TIDMHYR
RNS Number : 5321K
HydroDec Group plc
31 July 2013
31 July 2013
Hydrodec Group plc
("Hydrodec", the "Company" or the "Group")
Unaudited Interim Results
Hydrodec Group plc (AIM: HYR), the cleantech industrial oil
re-refining group, today announces unaudited results for the six
months ended 30 June 2013.
Highlights
-- Completion of transformational strategic partnership with
G&S Group and commencement of major expansion plans in US
-- Record SUPERFINE(TM) sales volumes of 12.5 million litres, up
7% on last year (H1 2012: 11.7 million litres)
-- Revenues increased to US$13.94 million (H1 2012: US$13.87
million) with higher sales volumes offsetting lower average sales
prices, which fell less than the benchmark ICIS Pale 60 pricing
index
-- Gross profit margin improved to 25% (H1 2012: 23%); unit
sales margin increased to US$0.29 per litre (H1 2012: US$0.28 per
litre). Improvements reflect tight controls on feedstock and other
direct costs, offsetting the fall in sales prices
-- Underlying operating EBITDA* significantly improved at US$0.2
million loss (H1 2012: US$1.1 million loss); improved period end
cash balance at US$4.5 million (H1 2012: US$3.4 million)
-- Utilisation of productive capacity steady at 72% (H1 2012:
72%), with an expectation of improvement in H2
-- Strong growth in re-refining of polychlorinated biphenyl
("PCB") contaminated oil positively impacting margins; PCB
feedstock increased to 11% of total volumes processed (H1 2012:
6%)
-- Current trading remains encouraging amid early signs of
improved market pricing. On track for further growth in sales
volumes, revenue and margins in second half in line with market
expectations for full year
Summary of Results
6 months 6 months 12 months
to to to
USD'000 30-Jun-13 30-Jun-12 31-Dec-12
Revenue 13,935 13,865 26,112
Gross profit 3,517 3,225 5,367
Gross profit % 25% 23% 21%
Operating loss* (1,026) (1,863) (4,510)
Operating EBITDA* (159) (1,102) (3,034)
-------------------------------- ------------- ------------- -------------
Operating cashflow pre
growth costs** (221) (651) (2,549)
Cashflow from operating
activities (1,865) (1,624) (4,706)
Cash balance 4,523 3,378 1,093
Loss after tax (7,013) (6,338) (14,196)
Loss per share - basic/diluted (1.67) cents (1.56) cents (3.48) cents
-------------
*Before growth costs(**) , intangible asset amortisation and
share based payment costs
**"growth costs" includes expenditure on market expansion and
new product development
Commenting on the results, Ian Smale, Chief Executive of
Hydrodec, said: "The first half has been very encouraging as
volumes continued to increase amid solid demand for our re-refined
products, which enabled the Company to offset some weakness in
market prices. We also significantly improved performance at an
underlying operating EBITDA level and made excellent progress in
bedding down our strategic partnership ahead of a major expansion
of the Group's activities in the US. We are on track to achieve our
eighth year of top-line growth and focused on moving to a positive
overall EBITDA run-rate by the end of the year for the first time
in the Company's history."
For further information please contact:
Hydrodec Group plc 020 7907 9220
Ian Smale, Chief Executive
Chris Ellis, Chief Financial Officer
Mike Preen, Head of Corporate and
Legal Affairs
Peel Hunt LLP (Nominated adviser
and broker) 020 7418 8900
Richard Kauffer
Daniel Harris
Luther Pendragon (PR adviser to Hydrodec) 020 7618 9100
Neil Thapar, Alexis Gore, Sarah Davis
Notes to Editors:
Hydrodec's technology is a proven, highly efficient, oil
re-refining and chemical process initially targeted at the
multi-billion US$ market for transformer oil used by the world's
electricity industry. Spent oil is currently processed at two
commercial plants with distinct competitive advantage delivered
through very high recoveries (near 100%), producing 'as new' high
quality oils at competitive cost and without environmentally
harmful emissions. The process also completely eliminates PCBs, a
toxic additive banned under international regulations.
Hydrodec's plants are located at Canton, Ohio, US and Young, New
South Wales, Australia and its shares are listed on the AIM Market
of the London Stock Exchange. For further information, please visit
www.hydrodec.com
Chief Executive's Report
The first six months of the year have seen further improvement
in the key performance indicators in our existing transformer oil
re-refining business. Furthermore, the completion of our strategic
partnership in the US in April 2013 has given the Group a major
platform for growth in the US. It is a transformational deal for
the business and much headway has already been made for an
expansion in our US activities from next year.
