ------------ ----------
Total
comprehensive
loss for the
period - - 172 - (947) (775)
--------- --------- ------------ --------- ------------ ----------
Share-based
payments - - - - 12 12
On issue of - - - - - -
new shares
Share issuance
costs - (2) - - - (2)
--------- --------- ------------ --------- ------------ ----------
Balance at 30
June 2013 109 22,344 1,134 33,504 (50,725) 6,366
--------- --------- ------------ --------- ------------ ----------
Comprehensive
income
Loss for the
period - - - - (728) (728)
--------- --------- ------------ --------- ------------ ----------
Other
comprehensive
income
Exchange
differences
on
retranslation - - (328) - - (328)
of overseas
operations
--------- --------- ------------ --------- ------------ ----------
Total
comprehensive
loss for the
period - - (328) - (728) (1056)
--------- --------- ------------ --------- ------------ ----------
Share-based
payments - - - - 32 32
On issue of
new shares 35 5,169 - - - 5,204
Share issuance
costs - (512) - - - (512)
--------- --------- ------------ --------- ------------ ----------
Balance at 31
December 2013 144 27,001 806 33,504 (51,421) 10,034
--------- --------- ------------ --------- ------------ ----------
Comprehensive
income
Loss for the
period - - - - (2,217) (2,217)
--------- --------- ------------ --------- ------------ ----------
Other
comprehensive
income
Exchange
differences
on
retranslation - - (138) - - (138)
of overseas
operations
--------- --------- ------------ --------- ------------ ----------
Total
comprehensive
loss for the
period - - (138) - (2,217) (2,355)
--------- --------- ------------ --------- ------------ ----------
Share-based
payments - - - - 15 15
On issue of
new shares - 41 - - - 41
Share issuance - - - - - -
costs
--------- --------- ------------ --------- ------------ ----------
Balance at 30
June 2014 144 27,042 668 33,504 (53,623) 7,735
--------- --------- ------------ --------- ------------ ----------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The interim condensed consolidated financial statements of Clean
Air Power Limited for the six months ended 30 June 2014 were
authorised for issue in accordance with a resolution of the
directors on 30 September 2014. Clean Air Power Limited is a public
limited Group incorporated in Bermuda whose shares are publicly
traded whose shares are publicly traded on the AIM market of the
London Stock Exchange.
All of the revenues and operating assets relate to the Group's
principal business activities, being vehicle conversion sales and
sales of components. Revenue is stated net of value added tax.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These interim condensed consolidated financial statements for
the six months ended 30 June 2014 have been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the European
Union and using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted in the European
Union (collectively 'Adopted IFRS').
The interim condensed consolidated financial statements are
presented in sterling and all values are rounded to the nearest
thousand (GBP'000) except when otherwise indicated.
The interim condensed consolidated financial statements are
unaudited and do not constitute statutory accounts and therefore do
not include all the information and disclosures required in the
annual financial statements, and should be read in conjunction with
the Group's financial statements as at 31 December 2013. The
financial information for the preceding year is based on the
Group's financial statements for the year ended 31 December 2013
upon which the auditors issued an unqualified opinion. The Group's
financial statements for the year ended 31 December 2013 were
prepared in accordance with International Financial Reporting
Standards as adopted in the European Union.
In preparing the interim consolidated cash flow statements for
the 6-month period ended 30 June 2014, the comparative periods
presented were restated to use the profit/(loss) for the period
when adjusting and reconciling profit or loss to the net cash flows
from operating activities. The comparative 6-month period ended 30
June 2013 was also restated to conform to the classification made
in the annual group financial statements for the year ended 31
December 2013 in relation to interest income received and interest
expense paid which were both classified as part of net cash flows
from operating activities. Previously these were reported as part
of net cash flows from investing and financing activities,
respectively.
Significant movements and transactions during the period
compared to the corresponding interim comparative period, in
particular movements in cost of sales, inventories and trade and
other receivables, are discussed in the Financial Review.
Accounting Policies
The accounting policies adopted in preparation of the interim
condensed financial statements are consistent with those followed
in preparation of the Group's annual financial statements for the
year ended 31 December 2013.
As 1 January 2014 there are no new standards or interpretations
that resulted in any impact on the accounting policies, financial
position or performance of the Group. The Group has not early
adopted any other standard, interpretation or amendment that has
been issued but is not yet effective.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Business Review and the Outlook. The financial
position of the Group is described within the Financial Review.
As described in the Business Review, the Group is in a difficult
and challenging transitional period. The introduction of the Euro 6
emissions standard across Europe at the start of 2014 means that
sales opportunities are now limited to a small number of operators
who continue to operate large fleets of Euro 5 vehicles and, as a
result, it is not possible to predict the quantum or timing of
future sales in the UK and Mainland Europe. In the short to medium
term, the Group is focussing on the launch of its products into the
US and Russia and, as these are new markets for the Group, there is
uncertainty around the rate of growth and overall sales quantities.
