RNS Number:2786T
Energy Asset Management PLC
29 April 2008
Energy Asset Management Plc
(the "Company")
Final results for the year ended 31 December 2007
Highlights
The Company:
* has seen the number of installations and systems gaining momentum
* has started benefitting from high operational gearing
* consequently has since February 2008 achieved monthly profitability
* consequently has now achieved monthly positive cash flow
* is now ready to exploit a fast growing market which is being driven by both
public and government awareness of the need for energy efficiency
* has successfully raised further working capital to expand IT system and to
fund accelerated expansion
Chairman's Statement
I have previously reported that we have been successful in negotiating and
winning contracts at a greater rate than previously anticipated. This continues
to be the case.
However, the mobilisation of these contracts as previously advised has
throughout 2007 been at a slower rate than we had anticipated, primarily because
when dealing with major corporates there is typically a thorough and prolonged
legal and implementation process to undertake. As a result, in the 12 months to
31 December 2007 the Group made a loss after taxation of GBP 1,051,289 (2006 -
loss GBP 2,782,270) representing a loss per share of 0.39p (2006 - loss 1.35p
per share).
Nevertheless, during the year we have demonstrated we can successfully conclude
trials, win potentially substantial contracts from both gas suppliers and gas
users and also complete the installation of metering systems within demanding
timeframes.
We have also seen the number of systems installations gaining momentum and can
now report that due to the flexibility within our business portfolio the Group
has since February 2008 achieved monthly profitability and is also trading on a
positive cash flow basis.
Contract Awards
During 2007 we signed several multi-utility contracts covering major high street
retailers, the public sector and also a leading Gas Transporter. Following the
successful implementation of its electricity metering project with Woolworth's,
services provided by Energy Assets Limited ("EAL", a wholly-owned subsidiary of
EAM) were extended to include gas metering and data collection services,
including the installation and management of a SMS-enabled gas metering
solution. This is now completed.
Similar success has been achieved on the Marks and Spencer gas meter data
collection contract. This has been successfully completed and has now been
extended to incorporate gas meter exchanges for a further 100 sites. Such is the
success of the gas metering project this has now been extended to specific Marks
and Spencer electricity metering sites and water metering sites. Installations
are nearly completed.
EAL's success with Woolworth's and Marks and Spencer has generated interest from
other similar high street retail groups and we are presently at varying levels
of negotiations with a number of these retail groups, with trials underway in
some cases.
Our strategic alliance with IMServ, a subsidiary of Invensys Plc, has in
addition introduced several high street and blue chip names to our portfolio,
ranging from Local Authorities to public service and leading financial
institutions. These prospects are existing customers of IMServ and we therefore
anticipate a smooth transition into these customers.
EAL have recently successfully completed a significant gas meter exchange and
data collection programme on behalf of a major Local Authority. The directors
believe that this programme will be extended to position EAL as the Local
Authority's 1st choice metering services provider. Such was the success of this
programme that EAL has been highly recommended to other adjacent Public Sector
groups and Local Authorities.
Energy Suppliers
EAL has signed further long term contracts with established energy suppliers for
the provision of new and exchange metering services, data collection and
management services. Such contracts have high future potential in light of the
possibility that some of these suppliers are considering major AMR projects that
may require substantial numbers of meter exchanges.
Others
A unique opportunity has been presented to EAL to collaborate with an
independent gas transporter. This opportunity introduces EAL to the potential of
15,000-20,000 new domestic, industrial and commercial metering installations on
an annual basis. Medium term contracts have been signed and implementation is
underway. This opportunity also extends to "smart metering" and the potential to
become involved in social housing and fuel poverty projects which all attract
Government grant funding. This one project in isolation has the ability to
deliver EAL's original expectations and objectives over the coming 3 years.
The timetable incurred in negotiating and implementing contracts has been
protracted. However, the level of contract gain activity has proven to be at a
much higher rate than previously anticipated.
As a result and as previously indicated, further to the trading statement made
on 7 December 2007, the Company issued 54,000,000 new ordinary shares at 1 pence
per share to raise gross proceeds of GBP 540,000 on 16 January 2008.