Trading in the first half was resilient against lower market
pricing. Sales volumes, margins and revenues are up on the same
period last year, which was itself a strong comparative period, and
significantly up on the second half of last year. Underlying
operating EBITDA has improved markedly through increased gross
profit contribution and reduced costs and we continue to drive the
business towards delivering a positive overall EBITDA run-rate by
the end of the year.
The management team has also taken the first steps to diversify
beyond transformer oils. The successful proof of concept in
extending the technology into re-refining of industrial and motor
oils opens up materially larger global markets for the Company.
Testing continues and details of a pilot phase will be announced
before the end of the year.
The US transaction has demonstrated the execution of a key part
of the Company's strategy, which is founded entirely on optimising
most value for the business and our shareholders. As a general
principle we will own and operate our unique, clean-technology at
least once to ensure its competitive position and our stewardship
of it. Beyond that, our participation will be based purely on
commercial or strategic logic, and through licensing as a means of
low-cost access to growth and returns. This provides a
significantly more flexible approach to new markets, as well as a
reduced burden on shareholder funding in the longer term.
Operating and financial review
The first half of 2013 has demonstrated continued improvement in
financial and operating performance. The comparative period in 2012
was itself a record on key performance indicators and to outperform
against a background of softer pricing in the industry is a
significant achievement.
Sales volumes of our premium quality, environmentally friendly
SUPERFINE(TM) transformer oil and SUPERFINE(TM) base oil advanced 7
per cent to a half-year record of 12.5 million litres (H1 2012:
11.7 million litres).
Revenues increased 0.5 per cent to US$13.94 million (H1 2012:
US$13.87 million), despite lower average sales prices reflecting
movement in the benchmark ICIS Pale 60 pricing index. While the
average for this industry benchmark is down 14 per cent for the
period versus the first six months of last year, our average sales
prices have further narrowed the discount to this index by only
falling 8 per cent. The benchmark index has risen again recently
and there appears to be further upward pressure. We would expect
that our pricing would follow these trends.
Unit sales margins widened to US$0.29 per litre (H1 2012:
US$0.28 per litre) and are significantly up on those for 2012 as a
whole (US$0.24 per litre). Improvements reflect tight controls on
feedstock and other direct costs, offsetting the fall in sales
prices.
Overall utilisation of existing plant capacity in the period
remained steady at 72 per cent (H1 2012: 72 per cent). We would
expect this to increase further through the rest of the year as the
impact of the access to feedstock supplies through the strategic
partnership in the US takes effect.
PCB contaminated oil as a proportion of total feedstock
increased to 11 per cent (H1 2012: 6 per cent), enhanced by the US
Environmental Protection Agency approval to treat PCB oil. This has
positively impacted margins as PCB feedstock is acquired at lower,
nil or negative cost.
Both plants continue to generate a cash surplus and are
contributing to the central overheads of the Group.
Performance improvements generally have significantly improved
the underlying operating EBITDA, before growth costs and share
based payment costs, to a US$0.2 million loss (H1 2012: US$1.1
million loss). Investment in growth costs increased in the period
to US$1.7 million from US$1.0 million (H1 2012), reflecting the
strategic decision to invest for future growth and the costs
incurred to close the US transaction in the first half of the
year.
The overall loss for the period widened to US$7.0 million (H1
2012: US$6.3 million) after the impact of significant non-cash
items including depreciation, amortisation (including the increased
non-cash interest charge from the unsecured loan note) and share
based payment costs is reflected.
The Group ended the period with an improved cash balance of
US$4.5 million (H1 2012: US$3.4 million).
Platforms for growth
US expansion
The early days of the US strategic partnership with G&S
announced earlier this year are exceeding my expectations with both
parties committed to enhancing the business today as well as
expediting its potential to grow. Our partner's market access and
expertise is enhancing Hydrodec's position in the US, as well as
allowing us to put forward a shared offer with G&S to utilities
in terms of both hardware and oil treatment. The broadened
feedstock supply from G&S has assisted in reducing feedstock
cost as well as committing volumes for growing capacity.
We are already working on an expansion of Canton from four
trains (processing units) to six, deliverable by late summer 2014.