On 25 September 2014, the Group announced that the US Genesis-EDGE
Dual-Fuel(TM) system had been temporarily withdrawn from emissions
testing in order to resolve technical issues with the base engine.
The Directors are confident that these issues can be resolved in a
matter of weeks, but this does create further uncertainty over the
timetable for achieving EPA certification testing and therefore the
timing of the first sales into the US market. Furthermore, as
products currently in development move into production, the Groups
strategy is to secure new development programs with OEMs and other
Tier 1 manufacturers. The recent success in securing the first
phase of a development program with a global manufacturer is major
endorsement of the Group's technology and it is hoped that this
will help to progress other opportunities that the Group is
pursuing, but again, it is difficult to predict with any certainty
the timing of such programs.
The Group's ability to meet its future working capital
requirements is dependent upon being able to generate sufficient
revenues from sales of its Genesis-EDGE Dual-Fuel(TM) system in the
US and Russia and, longer term, secure further OEM or Tier 1
development contracts. The Directors have prepared detailed
projections of future trading that they consider to be realistic
and which show that the Group can manage its business within
existing resources if trading is in line with expectations.
However, in order to be able to manage working capital with the
inherent uncertainties in the sales projections, the Directors are
implementing measures to restructure the business to reflect the
end of product lifecycle in the UK and Europe and are preparing
detailed plans for further cost savings should future sales be
delayed or lower than expectations. The Directors are also
discussing trade financing options with finance providers in order
to provide greater flexibility in the Group's ability to support
growth in the US and Russia and are considering alternative ways of
funding future development programs and financing the business.
With the uncertainties inherent in future revenues and the
absence of firm commitments in financing options, the Directors
have concluded that there is a material uncertainty that may cast
significant doubt upon the Group's ability to continue as a going
concern and that, therefore the Group may be unable to realise its
assets and discharge its liabilities in the normal course of
business. Nevertheless, after making appropriate enquiries and
preparing detailed projections of trading results which consider
the potential effect on cash of reasonably foreseeable sales
variances, along with the courses of action described above and
alternative forms of finance being pursued, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half yearly report.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
3. RISKS AND UNCERTAINTIES
Management identify and assess risks to the business using a
common model. The Group has a number of exposures which can be
summarised as follows: additional capital requirements;
manufacturer co-operation; fuel volatility; in-house product
development/certification timing; partnership arrangements; engine
management software/product development; gas supply; regulatory
framework; competition/intellectual property; employees; trading
and economic risks; adaptation of the core engine management
software and sales timing. These risks and uncertainties facing our
business were reported in detail in the financial review in the
2013 Annual Report and Accounts and all of them are monitored
closely by the Group's Management Board. There have been no changes
to the Group's principal risks and uncertainties in the six month
period to 30 June 2014 and the Board of Directors do not anticipate
any changes to the principal risks and uncertainties in the second
half of the year.
4. CASH AND CASH EQUIVALENTS
Unaudited Audited
as at as at
30 June 31 December
------------------ -------------
2014 2013 2013
GBP'000 GBP'000 GBP'000
3,206 2,007 4,006
Cash at bank and in hand 3,206 2,007 4,006
======== ======== =============
5. INCOME TAX
The major components of income tax expense in the interim consolidated
income statement are:
Unaudited Audited
6 months to year ended
30 June 31 December
------------------- -------------
2014 2013 2013
GBP'000 GBP'000 GBP'000
Current taxation
UK Tax
Research and development tax repayment - (162) (326)
Tax credit for the period - (162) (326)
========= ======== =============
6. SEGMENTAL ANALYSIS
Revenue by business segment:
For management purposes the Group is organised into business units based on their products
and services, and has two reportable
operating segments as follows:
The Dual-Fuel(TM) segment allows a standard diesel engine to operate
on natural gas without any major changes to the engine.
The Components segment designs and delivers innovative hydraulic
valves and natural gas injector components for natural gas engines
that enable automotive and truck manufacturers to build low-emission
gasoline, natural gas and diesel vehicles that meet worldwide emissions
regulations.
