TIDMMWG
RNS Number : 4780Z
Modern Water PLC
15 March 2017
15 March 2017
Modern Water plc ("Modern Water" or "the Company")
FINAL RESULTS
Modern Water (AIM:MWG), the owner of leading technologies for
water and wastewater treatment and the monitoring of water quality,
today announces
full-year results for the 12 months ended 31 December 2016
Key points
Operational
-- First sale of AMBC technology in India after a successful pilot
-- First Aquapak order secured, currently being delivered in Oman
-- New President appointed to the Monitoring division
-- Cashflow breakeven achieved at the Monitoring division
Financial
-- Revenue increased 12% to GBP3.6m (2015: GBP3.2m);
-- Gross profit increased 54% to GBP1.9m (2015:GBP1.2m);
-- Loss before tax, interest, depreciation, amortisation reduced to GBP2.5m (2015: GBP3.7m);
-- Total comprehensive loss for the year reduced to GBP2.2m (2015: GBP3.9m)
-- Cash outflow reduced to GBP2.0m (2015: GBP3.6m); and
-- Cash as at 31 December 2016 was GBP1.1m (2015: GBP3.2m).
Commenting on the results, Alan Wilson, Non-Executive Chairman
of Modern Water, said:
"Clearly the strategy review we undertook in 2015 is now bearing
fruit. The Monitoring division delivered its first positive EBITDA
since 2012 and we have successfully commercialised our AMBC
technology, all whilst significantly reducing our cash burn. We
enter 2017 with growing confidence."
---Ends---
For further information:
+44 1483 696
Modern Water plc 000
Simon Humphrey, Chief Executive
Officer
WH Ireland Limited +44 207 220 1666
Paul Shackleton (Nominated Adviser)
Tavistock +44 207 920 3150
Mike Bartlett
Andrew Dunn
Notes to editors
Modern Water owns, installs and operates broad based membrane
systems using world-leading Forward Osmosis (FO) membrane
technologies; supplies packaged seawater Reverse Osmosis (RO)
desalination systems; supplies wastewater treatment solutions; and
develops and supplies advanced systems for water monitoring. Its
shares trade on the Alternative Investment Market of the London
Stock Exchange.
Modern Water's patented forward osmosis (FO) technology's
benefits include lower energy consumption and a reduction in
environmental impact in a variety of industries. With a sales
presence in almost 60 countries, the Group's Monitoring division
includes a leading real-time continuous toxicity monitor and trace
metal analysers for monitoring the quality of drinking water.
www.modernwater.com
CHAIRMAN'S STATEMENT
Alan Wilson
I am pleased to report that improvements at Modern Water have
continued apace during the past year, resulting in a 12% increase
in revenues and a 54% improvement in gross profits, both of which
have been achieved whilst reducing our overheads by a further 11%,
notwithstanding our continuing commitment to R&D and new
product development.
Perhaps the most satisfying achievement I can report to
shareholders is that our Monitoring division delivered positive
EBITDA for the first time since the business was acquired in 2011,
which is testament to the management changes we have made during
the year. Sales in Monitoring increased by 8% and gross margins
showed a substantial improvement to 50% (2015: 38%), primarily as a
result of a better sales focus and product mix. Clearly, the
strategy review we undertook in 2015 is bearing fruit and we are
now in a position where we are working on a variety of new product
developments which we believe will add to our portfolio and
positively impact sales and profits as we move forward.
Our Membrane division continued to work with partners who have
complementary skills, competencies and market coverage that can
assist us in commercialising our proprietary membrane technology.
As previously reported, we have been working closely with the likes
of Advent Envirocare and Deutsche Babcock, both of whom offer us
valuable additional market insight and support.
On that note, it was very pleasing to announce the award of a
contract in February 2017 for the provision of our proprietary All
Membrane Brine Concentration (AMBC) technology. Our innovative AMBC
technology will be used to treat wastewater produced by an
India-based customer involved in the textiles industry. The project
will be executed in partnership with Advent Envirocare Technology
during the course of 2017. Once commissioned, this plant will
provide us with a fantastic shop window for our technology and will
provide us with a springboard into other markets and
geographies.
Our 2016 financial results show strong progress. Revenue and
gross profit increased on the prior year, whilst overheads
continued to reduce, resulting in an operating loss of GBP3.1m
(2015: GBP4.2m). Cash burn in 2016 reduced to GBP2.0m (2015:
GBP3.6m) and should reduce further in 2017. As at 31 December 2016,
the Group's financial position was debt free, with cash of GBP1.1m
(2015: GBP3.2m).