Work on engineering design, permitting and a contracting strategy
is well underway. We have clear line of sight to the commissioning
of a second US plant in early 2015 and at this stage it would seem
likely that a third plant will be required to fully access the US
transmission system; this is being assessed. Expansion at Canton
offers very attractive returns and will deliver a significant
improvement in EBITDA through leveraging the existing
infrastructure and cost base as well as providing an ongoing
royalty stream.
This transformational deal provides a clear fit with our
strategy, as well as a blueprint for further expansion of the
business. In simple terms, we have traded a proportion of our
current capacity for a secure source of feedstock and cash. The
commitment of feedstock fundamentally de-risks expansion, with the
proceeds from the transaction (including the earn-out) funding
Hydrodec's share of the capital expenditure required to grow the US
business. The recurring royalty based on turnover is also a key
step forward for the Company and the first stage in genuinely
remunerating our technology, as well as funding its development in
due course.
Technology, new applications and products
The second key element of our strategy is to extend the
technology into the re-refining of general used oils. We are now
engaged in a broad testing programme defining the limits of the
announced proof of concept and building the knowledge required to
design a pilot phase. We would also expect to start protecting the
evolving process and chemical reaction technology through patent
applications later this year.
While risks clearly remain, this project is fundamentally
de-risked by being an extension of the existing technology. We are
expanding the scope and potential of the technology, not starting
afresh, which I believe is very important. We will investigate
options to fast-track components of the process as we progress, but
a full implementation and roll-out plan is currently being
developed for commissioning in late 2015. Partnership and/or access
to feedstock will be critical and we are already reviewing a number
of potential options in this space.
New markets and further options for growth
We have a clean technology offer and business model that is
established and proven and I am confident that the transformer oil
market has global potential. There are growth options in Europe and
elsewhere through low risk licensing and/or higher risk, but higher
return, partnering or acquisition. Australia also offers options to
build scale and reduce our reliance on the product stewardship for
oil (PSO) subsidy.
We have reviewed our approach to the challenging, but
potentially very large, Japanese market and have decided to pursue
a new route to building a position in the region. As announced
earlier this year, we have terminated the strategic alliance with
Kobelco-Eco, instead focusing on a number of potential licensing
opportunities as well as reducing cost. Japan remains the most
favourable regulatory environment for the Hydrodec technology,
which remains the only certified non-destructive technology for
low-level PCB contaminated waste. I believe there is a substantial
opportunity in Japan, but one we will have to remain patient to
access.
Beyond transformer oil, there is a major opportunity in general
lubricant re-refining. We are confident that we can develop robust
options for growth at a substantially enlarged scale based on our
already proven technology platform. Although there is a lot of work
to do, we have identified potential roll-out options in Australia
and the UK which offer attractive returns.
Current trading and 2013 outlook
I am encouraged by the strong first half performance and there
remains scope for a continuing improvement in overall operating
results and cash generation as the impact of the US strategic
partnership comes through. Current trading remains positive and
market demand and pricing for transformer oil in the US appears to
be strengthening.
We are on track to achieve further growth in sales volumes and
revenues, together with a further improvement in gross margins, in
the second half of 2013, consistent with expectations. In addition
we remain focused on delivering a positive EBITDA run-rate by the
year-end.
Active consideration is being given to the Company's debt
position with a number of options being explored for managing the
balance sheet. This is a priority for the Board in 2013.
Looking further ahead, the US transaction is a clear blueprint
for how I see us developing the Company; value-chain integration
and especially security of feedstock, enhanced competitive
positioning, partners with deep capability and efficient capital
and funding structures. The management team continues to explore
new licensing, partnership and acquisition opportunities,
particularly in Europe.
With solid progress being made on all fronts, the management and
Board look to the future with increasing optimism.