The Group is increasingly able to deliver its clients a complete energy solution
addressing both electricity and gas remote automated meter reading. This is
encouraged by proposed Government legislation announced in a White Paper and so
we can progress forward on a much firmer base and with increased confidence.
The rate of installation is continuing to increase on a monthly basis and
expected to grow substantially in 2008 and 2009 on the basis purely of signed
contracts and clients' expectations.
As previously stated the Group has high operational gearing and as our activity
grows so should cash and profit generation. We are operating in a market sector
that has great prospects supported by both public and Government awareness and
support of the need for energy efficiency.
It has been a tough and hard mountain to climb but as we get nearer the top we
are excited at what we see ahead.
We are also excited and encouraged at the potential alliances and contracts we
are in the course of discussing and negotiating and can only look forward to
reporting to you our progress and to thank you for your patience and support.
Stephen J Barclay
CHAIRMAN
29 April 2008
Consolidated income statement- by function of expense
for the year ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
GBP GBP
Revenue 667,860 20,768
Cost of sales (360,374) (10,664)
---------- ----------
Gross Profit 307,486 10,104
Operating expenses (1,363,668) (2,811,165)
---------- ----------
Operating loss (1,056,182) (2,801,061)
Finance income 4,893 18,791
---------- ----------
Loss before taxation (1,051,289) (2,782,270)
Taxation - -
---------- ----------
Loss after taxation (1,051,289) (2,782,270)
---------- ----------
Retained loss for the period (1,051,289) (2,782,270)
---------- ----------
Attributable to
Equity holders of the Company (1,058,734) (2,774,375)
Minority interest 7,445 (7,895)
---------- ----------
Retained loss for the period (1,051,289) (2,782,270)
---------- ----------
Loss per share basic and diluted (0.39)p (1.35)p
Consolidated balance sheet
at 31 December 2007
31 December 31 December 31 December 31 December
2007 2007 2006 2006
GBP GBP GBP GBP
Assets
Non current assets
Property, plant and
equipment 476,092 20,405
Intangible assets -
Goodwill 745,475 745,475
---------- ---------
Total non current
assets 1,221,567 765,880
Current assets
Trade and other
receivables 95,200 53,335
Cash and cash
equivalents 17,101 249,095
Inventories 131,984 9,360
---------- ---------
Total current assets 244,285 311,790
--------- ----------
Total Assets 1,465,852 1,077,670
--------- ----------
Equity and liabilities
attributable to equity
holders of the Company
Share capital and reserves
Issued capital 2,787,684 2,467,684
Share premium account 1,163,929 1,083,929
Reserves (3,526,468) (2,580,880)
---------- ---------
425,145 970,733
Minority interest - (7,445)
--------- ----------
Total equity 425,145 963,288
--------- ----------
Non - current liabilities
Borrowings 425,374 -
Current liabilities
Borrowings 40,605 -
Trade and other
payables 574,728 114,382
--------- ----------
Total current
liabilities 615,333 114,382
--------- ----------
--------- ----------
Total equity and
liabilities 1,465,852 1,077,670
--------- ----------
Statement of changes in equity
Share Capital Share Premium Reserves Minority Total Equity
Interest
Group GBP GBP GBP GBP GBP
Balance at 1
January 2007 2,467,684 1,083,929 (2,580,880) (7,445) 963,288
Loss for year
attributable
to equity
holders _ _ (1,058,734) _ (1,058,734)
Loss for year
attributable
to minority
interest _ _ _ 7,445 7,445
Share based
payments _ _ 113,146 _ 113,146
Shares issued 320,000 80,000 _ _ 400,000
Balance at
31st December
2007 2,787,684 1,163,929 (3,526,468) _ 425,145
Consolidated cash flow statement
For the year ending 31 December 2007
Year to Year ended
31 December 31 December
2007 2006
GBP GBP
Cash flows from operating activities
Operating loss for the year as per income
statement (1,056,182) (2,801,061)
Depreciation of non current assets 22,576 33,175
Impairment of goodwill - 1,734,544
Share based payments 113,146 218,381
-------------- ----------
(920,460) (814,961)
Movements in working capital
Increase in trade and other receivables (41,865) (37,045)
Increase in inventories (122,594) (9,360)
Increase/(decrease) in trade and other payables 460,316 (13,868)
-------------- ----------
Net cash applied to operations (624,603) (875,234)
Cash flows from investing activities
Interest received 4,893 18,791
Net purchase of subsidiary undertaking - (260,190)
Cash acquired with subsidiary - 4,353
Purchase of non current assets (478,263) (53,580)
-------------- ----------
Net cash outflow from investing activities (473,370) (290,626)
Cash flows from financing activities
Net proceeds from issue of equity shares 400,000 1,102,577
Inflow from new leases 475,853 -
Capital element of finance lease rental payments (9,874) -
-------------- ----------
Net cash flows from financing activities 865,979 1,102,577
-------------- ----------
Net decrease in cash and cash equivalents (231,994) (63,283)
Cash and cash equivalents at the beginning of
financial period 249,095 312,378
-------------- ----------
Cash and cash equivalents at end of period 17,101 249,095
-------------- ----------
Notes on the Preliminary Results
1. The financial information incorporated in this announcement does not
constitute full statutory financial statements within the meaning of the
Companies act 1985. Full financial statements for the year ended 31 December
2007 will be filed with the Registrar of Companies in due course.