With an un-geared balance sheet, a cash generative Monitoring
division, the Membrane division expected to break even in 2018 and
a trade finance facility secured, we believe the Group now has the
resources in place to become a genuinely sustainable, profitable
business.
STRATEGIC REPORT
Simon Humphrey
The Directors of Modern Water plc (Modern Water or the Company)
and its subsidiary undertakings (which together comprise the Group)
present their Strategic Report for the year ended 31 December
2016.
Membrane Division
Strategy
Over the last decade, the Membrane division has developed a wide
range of IP, creating a Forward Osmosis (FO) platform from which a
suite of products is being commercialised, a key example being the
AMBC sale in February 2017. Each of the key technologies being
focused upon in the near-term provides a solution that enables
waste or unusable water to be desalinated or reused, at a lower
cost than alternative systems already in existence, whilst enabling
customers to comply with regulatory requirements. We believe that
there is clear demand for Modern Water's products and services in a
number of different industrial processes and across a number of
geographic territories globally, driven by increased legislation
and regulation as governments try to address the growing global
water crisis.
The Company has continued to pursue its key strategic goals and
has made clear progress in the commercialisation of its
technologies. The focus of the Company remains on its four market
areas within a clear framework to:
-- develop and commercialise our membrane technologies
that have unique competitive advantage;
and
-- work with strategic partners, by product
and territory, who have proven track records
in the target sector, on joint development
and commercialisation; risk sharing; licensing;
and protecting and expanding our IP.
All Membrane Brine Concentrator (AMBC)
The Group has developed and proven an All Membrane Brine
Concentrator (AMBC) which can reduce the energy consumption and
capital costs for achieving Zero Liquid Discharge or near Zero
Liquid Discharge, thereby reducing the cost of achieving regulatory
compliance for wastewater treatment.
The technology is based on using successive stages of
osmotically driven filtration to concentrate waste streams and can
be used across a wide range of industries.
In March 2016 Modern Water signed a joint development and
commercialisation agreement with Advent Envirocare Technology,
based in India. Following successful piloting of the technology in
December 2016, the first commercial order was secured rapidly. In
early February 2017 an agreement was reached to deploy our
technology in a textile dye facility. A second AMBC trial in a
different industrial sector is scheduled to commence in India later
this year.
Forward Osmosis (FO) Pre-treatment for Thermal Desalination
Modern Water has invented a Forward Osmosis process to allow an
increase in the top brine temperature (TBT) of a typical Thermal
Desalination plant by osmotic dilution of the re-circulating brine
or brine blow-down. Through this patented and proprietary
technology, on a typical multi-stage flash desalination (MSF)
plant, the Group's technology can both improve the thermal
efficiency by 12% and reduce power consumption by 27%. The
technology is also flexible and can be alternatively optimised to
increase the production of water from existing assets by 22%.
In January 2016, Modern Water signed a joint commercialisation
agreement with Bilfinger Deutsche Babcock Middle East (BDB) for our
proprietary Forward Osmosis technology. BDB is a leading services
provider across the Middle East and Africa for the construction,
rehabilitation, O&M and lifecycle services in a range of
industries. Under the agreement, the two parties agreed to develop
and commercialise Modern Water's Forward Osmosis technology for use
in both existing and new build MSF desalination plants across the
Middle East and Africa.
Following a joint design exercise, a pilot plant is being
constructed by BDB in Abu Dhabi, with the first field trials due to
take place in 2017. The purpose of the pilot plant is to develop
and demonstrate the effectiveness of FO to osmotically dilute and
soften the re-circulating brine of a desalination plant,
consequently proving the benefits customers can expect.
Forward Osmosis (FO) Evaporative Cooling Systems
The Company has continued to refine its technology to reduce the
cost and environmental impact of traditional evaporative cooling
systems. In line with our stated strategy for the membrane
business, we are in discussion with a number of potential partners
to undertake field tests of our technology in water-scarce
regions.
Aquapak
AquaPak is a low cost containerised or skid mounted desalination
plant using proven Reverse Osmosis (RO) technology. The units are
manufactured in three standard capacities of 100m(3) , 250m(3) and
500m(3) per day of fresh water. The AquaPak units have been
designed by Modern Water using its inherent technical knowhow and
fabricated by a third party partner. The primary target market for
AquaPak is the Gulf States, driven by the ever-increasing
requirement for fresh water in remote locations.
As highlighted in our Interim Results statement of September
2016, the Company was awarded its first AquaPak contract in August
2016 by a client in Oman. The plant has been fabricated and
delivered to Oman on schedule.