Ian Smale
Chief Executive
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months to Year to
to 30 June 2012 31 December
30 June 2013 2012
(unaudited) (unaudited) (audited)
Note USD'000 USD'000 USD'000
Revenue 2 13,935 13,865 26,112
Cost of sales (10,418) (10,640) (20,745)
Gross profit 3,517 3,225 5,367
Operating costs:
Employee benefit expense (3,372) (3,493) (7,083)
Administrative expense (3,686) (4,062) (7,244)
Depreciation (302) (31) (182)
Foreign exchange
(loss)/gain (192) 34 (35)
(7,552) (7,552) (14,544)
-------------- -------------------------------- --------------------------------
Operating loss (4,035) (4,327) (9,177)
-------------- -------------------------------- --------------------------------
Analysed as:
Underlying operating
loss (1,026) (1,763) (4,343)
Growth costs 2 (1,667) (973) (2,206)
Amortisation of intangible
assets (1,052) (1,040) (2,091)
Share based payments
costs 3 (290) (551) (537)
Operating loss (4,035) (4,327) (9,177)
--------------------------- ----- -------------- -------------------------------- --------------------------------
Loss on sale of asset (1) (8) (32)
Finance income 5 10 3
Finance costs 4 (3,052) (2,307) (5,343)
Loss on ordinary
activities
before taxation (7,083) (6,632) (14,549)
Income tax 5 70 294 353
Loss for the period (7,013) (6,338) (14,196)
-------------- -------------------------------- --------------------------------
Other comprehensive income
Exchange differences
on translation of foreign
operations (989) 218 594
Total comprehensive loss
for the period (8,002) (6,120) (13,602)
-------------- -------------------------------- --------------------------------
Loss for the period
attributable
to:
Non-controlling interests (46) - -
Owners of the parent (6,967) (6,338) (14,196)
Total loss for the period (7,013) (6,338) (14,196)
-------------- -------------------------------- --------------------------------
Other comprehensive income
for the period
attributable
to:
Non-controlling interests (46) - -
Owners of the parent (7,956) (6,120) (13,602)
Total comprehensive loss
for the period (8,002) (6,120) (13,602)
-------------- -------------------------------- --------------------------------
Loss per share - 6 (1.67) cents (1.56) cents (3.48) cents
basic/diluted
Non-GAAP measure Note 6 months 6 months to Year to
to 30 June 2012 31 December
30 June 2013 2012
USD'000 USD'000 USD'000
Underlying operating
EBITDA 2 (159) (1,102) (3,034)
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
As at As at As at
30 June 2013 30 June 2012 31 December
2012
(unaudited) (unaudited) (audited)
Note USD'000 USD'000 USD'000
Non-current assets
Property, plant and equipment 21,258 23,144 22,959
Other intangible assets 19,138 21,999 21,622
Other investments 105 104 111
40,501 45,247 44,692
-------------- -------------- -------------
Current assets
Trade and other receivables 7 4,213 2,695 2,080
Inventories 1,140 1,002 1,432
Cash and cash equivalents 4,669 3,378 1,635
10,022 7,075 5,147
Current liabilities
Borrowings - bank overdraft (146) - (542)
Trade and other payables 8 (4,371) (4,726) (4,557)
Provisions 9 (88) (70) (143)
(4,605) (4,796) (5,242)
-------------- -------------- -------------
Net current assets/(liabilities) 5,417 2,279 (95)
Non-current liabilities
Employee obligations (118) (130) (112)
Provisions 9 (312) (551) (356)
Borrowings 10 (22,489) (14,857) (16,979)
Deferred taxation (1,423) (1,669) (1,669)
(24,342) (17,207) (19,116)
-------------- -------------- -------------
Net assets 21,576 30,319 25,481
-------------- -------------- -------------
Equity attributable to
equity holders of the
parent
Called up share capital 11 3,659 3,644 3,870
Share premium account 68,502 67,818 72,446
Equity reserve 6,551 13,823 6,929
Merger reserve 45,356 46,347 47,967
Treasury reserve (40,951) (41,845) (43,308)
Employee benefit trust (1,216) (1,243) (1,286)
Foreign exchange reserve 4,510 5,622 4,906
Share option reserve 6,757 6,421 6,640
Profit and loss account (75,165) (70,268) (72,683)
Total equity 18,003 30,319 25,481
-------------- -------------- -------------
Non-controlling interests 3,573 - -
Total equity 21,576 30,319 25,481
-------------- -------------- -------------
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
EQUITY
Employee Foreign Share Profit Non
Share Share Equity Merger Treasury benefit exchange option and controlling
loss
capital premium reserve reserve reserve trust reserve reserve account interest Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January
2012 3,598 66,969 13,650 45,768 (41,322) (1,244) 5,815 5,803 (63,131) - 35,906
Exchange
