RNS Number:9555T
Clipper Windpower PLC
29 March 2007
CLIPPER WINDPOWER PLC ANNOUNCES RESULTS FOR THE YEAR ENDED
31 DECEMBER 2006
Clipper Windpower Plc (London Stock Exchange: AIM-CWP) and its subsidiaries
(together "Clipper", "the Group" or "Clipper Windpower"), a leading manufacturer
of advanced wind turbines and developer of wind energy projects, is pleased to
announce its results for the year ended 31 December 2006.
Highlights
* Clipper has concluded its first wind turbine sales agreements for
deliveries through 2011, with 1,079 MW in firm turbine sale commitments,
approximately 2,500 MW in contingent orders, and joint development / contingent
sale agreements for over 2,000 MW of early stage projects which would deploy
Clipper turbines.
* Commenced production in 2006, with the manufacturing completion of
Clipper's first eight Liberty 2.5 MW wind turbines. Series production as of 26
March 2007 is at 28 turbines, including the eight produced in 2006.
* Increased floor space to over 215,000 square feet at Clipper's Cedar
Rapids assembly plant, increasing the plant's capacity to over 400 wind turbines
per year.
* Initiated turnkey construction of the 40-turbine Endeavor project in
Iowa, scheduled for completion in Summer 2007.
* Strengthened Clipper's intellectual property portfolio by obtaining
several key new patents.
* Maintained in excess of 6,000 MW net ownership share of diversified
wind resource portfolio after considering joint project development and asset
sale agreements, including over 1,800 MW in wind project potential added in
2006.
* Raised $85.0 million in a successful share placing to finance the
turnkey construction of the Endeavor project and future strategic initiatives.
For further information, please contact:
James GP Dehlsen, Chairman and CEO + 1 805 690 3278
Colin Moynihan, Director + 44 20 7820 1078
This announcement was approved by the Board of Directors on 28 March 2007. A
copy of this announcement and the Annual Report and Financial Statements for the
year ended 31 December 2006 (including a Notice of Annual General Meeting) will
be available for inspection on the Group's website at http://www.clipperwind.com
The ordinary shares of Clipper Windpower Plc are traded on the Alternative
Investment Market of the London Stock Exchange and are not registered under the
US Securities Act 1933, as amended. Such shares may not be offered or sold to
residents of the United States or to persons acting on their behalf, or to other
persons who are "United States Persons" within the meaning of Regulation S as
promulgated under the Securities Act of 1933, unless such shares have been
registered under the Securities Act or there is an available exemption from
registration.
Chairman's Statement
As the forthcoming review illustrates, 2006 was a year where Clipper
transitioned from its formative elements in windpower technology, to the broad
activities required for volume production of the Liberty turbine, and
establishing the necessary capabilities to assure high quality in the whole
value chain of activity from the manufacturing of components to the installation
and operation of the power systems. In all aspects we had a very successful
year.
Business Activity
With the July 2006 announcement of a strategic alliance between Clipper and BP
Alternative Energy North America Inc., sales agreements for the 2.5 MW Liberty
wind turbine commenced and supply chain activities were stepped up. This and
subsequent sales commitments with UPC Wind (independently and in partnership
with BQ Energy), Edison Mission Group, and FPL Energy grew firm turbine sales
commitments to 1,079 MW, contingent orders to approximately 2,500 MW and joint
development / contingent sale agreements for over 2,000 MW of early stage
projects which would deploy Clipper turbines.
Manufacturing floor space was increased fourfold, and associated infrastructure
capacity and staffing accelerated beginning mid-2006, with wind turbine assembly
starting during the fourth quarter. By year-end, eight Liberty wind turbines
were ready for delivery to a customer's New York project site. In March 2007,
Clipper's first production wind turbines started delivering power to the grid,
with commissioning activities progressing well at the first installation site.
Twenty Liberty wind turbines have been produced year-to-date as of 26 March
2007, with series production totaling 28 turbines, including the eight produced
in 2006.
Clipper continued active engagement in project development activities last year,
maintaining in excess of 6,000 MW net ownership share in a diversified wind
resource portfolio, after considering joint project development and asset sale
agreements. Over 1,800 MW in wind project potential was added in 2006. We will
continue to mature the portfolio and seek ways to enhance its value in the
future.
Clipper's intellectual property gained further advantage through the award of
four additional U.S. patents. Clipper's technology portfolio contains eleven
U.S. patents, with a number of additional patents pending or provisional. We
believe the market is responding positively to Clipper's variable speed wind
turbine technology and its proprietary distributed drive train system, which
mitigates deficiencies in current wind turbine designs. This technology forms
the basis for Clipper's product portfolio and its future expansion.