2. Key accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards, as approved by the European Union, IFRIC
interpretations and parts the Companies Act 1985 applicable to companies
reporting under IFRS. The financial statements have been prepared under the
historical cost convention.
The preparation of the financial statements requires management to make
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the disclosure of contingent liabilities
at the date of the financial statements. If in the future such estimates and
assumptions which are based on management's best judgement at the date of the
financial statements, deviate from the actual circumstances, the original
estimates and assumptions will be modified as appropriate in the year in which
the circumstances change. Where necessary, the comparatives have been
reclassified or extended from the previously reported results to take into
account presentational changes.
The Group has assessed pronouncements issued by the International Accounting
Standards Board that were in issue but not in force at 31 December 2007.
IFRS 8 - Operating segments.
IFRIC 11 / IFRS 2 - Group and treasury share transactions.
IFRIC 12 - Service concession arrangements.
IFRIC 13 - Customer loyalty programmes.
IFRIC 14 / IAS 19 - The limit on a defined benefit asset, minimum funding
requirement and their interaction.
The Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the financial
statements of the Group.
Basis of consolidation
The financial statements of the Company and its Group undertakings have been
consolidated to 31 December 2007.The results and cash flows of subsidiary
undertakings are included in the income statement and consolidated cash flow
statement from the date of acquisition.
3. Tax on loss on ordinary activities
Tax charge for the year
No taxation arises on the result for the year because of the trading loss.
Factors affecting the tax charge for the year
The tax charge for the year does not equate to the loss for the period at the
standard rate of UK small companies corporation tax of 19%. The differences are
explained below:
Year ended Year ended
31 December 31 December
2007 2006
GBP GBP
Loss for the year before taxation (1,051,289) (2,782,270)
------------ ----------
Loss for the year before tax multiplied by the
applicable rate of UK small companies corporation
tax of 19% (199,745) (528,631)
Depreciation in excess of capital allowances (18,428) 3,758
Expenses not deductible for tax 29,910 339,490
Tax losses for the year not relieved 188,263 185,383
------------ ----------
- -
------------ ----------
Factors affecting the tax charge of future years
Tax losses available to be carried forward by the Group at 31 December 2007
against future profits are estimated at #1,967,000. There is an unprovided
deferred tax asset based on these losses of #551,000.
It is difficult to determine with certainty when the available tax losses will
be utilised. Therefore, the element of the potential deferred tax asset relating
to available tax losses has not been recognised in the financial information.
4. Loss per share
The calculation of basic loss per share is based on the loss attributable to
equity holders of GBP 1,058,734 (31 December 2006 - loss GBP 2,774,375) divided
by the weighted average number of ordinary shares in issue being 271,403,999 (31
December 2006: 205,497,607) during the year. As the Company has incurred a loss
for the year, no option or warrant is potentially dilutive, and hence basic and
diluted loss per share are the same.