differences 46 849 173 579 (523) 19 (1,136) (7) - - -
Share-based
payment - - - - - - - 551 - - 551
Issue of shares - - - - - (18) - - - - (18)
Transactions
with owners 46 849 173 579 (523) 1 (1,136) 544 - - 533
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
Exchange
differences - - - - - - 943 74 (799) - 218
Loss for the
period - - - - - - - - (6,338) - (6,338)
Total
comprehensive
income - - - - - - 943 74 (7,137) - (6,120)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
At 30 June
2012 3,644 67,818 13,823 46,347 (41,845) (1,243) 5,622 6,421 (70,268) - 30,319
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
Exchange
differences 127 2,370 483 1,620 (1,463) (43) (3,122) 28 - - -
Share-based
payment - - - - - - - 287 - - 287
Issue of shares 99 2,258 - - - - - - - - 2,357
Transfer - - (7,377) - - - - (301) 7,678 - -
Transactions
with owners 226 4,628 (6,894) 1,620 (1,463) (43) (3,122) 14 7,678 - 2,644
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
Exchange
differences - - - - - - 2,406 205 (2,235) - 376
Loss for the
period - - - - - - - - (7,858) - (7,858)
Total
comprehensive
income - - - - - - 2,406 205 (10,093) - (7,482)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
At 31 December
2012 3,870 72,446 6,929 47,967 (43,308) (1,286) 4,906 6,640 (72,683) - 25,481
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
Change in
exchange rates (211) (3,944) (378) (2,611) 2,357 70 4,717 - - - -
Share-based
payment - - - - - - - 478 - - 478
Sale of
non-controlling
interest (note
12) - - - - - - - - - 3,619 3,619
Transactions
with owners (211) (3,944) (378) (2,611) 2,357 70 4,717 478 - 3,619 4,097
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
Change in
exchange rates - - - - - - (5,113) (361) 4,485 - (989)
Loss for the
period - - - - - - - - (6,967) (46) (7,013)
Total
comprehensive
income - - - - - - (5,113) (361) (2,482) (46) (8,002)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
At 30 June
2013 3,659 68,502 6,551 45,356 (40,951) (1,216) 4,510 6,757 (75,165) 3,573 21,576
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ --------
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
6 months 6 months to Year to
to 30 June 30 June 2012 31 December
2013 2012
(unaudited) (unaudited) (audited)
USD'000 USD'000 USD'000
Loss before tax (7,083) (6,632) (14,549)
Adjustments for:
Net finance costs 3,047 2,297 5,340
Amortisation and depreciation 1,919 1,701 3,567
Gain on disposal of fixed assets - 8 32
Share based payment expense 290 551 537
Foreign exchange movement 437 232 140
Operating cash flows before working
capital movements (1,390) (1,843) (4,933)
Decrease/(increase) in inventories 292 (442) (872)
(Increase)/decrease in receivables (352) (200) 481
(Decrease)/increase in trade
and other payables (278) 941 826
Decrease in provisions (50) (100) (208)
Taxes paid (87) - -
Net cash outflow from operating
activities (1,865) (1,624) (4,706)
------------ -------------- -------------
Cash flows from investing activities
Purchase of property, plant and
equipment (122) (719) (1,151)
Proceeds from disposal of property,
plant and equipment - 15 15
Proceeds from sale of investment 1,733 - -
Interest received 5 - 3
Net cash inflow /(outflow) from
investing activities 1,616 (704) (1,133)
------------ -------------- -------------
Cash flows from financing activities
Proceeds from loans 4,583 - 4,039
Repayment of loans - - (1,777)
Interest paid (859) (988) (1,981)
Repayment of lease liabilities (45) (61) (104)
Net cash inflow/(outflow) from
financing 3,679 (1,049) 177
------------ -------------- -------------
Increase /(decrease) in cash
and cash equivalents 3,430 (3,377) (5,662)
------------ -------------- -------------
Movement in net cash
Cash 1,635 6,977 6,977
Bank overdraft (542) (222) (222)
Opening cash and cash equivalents 1,093 6,755 6,755
Increase /(decrease) in cash
and cash equivalents 3,430 (3,377) (5,662)
Closing cash and cash equivalents 4,523 3,378 1,093
------------ -------------- -------------
Reported in the Consolidated Statement
of Financial Position as:
Cash and cash equivalents 4,669 3,378 1,635
Borrowings - bank overdraft (146) - (542)
4,523 3,378 1,093
------------ -------------- -------------
NOTES TO THE UNAUDITED INTERIM REPORT
1. Basis of Preparation
Hydrodec Group plc is the Group's ultimate parent company. It is
incorporated and domiciled in England and Wales. The address of
Hydrodec Group plc's registered office is 50 Curzon St, London,
United Kingdom. Hydrodec Group plc's shares are listed on the
Alternative Investment Market of the London Stock Exchange.