2007 Outlook and Beyond
Clipper's 2007 firm orders have increased from 150 turbines forecast at the end
of 2006 to 171 currently. We are now in final stage negotiations over additional
machines. In line with the increased sales forecast for the year, the Board is
increasingly confident of our ability to meet these orders and we retain our
target production of 250 machines for 2007. Firm orders for delivery in 2008
currently stand at 252 turbines, with contingent orders for over 50 turbines in
2008 and 300 turbines in 2009.
Our long-standing supplier relationships are helping Clipper manage the current
tight supply chain environment, which is being driven by the increasing global
demand for wind turbines. In this regard, we are moving to multiple suppliers
and investing in vertical integration where this secures continuity of supply
and the highest quality and possible opportunities for growth. For an
increasing number of key components, we are starting to build some working
inventory and have improved visibility on availability of key components to meet
the firm orders we have received. Forecast production in the first half of 2007
will continue to be 'lumpy' and increased production is forecasted as we move
through the remaining quarters of the year. We expect narrowed margins during
start-up due to initial production and procurement inefficiencies and legacy
pricing in initial sales. Substantial progress towards normalised margins is
expected as we move into 2008 due to more favorable product pricing and
moderating component costs. We are significantly strengthening our Supply Chain
management team. Ian Cluderay joined us in March as Vice President, Supply Chain
Management after fifteen years of senior experience with Rolls Royce Energy and
Toyota. A new Director of Strategic Sourcing joins us in Cedar Rapids at the end
of March. Our employee count is set to exceed 400 by mid-year.
It is with great appreciation for his contribution to Clipper's development that
I indicate that Colin Moynihan will be standing down as a Director at this
year's Annual Meeting. Colin has worked with me for over ten years and has been
instrumental to our successful IPO and the negotiations with BP Alternative
Energy. We wish him every success in his new appointment as Executive Chairman
of Ocean Power Delivery. Colin will continue his relationship with Clipper in a
consulting role.
Looking forward through 2009, Clipper Windpower now has firm orders and options
on approximately 800 turbines and visibility on a substantial number of
additional machines. We are confident that we can meet the challenge of a brisk
manufacturing ramp up and the risk associated with any new technology
deployment. That said, our Group and the management team are well experienced
in the very processes, industry, and business practices necessary to address
these demands and challenges. We remain committed to moving Clipper vigorously
forward, providing high value to our shareholders, and achieving top tier
performance within the wind power industry.
James G. P. Dehlsen
Chairman and Chief Executive Officer
Business and Financial Review
Business Review
Company Description
Clipper Windpower Plc ("the Company") and subsidiaries (together, the "Group", "
Clipper" or "Clipper Windpower") is a rapidly growing wind energy technology,
turbine manufacturing and wind project development company. With offices in
California, Colorado, Maryland, and the U.K., and ISO9001:2000 QMS certified
manufacturing and assembly facilities located in Cedar Rapids, Iowa, Clipper
Windpower designs advanced wind turbines, manufactures its 2.5 MW Liberty wind
turbine and actively develops wind power generating projects in the Americas and
Europe. Shares in Clipper Windpower Plc are traded on the London Stock
Exchange's Alternative Investment Market (AIM) and the Company's ticker symbol
is CWP.
Global Wind Energy Market
The global wind market experienced another record year in 2006. According to
the Global Wind Energy Council, installed wind energy capacity worldwide
increased by about 26%, growing from 59,091 MW at the end of 2005 to 74,223 MW
at the end of 2006. In North America, installed wind capacity grew by
approximately 33% last year, increasing from 9,832 MW at the end of 2005 to
13,062 MW at year-end 2006. In Asia, the growth rate was even higher at
approximately 52%, increasing from an installed capacity of 6,990 MW to 10,667
MW at year-end 2006. Installed capacity in Europe grew over 18%, increasing
from 40,898 MW at the end of 2005 to 48,545 MW at year-end 2006. The total
value of new generating equipment installed globally in 2006 reached US $23
billion.
In the United States, the Federal Production Tax Credit ("PTC") was extended for
projects placed in service through 2008. According to the American Wind Energy
Association, requirements for Renewable Portfolio Standards ("RPS") have now
been adopted in 22 states. As a result, interest in U.S. wind energy projects
and the Liberty turbine remained strong in 2006.
Strategy and Key Performance Indicators
Clipper's business strategy includes four core components:
* Manufacturing the Liberty wind turbine for sale directly to third
party developers and project owners;
* Research and development aimed at expanding the technology advantage,
adapting the platform for larger scale turbines and offshore applications;
* Project development activities which add to its existing wind resource
portfolio, facilitating the deployment of the Liberty turbine and onward sale of
its wind farm projects to third parties; and
* Investment ownership wherein it retains a stake in some projects it
develops to provide a base for recurring revenue.