54,000,000 new ordinary shares were issued after the year end. If these shares
had been issued prior to 31 December 2007, this would have altered the weighted
average number of ordinary shares in issue as calculated above.
5. Property, plant and equipment
Office Meters & Total
Equipment Loggers
GBP GBP GBP
Cost
Opening balance as at 1 January
2007 53,580 - 53,580
Additions in year 5,670 472,593 478,263
Closing balance as at 31
December 2007 59,250 472,593 531,843
Depreciation
Opening balance as at1 January
2007 33,175 - 33,175
Charge in year 7,907 14,669 22,576
Closing balance as at 31
December 2007 41,082 14,669 55,751
Net book value as at 1 January
2007 20,405 - 20,405
----------- ----------- ----------
Net book value as at 31 December
2007 18,168 457,924 476,092
----------- ----------- ----------
Gas meters and data loggers are leased to customers via financing arrangements
using third party finance companies. Under these arrangements, the Group sells
gas meters and data loggers for cash to the finance company and at the same time
customers enter into contracts with the Group for the provision, installation
and maintenance of the gas metering and ancillary equipment together with data
provision services as applicable. Under the terms of a deed of assignment
between the Group, the customer and the finance company, customers are required
to make regular payments to the finance company who in turn remit the funds to
the Group. Under the customer contracts with the Group, the Group is required to
maintain the gas meters and data loggers for the duration of the contract.
At the end of the contract between the finance company and the Group, the Group
has the option to buy back the gas meters and data loggers from the finance
company at a nominal amount. The Directors currently intend to exercise their
option to acquire these units and lease them directly to customers over their
remaining useful economic life.
Accordingly, the Directors have accounted for these units so that the Financial
Statements reflect the substance of the transaction, rather than its legal form,
as follows:
i. Gas meters and data loggers initially purchased by the Group and
sold to the finance companies are included in fixed assets at their
purchase price, which includes installation costs and attributable
overheads where appropriate. Such assets are depreciated over the
Directors' estimate of their useful economic life.
ii. In accordance with the terms of the finance agreement between the
Group and the finance company, the Group assigns its title and
interest to the assets and the customer rentals to the finance
company for the duration of the lease agreement. The Group is however
required to insure and maintain the assets over the duration
of the lease agreement and administer the collection of the rental
payments from the customer. The Group indemnifies the finance company
for all amounts due under the terms of the lease and customer
agreements.
The rental charge for gas meters and data loggers, together with data provision
services, is recognised in the income statement over the period in which the
customer has use of the assets and data services are provided.
6. Share capital
31 December 31 December
2007 2006
GBP GBP
Authorised
500,000,000 Ordinary shares of 1p each 5,000,000 5,000,000
Allotted, issued and fully paid
278,768,383 Ordinary shares of 1p each 2,787,684 2,467,684
On 26 March 2007 the Company issued 32,000,000 new ordinary shares of 1p at an
issue price of 1.25p each, to raise GBP 400,000 before expenses.
Options
No options were granted during the year ended 31 December 2007 or subsequent to
the date of approval of the financial statements
Warrants
No warrants were granted during the year ended 31 December 2007 or subsequently
to the date of approval of the financial statements
7. Post balance sheet events
On 16 January 2008 the Company issued 54,000,000 new ordinary shares of 1p each
at par to raise GBP 540,000 before expenses. These shares rank pari passu with
all existing issued ordinary shares.
8. Registered Office and copies of Financial Statements
The registered office of the Company is 3 Hardman Square, Spinningfields,
Manchester M3 3EB. Copies of the Annual Report and Financial Statements, will be
mailed to shareholders along with the notice of the AGM shortly.
Notice is hereby given that the Annual General Meeting of Energy Asset
Management Plc will be held at 1 Westferry Circus, Canary Wharf, London E14 4HA
on 26 June 2008.
Enquiries
Energy Asset Management Plc
Stephen Barclay, Chairman
Tel: 07767 444114
Alan McKeating, Managing Director
Tel: 07843 231372
Ruegg & Co Limited, Nominated Adviser
Brett Miller/ Gavin Burnell
Tel 0207 584 3663
This information is provided by RNS
The company news service from the London Stock Exchange
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