The Group presents its financial statements in US dollars, as
the Group's business is influenced by pricing in international
commodity markets which are primarily dollar based.
These consolidated condensed interim financial statements have
been approved by the Board of Directors on 30 July 2013.
The interim consolidated financial statements for the six months
ended 30 June 2013, which are unaudited, do not constitute
statutory accounts within the meaning of Section 435 of the
Companies Act 2006. Accordingly, this condensed report is to be
read in conjunction with the Annual Report for the year ended 31
December 2012, which has been prepared in accordance with IFRS as
adopted by the European Union, and any public announcements made by
the Group during the interim reporting period.
The statutory accounts for the year ended 31 December 2012 have
been reported on by the Group's auditors, received an unqualified
audit report and have been filed with the registrar of companies at
Companies House. The unaudited condensed interim financial
statements for the six months ended 30 June 2013 have been drawn up
using accounting policies and presentation expected to be adopted
in the Group's full financial statements for the year ending 31
December 2013, which are not expected to be significantly different
to those set out in note 1 to the Group's audited financial
statements for the year ended 31 December 2012.
The financial statements have been prepared on the going concern
basis, which assumes that the Group will have sufficient funds to
continue in operational existence for the foreseeable future. The
Group's forecasts and projections, taking account of reasonably
possible changes in trading performance, show that the Group should
be able to operate within the level of its current available
working capital and working capital facilities for the next 12
months. Therefore the Directors consider the going concern basis
appropriate.
2. Revenue and operating loss
Revenue and assets for each period are wholly attributable to
the Group's sole activity of the treatment of used transformer oil
and the sale of SUPERFINETM oil, which are deemed to be continuing
activities.
2.1 geographic analysis
USA Australia Unallocated Total
Six months ended 30 June USD'000 USD'000 USD'000 USD'000
2013
Revenue 9,391 4,544 - 13,935
-------- ---------- ------------ --------
Non-current assets 13,417 15,147 11,937 40,501
-------- ---------- ------------ --------
USA Australia Unallocated Total
Six months ended 30 June USD'000 USD'000 USD'000 USD'000
2012
Revenue 9,685 4,180 - 13,865
-------- ---------- ------------ --------
Non-current assets 14,232 16,696 14,319 45,247
-------- ---------- ------------ --------
USA Australia Unallocated Total
Year ended 31 December USD'000 USD'000 USD'000 USD'000
2012
Revenue 18,372 7,740 - 26,112
-------- ---------- ------------ --------
Non-current assets 13,994 16,954 13,744 44,692
-------- ---------- ------------ --------
2.2 loss ON ORDINARY ACTIVITIES
The loss on ordinary activities before taxation is stated after
charging/(crediting) the following amounts:
6 months to 6 months to Year to
30 June 2013 30 June 2012 31 December
2012
USD'000 USD'000 USD'000
Grant income (1,308) (1,036) (1,986)
Cost of goods sold
- inventory expensed 6,257 6,945 11,443
- other direct costs 2,374 1,857 5,403
- employee benefit expense 1,222 1,207 2,602
- depreciation 565 630 1,294
Depreciation (160) (31) (182)
Impairment of assets no longer
in use (142) - -
2.3 underlying operating ebitda
6 months 6 months Year to
to to 31 December
30 June 2013 30 June 2012 2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Operating loss (4,035) (4,327) (9,177)
Growth costs 1,309 899 2,059
Transaction fees and onetime costs 358 74 147
Depreciation 867 661 1,476
Amortisation 1,052 1,040 2,091
Share based payment costs 290 551 537
Underlying operating EBITDA (159) (1,102) (2,867)
-------------- -------------- -------------
2.4 growth costs
The business continues to invest in long term strategic growth
initiatives focused on geographic expansion and research and
development. These costs are analysed as follows:
6 months 6 months Year to
to to 31 December
30 June 2013 30 June 2012 2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Market expansion 1,057 713 1,622
New product development 252 186 437
Transaction fees and onetime costs 358 74 147
Growth costs 1,667 973 2,206
-------------- -------------- -------------
6 months 6 months Year to
to to 31 December
30 June 2013 30 June 2012 2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Employee benefit expense 939 548 1,153
Other costs 728 425 1,053
Growth costs 1,667 973 2,206
-------------- -------------- -------------
3. share based payment costs
Equity-settled share option scheme
The Company has a share option scheme for selected employees and
Directors of the Group. Options are generally exercisable at a
price equal to the quoted market price of the Company's shares on
the date of grant. The vesting period for each grant is variable
and typically between 2 and 5 years. 1,000,000 new options were
granted during the period. 500,000 options issued to a previous
employee of the Company were forfeited during the period. No
options were exercised in the year and 16.58 million options were
exercisable at prices between 6.9p and 33.25p at 30 June 2013 at a
weighted average exercise price of 19.0p per share.