Most of the Group's initial turbine sales and project development prospects are
located in North America. However, Clipper is also in active negotiations for
wind turbine sales outside of North America and intends to grow internationally.
Clipper just completed initial commercial turbine assemblies at the end of 2006,
so performance against the Group's strategy was measured during the year using
primarily non-financial indicators. The following performance indicators were
tracked closely in 2006 to measure progress:
* Liberty 2.5 MW blade design certification for new rotor sizes;
* Wind turbine sales order book, both firm commitments and contingent
sales measured in megawatts ("MW");
* Employee and assembly facility ramp-up, in terms of number of
employees and assembly facility square footage;
* Availability of critical components such as blades and towers
fabricated by outside suppliers, measured in terms of forecast supplier
commitments;
* Ex-works wind turbine assembly completions;
* Key wind turbine technology patents obtained;
* Development project construction progress and wind resource inventory;
and
* Cash and working capital levels.
2006 performance against these indicators is further described in the sections
that follow. As the business evolves, additional performance indicators will
become important, such as wind turbines shipped, gross profit and earnings
before interest and taxes.
Commercial Sales Activity
After receiving Germanischer Lloyd ("GL") design certification for the Liberty
2.5 MW C-96 wind turbine in March 2006, Clipper announced its first turbine sale
agreements in July. Sales agreements concluded in 2006 are summarised below:
BP Alternative Energy North America Inc.
In July, Clipper and BP Alternative Energy North America Inc. announced a
strategic alliance for a long-term turbine supply agreement and the joint
development of five of Clipper's wind energy projects in the USA. The five wind
projects, with an anticipated generating capacity of 2,015 MW, will be jointly
owned by the two companies and will deploy Clipper's advanced Liberty wind
turbines. Additionally, in recognition of the long-term strategic relationship
between Clipper Windpower and BP Alternative Energy North America Inc., BP
acquired a five-year share option to purchase a 10% equity interest at #3.77 per
share in Clipper Windpower Plc.
As part of the long-term turbine supply agreement, BP Alternative Energy North
America Inc. committed to the purchase of 100 MW of Liberty turbines in 2007 and
200 MW in 2008 which it will use in other projects in its global wind business.
These orders represent the initial firm deliveries under the long-term supply
agreement for up to 900 Liberty turbines (2,250 MW) over the next five years.
In December 2006, and as part of the strategic turbine supply and joint
development agreement announced in July 2006, BP and Clipper concluded an
agreement to supply 60 MW of Clipper's 2.5 MW Liberty wind turbines to a joint
development company owned 85% by BP and 15% by Clipper for delivery in 2007. In
accordance with the companies' July agreement, these 60 MW of turbines are
incremental to the BP commitment to purchase 100 MW of Liberty turbines in 2007
and 200 MW in 2008.
UPC Wind
In July, Clipper announced it would supply eight Liberty 2.5 MW wind turbines to
a subsidiary of UPC Wind, one of the world's largest and most successful wind
power companies, and its partner BQ Energy, for construction of the Steel Winds
Wind Farm, the first wind power project to be built on the U.S. shores of Lake
Erie. In addition to wind turbine supply, Clipper will provide wind turbine
installation supervision as well as operation and maintenance services for a
period of five years. This project is the first to receive commercial delivery
of Clipper C-96 wind turbines, with installation completion expected in the
first quarter of 2007.
In September, Clipper announced a firm order with a subsidiary of UPC Wind for
the supply of 125 MW of Clipper wind turbines in 2007. Under the terms of the
agreement, Clipper will deliver 50 of the Group's 2.5 MW Liberty wind turbines,
including installation supervision, and provide operations and maintenance
services for a period of five years.
In October, Clipper announced it signed a contract with a subsidiary of UPC Wind
for the supply of 200 MW of Clipper wind turbines for delivery in 2008. Under
the terms of the agreement, Clipper will deliver 80 of the Group's 2.5 MW
Liberty wind turbines including wind turbine installation and supervision, and
provide operations and maintenance services for a period of five years. The
wind turbines will be deployed in projects UPC plans to develop in the western
U.S.
Edison Mission Group
In July, Clipper signed an agreement with Edison Mission Group, through its
subsidiary Edison Mission Energy, representing deployment of up to 112 units, or
280 MW of Clipper's 2.5 MW Liberty wind turbines. The mix of firm and
contingent orders includes the supply of 50 MW in 2006-07, which became a firm
order following later approval from the Minnesota Public Utilities Commission.
Contingent orders included in the agreement provide for options on the supply of
an additional 80 MW for delivery in 2007-2008, as well as the acquisition of up
to 150 MW of Clipper-held U.S. project development resources which will deploy
Clipper 2.5 MW Liberty wind turbines.