Period ended 30 June 2014 GBP'000
Dual-Fuel(TM) Components Adjustments Total
and eliminations
------------------------------- -------------- ----------- ------------------ --------
Revenue
Third party sale of
goods (1) 3,152 823 - 3,975
Third party rendering
of services (1) 528 - - 528
-------------- ----------- ------------------ --------
Total revenue before
inter-segment 3,680 823 - 4,503
Inter-segment (2) 197 - (197) -
Total revenue 3,877 823 (197) 4,503
============== =========== ================== ========
Results
Depreciation and amortisation
(3) (880) (33) 23 (890)
Operating (loss)/profit(3)(4) (2,253) 16 13 (2,224)
Net finance income 7
Income tax credit (Research -
& Development related)
Loss for the period (2,217)
============== =========== ================== ========
Assets
Operating assets (5) 4,989 1,014 (22) 5,981
============== =========== ================== ========
Provisions 880 61 - 941
Operating liabilities
including provisions 2,564 351 - 2,915
============== =========== ================== ========
Other disclosures
Capital expenditure
(6) 1,097 - - 1,097
============== =========== ================== ========
NOTES TO THE INTERIM FINANCIAL STATEMENTS
6. SEGMENTAL ANALYSIS - CONTINUED
1. Dual-Fuel(TM) conversion segment includes revenue arising from
development activity
2. Inter-segment revenues are eliminated on consolidation (GBP197,000)
3. Amortisation eliminated (GBP23,000) following transfer of intangible
assets to Clean Air Power Inc.
4. Elimination of intergroup balances relating to foreign exchange
gains and losses (GBP10,000)
5. Adjustment to profit in inventory (GBP22,000)
6. Capital expenditure consists of additions to plant and equipment
and intangible assets
7. Revenue from one customer amounted to GBP1,427,560 arising from
sales related to the Dual-Fuel(TM) segment.
Period ended 30 June 2013 GBP'000
Dual-Fuel(TM) Components Adjustments Total
and
eliminations
------------------------ -------------- ----------- ------------- -------------
Revenue
Third party sale of
goods (1) 2,701 982 - 3,683
Third party rendering
of services (1) 438 - - 438
-------------- ----------- ------------- -------------
Total revenue before
inter-segment 3,139 982 - 4,121
Inter-segment (2) 466 - (466) -
Total revenue 3,605 982 (466) 4,121
============== =========== ============= =============
Results
Depreciation and
amortisation
(3) (493) (173) 8 (658)
Operating (loss)/profit
(3) (1,331) 213 8 (1,110)
Net finance income 1
Income tax credit (Research
& Development related) 162
Loss for the period (947)
============== =========== ============= =============
Assets
Operating assets (4) 3,848 745 (46) 4,547
============== =========== ============= =============
Provisions (5) 536 73 (6) 603
Operating liabilities
including provisions
(5) 2,334 229 (6) 2,557
============== =========== ============= =============
Other disclosures
Capital expenditure
(6) 965 42 - 1,007
============== =========== ============= =============
1. Dual-Fuel(TM) conversion segment includes revenue arising from
development activity
2. Inter-segment revenues are eliminated on consolidation (GBP466,000)
3. Amortisation eliminated (GBP8,000) following transfer of intangible
assets to Clean Air Power Inc.
4. Adjustment to profit in inventory (GBP46,000)
5. Adjustment to provisions of GBP6,000
6. Capital expenditure consists of additions to plant and equipment
and intangible assets
7. Revenue from one customer amounted to GBP2,261,780 arising from
sales related to the Dual-Fuel(TM) and Components segment.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
6. SEGMENTAL ANALYSIS - CONTINUED
Year ended 31 December 2013 GBP'000
Dual-Fuel(TM) Components Adjustments Total
and eliminations
------------------------------- -------------- ----------- ------------------ --------
Revenue
Third party sale of
goods (1) 7,256 1,704 - 8,960
Third party rendering
of services (1) 970 - - 970
-------------- ----------- ------------------ --------
Total revenue before
inter-segment 8,226 1,704 - 9,930
Inter-segment (2) 1,785 - (1,785) -
Total revenue 10,011 1,704 (1,785) 9,930
============== =========== ================== ========
Results
Depreciation and amortisation
(3) (1,328) (52) 15 (1,365)
Operating (loss)/profit
(4) (2,754) 296 461 (1,997)
Net finance expense (4)
Income tax credit (Research
& Development related) 326
Loss for the year (1,675)
============== =========== ================== ========
Assets
Operating assets (5) 7,547 989 (16) 8,520
============== =========== ================== ========
Provisions 901 54 - 955
Operating liabilities
including provisions 2,753 290 - 3,043
============== =========== ================== ========
Other disclosures
Capital expenditure
(6) 2,046 - - 2,046
============== =========== ================== ========
1. Dual-Fuel(TM) conversion segment includes revenue arising from
development activity
2. Inter-segment revenues are eliminated on consolidation (GBP1,785,000)
3. Amortisation eliminated (GBP15,000) following transfer of intangible
assets to Clean Air Power Inc.