Long Term Incentive Plan
In November 2011 shareholders approved the Hydrodec Group plc
2012 Long Term Incentive Plan (the "LTIP") for the purposes of
attracting, retaining and motivating key executives of the Group
and securing greater alignment of shareholders' and management's
interests with transparency over performance targets.
Awards were granted to selected members of the senior executive
team effective 15 January 2012 and will be conditional on the
achievement of the following share price targets on or before 15
January 2015: 16 pence, 20 pence and 25 pence per ordinary share
(each a "Share Price Threshold"). Awards will not vest at all
unless the 16 pence Share Price Threshold is achieved.
The aggregate value of ordinary shares in the share pool will
equal 15 per cent of the growth in market capitalisation of the
Company between 1 November 2011 and the first date on which a Share
Price Threshold is met and successive subsequent growth in market
capitalisation upon achievement of any higher Share Price
Thresholds.
During the period the existing awards were re-structured as
various classes of shares in Hydrodec Holdco Limited ("Holdco"), a
subsidiary of Hydrodec Group plc. The Holdco articles of
association entitle the individuals to exchange their Holdco shares
for shares in the Company, determined by reference to the
individual's proportionate interest in the share pool, if the Share
Price Thresholds are met.
4. Finance costs
6 months 6 months Year to
to to 31 December
30 June 2013 30 June 2012 2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Bank overdrafts and leases 9 25 43
Unsecured loan stock 2,919 2,126 4,582
Fixed rate notes 123 156 710
Revolving credit line - - 8
3,052 2,307 5,343
-------------- -------------- -------------
5. TAXATION
6 months 6 months Year to
to to 31 December
30 June 2013 30 June 2012 2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Current tax (87) - -
Deferred tax
Reversal of temporary timing differences 116 176 115
Adjustment for change in UK tax
rate 41 118 238
Deferred tax 157 294 353
-------------- -------------- -------------
Total tax 70 294 353
-------------- -------------- -------------
The deferred tax liability has been adjusted by USD 41,000 to
reflect changes in the UK corporate tax rate during the period.
A deferred tax asset of approximately USD 15,474,000 (2012: USD
13,927,000) in respect of losses against future taxable profits is
not recognised due to the uncertainty of future taxable
profits.
6. LOSS PER SHARE
The calculation of the basic loss per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the year.
The weighted average number of shares used in the calculations
are set out below:
6 months to 6 months to Year to
30 June 2013 30 June 2012 31 December
2012
Number of Number of Number of
shares shares shares
419,880,361 407,552,077 407,944,242
------------ ------------ -----------
In the period, the share options and warrants were anti-dilutive
and diluted earnings per share is the same as basic. The
calculation of the weighted average number of shares excludes
shares which are now held by a member of the Group and in respect
of which votes may not be cast at a general meeting (which are
treated as treasury shares) and also shares held by the Employee
Benefit Trust.
7. Trade and other receivables
As at As at As at
30 June 2013 30 June 2012 31 December
2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Trade receivables 1,879 2,001 1,191
Other receivables 211 410 526
Deferred consideration (see note 1,887 - -
12)
Other taxation and social security - 73 69
Prepayments and accrued income 236 211 294
4,213 2,695 2,080
-------------- -------------- -------------
8. Trade and other payables
As at As at As at
30 June 2013 30 June 2012 31 December
2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Trade payables 1,126 1,886 1,415
Finance lease obligations due within
1 year 62 97 92
Accruals 2,701 2,232 2,540
Deferred income 482 511 510
4,371 4,726 4,557
-------------- -------------- -------------
The carrying values of trade and other payables are considered
to be a reasonable approximation of fair value. Deferred income
consists of income for the treatment of hardware at the Young
facility. A provision for the treatment of this material has also
been made and is disclosed in note 9.