In December 2006, Clipper announced the exercise of the Edison option for the
supply of 80 MW of wind turbines that was previously announced as a contingent
order in July. Including this December announcement, Clipper will supply a
total of 130 MW, or 52 Liberty 2.5 MW wind turbines, to Edison Mission Group for
delivery in 2007 and 2008.
FPL Energy
In October, Clipper announced that it had entered into an agreement with FPL
Energy, a subsidiary of FPL Group, for the purchase of Clipper's 100 MW Endeavor
Wind Project, including the supply of 100 MW (40 units) of Clipper-manufactured
2.5 MW Liberty wind turbines for the project. Ground was broken on the Endeavor
project in September 2006, with Clipper responsible for turn-key construction.
Project completion is expected in Summer 2007.
The agreement also includes options on an additional 950 MW of Clipper units
through 2010, including up to 200 MW for delivery in 2007, and up to 250 MW for
delivery in each of the following three years through 2010.
The FPL Energy turbine purchase option for delivery in 2007 was not exercised.
A notice to proceed has been issued by FPL Energy in March 2007 exercising a
portion of its 2008 options. The remaining turbine purchase options for delivery
in 2008 (about 147 MW), as well as options for deliveries in subsequent years
through 2010 remain in place.
Manufacturing and Assembly
Clipper's turbine production was initiated in 2006, with the completion of the
Group's first eight Liberty 2.5 MW turbines in December 2006 for delivery to the
Steel Winds project in New York.
Clipper assembles machine base, nacelle and hub assemblies at its facility in
Cedar Rapids, Iowa. Clipper Windpower also assembles gearboxes in Cedar Rapids
following a decision in mid-2006 to bring assembly in-house in order to assure
high quality production. Components used in these key assemblies are fabricated
to Clipper design specifications by outside suppliers. Floor space at the Cedar
Rapids plant was increased from approximately 54,000 square feet at the end of
2005 to over 215,000 square feet by year-end 2006, with the capacity to assemble
over 400 turbines per year based on three-shifts per day. Liberty towers and
blade sets, also built to Clipper specifications by outside vendors, are
transported directly to the wind project sites.
Turbine component procurement ramped up considerably in 2006. Approximately
$159 million in non-cancellable Clipper financial commitments were outstanding
at the end of 2006, including commitments pursuant to long-term supplier
contracts. Most of these commitments were for turbine components needed to
support Clipper's growing book of sales orders. The number and breadth of
component suppliers was expanded in 2006. The global supply chain includes key
third-party manufacturers located in Europe, Asia, North and South America.
Quality control is a key focus for Clipper as production ramps up. In late
2006, an issue was detected relating to machining tolerances in the gearbox
housing of the first gearboxes. As a result, Clipper introduced an additional
measurement process during the machining at outside vendors to ensure gearbox
tolerances were met. The additional measurement process was successfully
implemented and the issue resolved. This commitment to producing a quality
product did result in a delay in the first phase of the deliveries to the
Endeavor project (40 turbines) from late 2006 to early 2007.
Staffing in the manufacturing, procurement and quality assurance areas grew
significantly in 2006, with over 160 employees located at the Cedar Rapids plant
by year-end. Recognising the importance of quality throughout the supply chain,
there were 28 quality assurance-related positions at the end of 2006, including
engineers located in Mexico and Brazil at the sites of key suppliers.
Technology
The first commercial prototype of the C-93 model of the Liberty turbine was
erected in Medicine Bow, Wyoming and began selling power to the Platte River
Power Authority in April 2005. The turbine has performed well and served as a
rigorous test facility for continuous engineering enhancements.
One of the objectives of the prototype turbine testing program was blade
optimisation, which resulted in the strategic decision to broaden the product
line and proceed with the development of a 96 meter rotor (vs. the 93 meter test
rotor), a step which required new GL certification for the turbine. In March
2006, Clipper received GL design certification for the 89 and 96 meter rotor
sizes, in addition to the 93 meter baseline machine. GL certification of a 100
meter rotor is expected in 2007, which will provide a common platform Liberty
turbine for all classes of wind.
In 2006, Clipper continued to strengthen its intellectual property portfolio,
adding four new U.S. patents, bringing the total to eleven. A number of
additional patents are pending or provisional. Key patents added in 2006
include the following:
* In May, a patent was issued for Variable Speed Wind Turbine
Technology, an advanced method for achieving variable speed operation that
contributes to the superior performance of the Liberty turbines.
* A Distributed Drive Train patent was issued in July, adding to the
patent framework of the distributed drive-train technology that Clipper has
developed to achieve lower cost and high reliability.
* The Distributed Static VAR Compensation patent was issued in August,
complementing the Variable Speed patent method of achieving voltage stability
and power factor correction needed for large wind farm deployments.