4. Elimination of intragroup management charges (GBP48,000) and
intragroup foreign exchange gains and losses (GBP413,000)
5. Adjustment to profit in inventory (GBP16,000)
6. Capital expenditure consists of additions to plant and equipment
and intangible assets
7. Revenue from one customer amounted to GBP5,443,000 arsing from
sales related to the Dual-Fuel(TM) and Components segment.
7. PLANT, EQUIPMENT & INTANGIBLE ASSETS
During the six months ended 30 June 2014, the Group acquired
plant and equipment with a cost of GBP31,000 (30 June 2013:
GBP105,000) (31 December 2013: GBP202,000). Expenditure on product
development for the six months ended 30 June 2014 was GBP1,066,000
(30 June 2013: GBP902,000) (31 December 2013: GBP1,844,000). The
majority of the expenditure related to the US Genesis-EDGE
development project.
8. SHARE-BASED PAYMENT
During the period the Group recognised GBP30,816 (30 June 2013:
GBP12,000) (31 December 2013: GBP44,328) related to equity-settled
share-based payments transactions.
9. RELATED PARTY DISCLOSURES
The Group receives consultancy services from Karl Viktor
Schaller, a Non-Executive Director of the Company.
The following table provides the total amount of transactions, which
have been entered into with related parties for the relevant financial
period.
Prof K V Schaller Unaudited 6 months Unaudited 6 months Audited year
to to ended 31 December
30 June 30 June
------------------------------------ --------------------- --------------------- ---------------------
2014 2013 2013
------------------------------------ --------------------- --------------------- ---------------------
GBP'000 GBP'000 GBP'000
Services received from related
parties 2 2 4
Amounts owed to related parties - - -
10. POST BALANCE SHEET EVENTS
In July 2014, the Company successfully raised capital of approximately
GBP1.0m before expenses from the placing of new shares; this increased
the ordinary share capital to GBP158,500 by the creation of an additional
25,000,000 Ordinary Shares with a nominal value of US$0.001 each and
a market price of 4 pence per share.
CORPORATE INFORMATION
Directors
Non-Executive Chairman - Rodney Westhead "#
Non-Executive Deputy Chairman - Bernard Lord "*+#
President & Chief Executive - John Pettitt
Chief Financial Officer - Neill Skinner
Non-Executive Director - Prof Dr. Karl Viktor Schaller *+#
Non-Executive Director - Dr. Ulrich Wöhr "*+#
Non-Executive Director - Robert Tyrer
* Member of the Audit Committee + Member of the Remuneration Committee
# Member of the Nomination Committee " Independent
Secretary
Codan Services Limited
Registered Office
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Auditors
Ernst & Young LLP
100 Barbirolli Square
Manchester
M2 3EY
Solicitors
Pillsbury Winthrop Shaw Pittman LLP
Tower 42, Level 23
25 Old Broad Street
London
EC2N 1HQ
Nominated Advisor and Joint Broker
Panmure Gordon & Co
One New Change
London
EC4M 9AF
Joint Broker
Peat & Co
118 Piccadilly
London
W1J 7NW
Registrars and Transfer Office
Capita IRG (Offshore) Limited
Victoria Chambers, Liberation Square
1/3 The Esplanade
St Helier
Jersey
Principal Banker
HCBC Bank plc
1 Forest Green Road
Fulwood
Preston
PR2 9LJ
Financial Public Relations
Citigate Dewe Rogerson
3 London Wall Buildings
London Wall
London
EC2M 5SY
INDEPENDENT REVIEW REPORT TO CLEAN AIR POWER LIMITED
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the Interim Results for the 6 months
ended 30 June 2014 which comprise the Interim Consolidated Income
Statement, the Interim Consolidated Statement of Comprehensive
Income, the Interim Consolidated Statement of Financial Position,
the Interim Consolidated Cash Flow Statement, the Interim
Consolidated Statement of Changes in Equity and the related
explanatory notes 1 to 10. We have read the other information
contained in the Interim Results report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
(UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The Interim Results report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the Interim Results report in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
As disclosed in note2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Interim Results report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the Interim Results
report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Results report for the 6 months ended 30 June 2014
is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union.
Emphasis of Matter - Going Concern
In reaching our conclusion, which is not qualified, we have also
considered the adequacy of the disclosures made in note 2 to the
interim financial statements concerning the group's ability to
continue as a going concern. The conditions described in note 2
indicate the existence of a material uncertainty which may cast
significant doubt about the group's ability to continue as a going
concern. The condensed set of financial statements in the Interim
Results report do not include the adjustments that would result if
the group was unable to continue as a going concern.
Ernst & Young LLP
Manchester
30 September 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFEAALIAFIS
Clean Air (LSE:CAP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Clean Air (LSE:CAP)
Historical Stock Chart
From Jul 2023 to Jul 2024