9. Provisions
The provision relates to stocks of materials at the Young
facility dating from the plant's original function, ownership and
business strategy. During the period the Company was able to
process certain materials for which it incurred costs for
remediation services charged to the provision. The cost for
treatment and disposal has been reassessed by management and the
current remaining provision is deemed to be adequate:
As at As at As at
30 June 2013 30 June 2012 31 December
2012
USD'000 USD'000 USD'000
-------------- -------------- -------------
Remediation of contaminated stock
Current 88 70 143
Non-current 312 551 356
400 621 499
-------------- -------------- -------------
10. NON-CURRENT LIABILITIES - borrowings
As at As at As at
30 June 2013 30 June 2012 31 December
2012
USD'000 USD'000 USD'000
------------- ------------- ------------
Unsecured loan stock 14,851 11,682 13,732
Fixed rate notes - 2014 - 3,122 -
Fixed rate notes - 2015 7,638 - 3,321
Finance lease liabilities due in
one to five years - 53 16
22,489 14,857 16,979
------------- ------------- ------------
Unsecured loan stock
The Company has GBP12,790,000 of unsecured loan stock in issue.
The loan stock was originally convertible into ordinary shares but
these conversion rights have lapsed and the loan stock is now an
unsecured loan repayable, at the Company's determination, on or
before 31 October 2014.
Interest is charged at a fixed rate of 8 per cent per annum.
Management recognise that the 8 per cent interest rate is below
market rate for this type of financial instrument and the fair
value of the liability is calculated using estimated interest rates
for an equivalent non-convertible instrument, which has been
assessed using comparable internal rates of return by the Group for
other income streams.
The residual amount, representing the original equity conversion
option, is included in the equity reserve in shareholder's funds,
and is being recognised over the remaining period of the loan to
redemption as a transfer within reserves.
Fixed rate loan notes
On 19 December 2012, the Company created GBP5,000,000 of fixed
rate loan notes - 2015, of which the outstanding GBP3,000,000 was
received in the period. The notes are secured over Group assets.
Interest is payable at 5 per cent per annum due in March and
September of each year. The Notes have a three year term and are
repayable at the Company's option at any time after six months from
their date of issue, subject to a final repayment date of 19
December 2015.
11. share capital
As at
30 June 2013
No.
Issued and fully paid - ordinary shares of 0.5 pence
each
At 31 December 2012 479,137,027
---------------------------
At 30 June 2013 479,137,027
---------------------------
VIN Australia Pty Ltd, a member of the Group holds 54,500,000
ordinary shares in Hydrodec Group plc pursuant to the acquisition
of Virotec International plc in 2008. Votes in respect of these
shares, and a further 2,173,333 shares issued pursuant to that
acquisition, may not be cast in a general meeting of Hydrodec Group
plc and as such they are treated as if they were treasury shares on
consolidation.
Warrants
In 2011, the Company issued 10,750,000 warrants in connection
with the GBP2,000,000 of fixed rate loan notes - 2014. The warrants
have an exercise price of 8p per share with an exercise window from
14 June 2013 to 14 June 2016.
The Company has issued an additional 25,000,000 warrants in
connection with the GBP5,000,000 of fixed rate loan notes - 2015.
The warrants have an exercise price of 16p per share with an
exercise window from 19 June 2013 to 19 December 2017.
12. SALE OF INTEREST
USD'000
Value disposed 3,619
Consideration received (1,733)
--------
Deferred consideration subject
to earn out (1,886)
--------
On 16 April 2013 the Group sold a 25% interest in its US
operations to G&S Oil Recycling Group LLC for total
consideration based on a multiple of earnings for the years ended
31 December 2012 (5 times EBITDA) and 2013 (6.5 times EBITDA).
Management have estimated the value of the consideration to be
USD$3.62m, based on latest available projections to December 2013,
of which cash of USD $1.73m was received in the period. The value
of the remaining consideration has been included in "Other
receivables" (see note 7), and will be finally determined when the
results for the year ending 31 December 2013 are known.
Additionally a royalty stream of 5% of net revenue is payable to
the Company under the terms of the strategic partnership.
Included in the agreement with G&S Oil Recycling Group LLC
is the potential for the sale of a further 24.9% of the investment
in the Group's US operations, conditional on a number of future
actions to be undertaken by both parties. The value of the
consideration is set at a price to be determined by earnings for
the years ended 31 December 2012 and 2013. At 30 June 2013, the
Group has not valued this future arrangement, as both the
completion and timing of conditions related to the further sale
would render the estimation of this value unreliable.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SDUFUSFDSEEW
Hydrodec (LSE:HYR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hydrodec (LSE:HYR)
Historical Stock Chart
From Jul 2023 to Jul 2024