Wind Resource Portfolio
The wind resource portfolio played an important role in securing turbine sale
agreements in 2006. Examples include the BP strategic turbine supply and joint
development agreement announced in July, the Edison sale and development
agreement also announced in July, and the agreement with FPL Energy announced in
October.
Clipper Windpower continued active engagement in development activities in 2006,
with a broad, diversified portfolio of projects located throughout North America
ranging from early stage through to construction phase. Clipper's net ownership
share of its wind resource portfolio totaled over 6,000 MW at year-end 2006;
this total includes over 1,800 MW of wind project development potential added to
its portfolio during the 2006 year and the sales commitment of 1,300 MW of
project development assets.
Share Placing
In September, Clipper announced the successful placing of 9.5 million new shares
at a price of 480 pence per share, raising gross proceeds of #45.6 million (US
$85.0 million). The new shares placed represented just under 10 per cent of
Clipper's ordinary share capital immediately prior to the placing.
The proceeds from the share placing are being used to build out the 100 MW (40
turbine) Endeavor project in Iowa on a turnkey basis for subsequent sale upon
project completion. Subsequent to the share placing, an agreement was signed
with FPL Energy for the sale of the Endeavor project, with Clipper retaining
responsibility for construction, turbine installation and commissioning. Once
the Endeavor project is completed and sold, the proceeds will be redeployed to
strengthen Clipper's ability to meet the manufacturing requirements of the
Group's book of business through 2011. These initiatives include potential
acquisitions in the supply chain, a second assembly plant, and further expansion
of Clipper's development portfolio. Clipper will also invest to strengthen its
technology, product development and research and development capability for both
the onshore and offshore markets.
Human Resources
The Group's employee base and overall management capability was substantially
strengthened in all areas, with total headcount increasing to over 300 at
year-end 2006 compared to 85 at the end of 2005.
In addition to manufacturing, significant increases in experienced managerial,
professional and technical talent occurred in other areas as well. A commercial
sales function was established in the first quarter of 2006 and the fleet
services team ramped up to support turbine installation, commissioning and
ongoing operations and maintenance activities. Both of these areas are staffed
with experienced wind industry professionals. The product engineering and
project development teams increased staffing in 2006 by a combined total of 21
employees, and administrative support functions such as finance were also
strengthened.
Financial Review
Turnover for the year ended 31 December 2006 was $7,263,647, which reflects the
sale of wind project development rights and services. This compares to
$2,725,678 for the previous year, comprised primarily of grant revenue. No
sales of wind turbines were recorded in 2006 or 2005. The Group did record a
profit on sale of subsidiary undertakings in the year totalling $19,526,743 in
transactions that also included turbine supply agreements for Clipper 2.5 MW
Liberty turbines.
The loss on ordinary activities before taxation for the year ended 31 December
2006 totalled $20,113,851 versus a loss of $20,866,298 in the previous year.
The loss on ordinary activities after taxation for the year ended 31 December
2006 was $20,879,563, versus a loss of $20,555,917 in the previous year. The
2006 results reflect the ramp-up in activities to support the production and
delivery of wind turbines that commenced in December 2006.
Cost of sales includes all costs associated with engineering, manufacturing,
project development and service activities. Cost of sales for the year ended 31
December 2006 was $32,915,074, compared with $14,076,197 in 2005. The
$18,838,877 increase was mainly due to unabsorbed manufacturing overhead
associated with the commencement of production of wind turbines, plus higher
project and product development expenses compared to 2005.
Administrative expenses for the year ended 31 December 2006 totalled
$19,716,692, compared with $8,470,124 in the previous year. A significant
amount of the $11,246,568 increase was due to higher employee-related costs,
resulting from the strengthening of Clipper's commercial, administrative and
management functions in support of 2006 and future business growth.
Net finance income totalled $5,998,481 for the year ended 31 December 2006, as
compared to net finance charges of $928,502 in the previous year. The
$6,926,983 increase was mainly due to higher levels of cash at bank and in hand,
which totalled $222,548,077 as of 31 December 2006 compared to $104,040,713 at
the previous year-end.
Stock levels totalled $124,742,933 at year-end 2006, compared to $6,549,644 the
previous year. The $118,193,289 increase was primarily due to the build-up of
components for future turbine sales, in addition to construction costs for the
Endeavor project in Iowa.
Amounts due from debtors within one year totalled $47,958,453 as of 31 December
2006, compared to $4,069,397 at the end of 2005. The $43,889,056 increase was
mainly due to prepayments to turbine component suppliers.
Amounts payable to creditors falling due within one year totalled $204,296,245
at 31 December 2006, compared to $8,134,257 as of the previous year-end.
Amounts payable to creditors falling due after more than one year totalled
$22,537,495 at year-end 2006, versus $421,155 in the previous year. The combined
increase of $218,278,328 was largely comprised of advance turbine sale deposits
received from customers, in addition to higher trade creditor balances resulting
from increased stock levels.
The share premium account balance as of 31 December 2006 was $187,512,354,
compared to $104,107,672 at the prior year-end. The $83,404,682 increase was
mainly due to the share placing in September 2006, in addition to proceeds
received from the exercise of share options.
James B Dehlsen Charles H Williams
Chief Operating Officer Chief Financial Officer
Consolidated profit and loss account
For the year ended 31 December 2006
2006 2005
US$ US$
(Restated)
Turnover 7,263,647 2,725,678
Cost of sales (32,915,074) (14,076,197)
______________ _____________
Gross loss (25,651,427) (11,350,519)
Administrative expenses (19,716,692) (8,470,124)
Other operating (expense)/income (67,203) 37,318
______________ _____________
Operating loss (45,435,322) (19,783,325)
Profit on sale of subsidiary undertakings 19,526,743 -
Losses from joint ventures (203,753) (154,471)
______________ _____________
Loss on ordinary activities before interest and tax (26,112,333) (19,937,796)
Finance income/(charges), net 5,998,481 (928,502)
______________ ______________
Loss on ordinary activities before taxation (20,113,851) (20,866,298)
Tax (charge)/credit on loss on ordinary activities (765,712) 310,381
______________ ______________
Loss on ordinary activities after taxation (20,879,563) (20,555,917)
______________ ______________
Loss per share - basic and diluted (21.2c) (29.0c)
______________ ______________
Consolidated balance sheet
As at 31 December 2006
2006 2005
US$ US$
Fixed assets (Restated)
Intangible assets 36,697 48,301
Tangible assets 28,117,266 15,521,725
Investments 1,615,745 -
_____________ ____________
29,769,708 15,570,026
_____________ ____________
Current assets
Stock 124,742,933 6,549,644
Debtors: amounts falling due within one year 47,958,453 4,069,397
Cash at bank and in hand 222,548,077 104,040,713
_____________ ____________
395,249,463 114,659,754
_____________ _____________
Creditors: amounts falling due within one year (204,296,245) (8,134,257)
_____________ _____________
Net current assets 190,953,218 106,525,497
_____________ _____________
Total assets less current liabilities 220,722,926 122,095,523
Creditors: amounts falling due after more than one year (22,537,495) (421,155)
Share of joint venture assets / (liabilities)
Share of gross assets 218,848 85,904
Share of gross liabilities (528,878) (377,942)
_____________ _____________
(310,030) (292,038)
__________ _________
Net assets 197,875,401 121,382,330
_____________ _____________
Capital and reserves
Share capital 19,526,544 17,443,218
Share premium account 187,512,354 104,107,672
Merger reserve 35,106,952 35,106,952
Capital redemption reserve 91,140 91,140
Other reserves 13,323,497 2,021,306
Profit and loss account (57,685,086) (37,387,958)
_____________ _____________
Equity shareholders' funds 197,875,401 121,382,330
_____________ _____________
Consolidated cash flow statement
For the year ended 31 December 2006
2006 2005
US$ US$
Net cash inflow/(outflow) from operating activities 27,995,906 (20,626,529)
Returns on investments and servicing of finance
Interest received and similar income 5,591,301 1,412,038
Interest paid and similar charges (156,011) (2,340,540)
_____________ ____________
5,435,290 (928,502)
Taxation paid (1,047,609) -
_____________ ____________
Acquisitions and disposals
Investment in associated undertaking (11,065,657) -
Sale of associated undertakings 19,141,009 -
_____________ ____________
8,075,352 -
Capital expenditure and financial investments
Payments to acquire tangible fixed assets (16,942,886) (12,655,264)
Payments to acquire intangible fixed assets (2,380) (6,170)
_____________ ____________
(16,945,266) (12,661,434)
_____________ _____________
Cash inflow/(outflow) before financing 23,513,673 (34,216,465)
Financing
Issue of ordinary and other share capital
- proceeds from issues prior to initial public offering - 24,613,042
("IPO")
- proceeds from issues on or after IPO 85,047,559 118,624,986
- proceeds from issue of warrant and stock options 11,714,408 -
Costs associated with issue of share capital and warrant (1,768,276) (8,171,198)
_____________ _____________
94,993,691 135,066,830
_____________ _____________
Increase in cash in the year 118,507,364 100,850,365
_____________ _____________
Consolidated statement of total recognised gains and losses
For the year ended 31 December 2006
2006 2005
US$ US$
(Restated)
Loss for the financial year (20,879,563) (20,555,917)
Currency translation difference on foreign currency net (19,569) (13,310)
investments
_____________ ____________
Total recognised gains and losses relating to the year (20,899,132) (20,569,227)
____________
Prior year adjustment (1,992,789)
_____________
Total gains and losses recognised since last annual report (22,891,921)
and financial statements
_____________
Notes to Financial Statements
1. Announcement based on audited accounts
The financial information set-out in the announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2006, but is
derived from those accounts. Statutory accounts for 2005 have been delivered to
the Registrar of Companies and those for 2006 will be delivered following the
Company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under s.237(2) or
(3) Companies Act 1985.
The information presented herein has been prepared on the basis of current UK
generally accepted accounting practice (UK GAAP) and on the basis of the Group's
accounting policies. The accounting policies are set out in the Group's
financial statements for the year ended 31 December 2006 which will be available
to shareholders shortly.
2. Loss per share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Basic Diluted
2006 2005 2006 2005
$ $ $ $
Loss for the financial year (20,879,563) (20,555,917) (20,879,563) (20,555,917)
______________ ____________ _____________ _____________
2006 2005
Number Number
of of
shares shares
Weighted average number of shares:
For basic earnings per share 98,640,635 70,997,108
Exercise of share options contingent and outstanding and warrants 15,263,727 5,848,132
______________ _____________
Shares for dilution calculation 113,904,362 76,845,240
______________ ______________
2006 2005
Loss per share
Basic (21.2c) (29.0c)
As diluted (18.3c) (26.7c)
______________ ______________
As the effect of the dilution calculation is to reduce the loss per share in
2006 and 2005, no diluted earnings per share has been disclosed on the face of
the consolidated profit and loss account.
3. Tax charge/ (credit) on loss on ordinary activities
a) Analysis of charge/(credit) in the period
The tax charge/(credit) is comprised of:
2005
2006
$ $
U.S. Federal taxes payable 389,283 -
U.S. State taxes payable/(recoverable) 68,937 (310,381)
UK taxes payable 307,492 -
Deferred tax - -
____________ _____________
Total tax charge/(credit) on loss on ordinary activities 765,712 (310,381)
____________ _____________
b) Factors affecting tax charge for the period
The differences between the total current tax shown above and the amount
calculated by applying the standard combined rate of U.S. state and federal
corporation tax (being the environment in which the Group primarily operates) to
the loss before taxation is as follows:
2006 2005
$ $
(Restated)
Loss on ordinary activities before taxation (20,113,851) (20,866,298)
____________ _____________
Tax credit on Group loss on ordinary activities at 42% (8,447,818) (8,763,845)
Effects of
Permanent differences (504,221) 79,686
Timing differences arising 8,952,039 8,684,159
US taxes on imputed interest for revenue deferred for tax purposes 458,220 -
UK taxes on items recorded in equity 307,492 -
Other income taxes recoverable - (310,381)
____________ _____________
Group current tax charge (credit) for the period 765,712 (310,381)
____________ _____________
c) Factors that may affect future tax charges
In 2006, the Group entered into an agreement that resulted in an issuance of
warrants. UK tax is payable on the proceeds, however, if the warrants are
converted to ordinary shares, the tax payable may be refunded.
A net deferred tax asset (including tax losses and other attributes) amounting
to $22.0 million (2005: $13.6 million) has not been recognised because there is
insufficient evidence of taxable profits in the future which would enable the
asset to be recovered.
4. Reconciliation of movements in Group shareholders' funds
2006
2005
$ $
Restated
Loss for the financial year (20,879,563) (20,555,917)
Other recognised gains and losses relating to the year (net) (19,569) (13,310)
________________ ______________
(20,899,132) (20,569,227)
Par value of new shares issued 2,083,326 6,329,923
Share premium arising 84,678,642 112,154,968
Costs of shares issued (1,273,960) (8,047,296)
(8,047,296)
Share options and warrants issued 12,398,511 1,482,701
Costs of warrants issued (494,316) -
Preference shares issued - 91,140
Merger reserve arising - 16,812,388
________________ ______________
Net addition to shareholders' funds 76,493,071 108,254,597
Opening shareholders' funds as previously stated 121,382,330 13,127,733
________________ ______________
Closing shareholders' funds 197,875,401 121,382,330
________________ ______________
On 28 September 2006, The Company placed 9,504,852 new ordinary shares of 10
pence each at a price of $9.08 (480 pence) per share raising gross proceeds of
approximately $85.0 million (# 45.6 million). The shares were admitted on the
Alternative Investment Market of the London Stock Exchange Plc on 4 October
2006, were fully paid and rank pari passu in all respects with Clipper's
existing ordinary shares. The offering costs associated with this secondary
offering were $1,273,960.
In the year, the Group signed a warrant agreement with BP that gives BP the
option to purchase a fixed number of the Group's ordinary shares over a 5 year
period to July 2011. At an exercise price of #3.77, BP may purchase up to
9,596,681 ordinary shares of the Group if all contract conditions are met. The
warrant provided BP with the right to purchase up to 10% of the outstanding
share capital of the Group at the date of the transaction and in certain
circumstances, the number of shares can be increased dependent on the shares
issued by the Group up to the date the warrant lapses.
5. Share based payments
The Group has applied the requirements of FRS20 'Share-based payments' for the
first time in 2006. In accordance with the transitional provisions, FRS20 has
been applied to all grants of equity instruments after 7 November 2002 that were
unvested at 1 January 2005 and the 2005 results have been restated accordingly.
The Group now recognises a charge to the income statement in respect of its
share-based remuneration scheme. The impact of the change in accounting policy,
as well as the assumptions used in the calculation, is summarised below.
The Group recognised total expenses of $2,398,511 for the year ended 31 December
2006, $1,454,184 for the year ended 31 December 2005 and $538,605 for the prior
periods.
The estimate of the fair value of the services is measured based upon the
Black-Scholes model. The contractual life of the option (typically 10 years),
the expectations of early exercise and the expected forfeiture rate are
incorporated into the model. Expected volatility is based upon historic
volatility of 45.7% from the date of Clipper's listing on the AIM market. The
assumptions are as follows:
2006 2005
_________________ ________________
Weighted average share price $8.14 $3.75
Weighted average exercise price $6.72 $1.27
Expected volatility 45.3% 45.7%
Expected life (years) 6.0 4.8
Risk-free rate 4.66% 4.62%
Expected dividends - -
Forfeiture rate 6.0% 0%
___________________ ________________
The effects of the change in policy are summarised below:
2006 2005
$ $
Profit and loss account
Staff costs 2,398,511 1,454,184
Increase/(decrease) in profit (2,398,511) (1,454,184)
______________________________ ______________________________
Balance sheet
Share premium 2,398,511 1,992,789
Increase/(decrease) in net assets (2,398,511) (1,992,789)
______________________________ ______________________________
6. Reconciliation of operating profit to operating cash flows
2006 2005
$ $
(Restated)
Operating loss (45,435,322) (19,783,325)
Depreciation 5,495,744 1,806,568
Amortisation and impairment charges 13,984 152,799
Increase in debtors (32,958,357) (903,968)
Increase in stock (118,193,289) (6,549,644)
Increase in creditors 216,694,205 3,196,857
Other 2,378,941 1,454,184
_______________ ______________
Net cash inflow/(outflow) from operating activities 27,995,906 (20,626,529)
________________ ______________
7. Contingent liability
In 2004, a former employee initiated litigation alleging various monetary claims
related to breach of an employment agreement and entitlement to Clipper
Windpower Plc ordinary share options with a purchase price of $0.25 per share.
The number of shares at issue has been determined to be 875,000. Subsequent to
year end, a preliminary finding by the court determined that the options granted
to the former employee had not expired as a result of his contract termination
and he, therefore, may have the right to exercise the options for a period of
five years. The grant price of the share options is $0.25 and the market price
at 31 December 2006 was $11.63 per share. Although the full finding has not yet
been received, the Group has been advised that it has grounds upon which to
appeal and a reasonable prospect of a favourable outcome to such an appeal.
Accordingly, no provision has been made in respect of this contingent liability.
The Group has sold part of its investments in five subsidiary undertakings
during the period. It has retained an interest, either as a joint venture
partner or investor in each of these wind farm development projects. Each
project was sold on the basis that on completion, it would achieve a
contractually-agreed capacity. If one of the Group's projects has a lower
capacity on completion than that anticipated at commencement, or falls short of
other contractually-agreed commitments, the Group is required to transfer a new
project in its place or, failing that, the Group is responsible for reimbursing
its joint venture partner for any amounts paid plus interest at 2% up to a
maximum of $4 million. The Directors consider it is remote that any payments
will arise under this arrangement and accordingly have recognised revenue based
on their view of the probable outcome of this transaction.
The Group has signed turbine supply agreements with customers that require the
Group to make payments to the buyers in the event the Group is unable to meet
certain conditions of the contracts relating to delivery, commissioning and
assembly dates in the ordinary course of business. The specific terms vary by
contract but, in general, the maximum potential future payments under the
guarantees are subject to daily and overall project limits.
Annual General Meeting
NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of CLIPPER WINDPOWER PLC
(the "Company") will be held at the offices of Lehman Brothers at 25 Bank
Street, 30th Floor, London E14 5LE on 30 May 2007 at 10 am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JLMTTMMMTMPR
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