We continue to actively generate a significant number of
enquiries and are pursuing a number of projects. We are confident
of receiving further orders in the coming months.
Wastewater Treatment
The status of our joint venture with Northumbrian Water is
unchanged from previous statements. We remain the preferred bidder
for a wastewater project in Gibraltar. Modern Water has completed
its current obligations and continues to assist in the project's
advancement, with little in the way of ongoing costs being incurred
by us.
This is a much needed infrastructure project for Gibraltar and
is important in bringing the country up to international wastewater
treatment standards. However, given the region's current challenge
following the Brexit vote, uncertainty remains over potential
timescales.
Monitoring Division
Strategy and Performance Review
Modern Water's Monitoring division has been built through a
number of small acquisitions over the last decade. The division has
a proven capability in the design, development and provision of
analytical instruments and technologies for monitoring contaminants
in water, soil, food and industrial process streams. These
activities can be provided to clients either at a laboratory, on
site or on-line, through a combination of direct and distributor
sales channels. The Monitoring division's products and services are
supplied to laboratories, industrial companies and municipalities
across 60 countries globally. Revenue is generated through a
combination of equipment sales and reagents/consumables.
Specifically, the Monitoring division is focused on three core
product segments: Toxicity, Trace/Heavy Metals and Environmental
contaminants, with a geographic focus on North America, China and
Europe.
Doug Workman was appointed as President of the Monitoring
division in March 2016 and has subsequently restructured the sales
team, launched new products and consolidated all production and
systems at the Monitoring division's head office in New Castle,
Delaware, USA. Results so far have been very encouraging, with
strong revenue growth delivered, alongside a highly attractive
>50% gross margin.
The Monitoring division achieved a key milestone in 2016,
reporting positive EBITDA of GBP60,000 (2015: loss of GBP508,000).
Adjusting for the expected recovery of 2016 R&D tax credits
would improve this further. This is the first positive EBITDA
achieved by the division since 2012. The two key factors in
achieving this milestone were an 8% growth in revenue and an
improvement in gross margins to 50% (2015: 38%). The growth in
margin was due to an increased focus on direct sales, improved
shipping cost recoveries, strong sales of consumables and reagents
and consolidation of production to a single site.
Recurring revenue from service contracts and reagent sales was
GBP1.1m in 2016 (2015: GBP1m).
Group Key Performance Indicators (KPIs)
At the Company's current stage of development, the Directors
consider that strategic and operational progress is best measured
by achievement in terms of technical and business development
milestones and at this stage does not monitor non-financial KPIs.
In 2016 we achieved progress against our goals and will continue to
focus on these elements to drive future growth. In 2016, the key
milestones reached were:
-- The first sale for our AMBC technology
-- The first sale of our AquaPak product
-- Continued revenue growth in the Monitoring division
Further details of strategic and operational progress for the
two main operating divisions are outlined in the Membrane and
Monitoring sections of this Strategic Report. The Board reviews
strategic, operational and financial information on a monthly basis
to measure progress. The key financial performance indicators for
2016, covered in more detail in the Financial Review and the
financial statements, were:
-- Revenue increased 12% to GBP3.6m (2015: GBP3.2m);
-- Gross profit grew 54% to GBP1.9m (2015:GBP1.2m);
-- Operating loss before tax, interest, depreciation,
amortisation decreased to GBP2.5m (2015: GBP3.7m);
-- Total comprehensive loss for the year reduced to GBP2.2m (2015: GBP3.9m)
-- Cash outflow decreased to GBP2.0m (2015: GBP3.6m); and
-- Cash as at 31 December 2016 was GBP1.1m (2015: GBP3.2m).
Group Research & Development (R&D)
The Group continues to invest in R&D across membrane,
wastewater and monitoring technologies to support the development
and delivery of commercial products for customers and expand the
patent portfolio of the Group. Expenditure recorded in the
Statement of Comprehensive Income for R&D during the year was
GBP200,000 (2015: GBP156,000). The Group has benefited from the
HMRC R&D tax credits scheme with the receipt of GBP0.5m in cash
from claims made in 2016, related to R&D expenditure in 2013,
2014 and 2015. The Group will submit claims for the recovery of
2016 R&D expenditure to HMRC in 2017.
Group Patent Portfolio & Intellectual Property
As part of our active patent management we have decided to
abandon patent coverage in some strategically unimportant
jurisdictions, thereby achieving cost savings.
As a result our patent portfolio in the Membrane division now
consists of 89 (2015: 104) granted patents across eight main patent
families comprising solvent removal, improved solvent removal,
secondary oil recovery, osmotic energy, separation process,
evaporative cooling, cooling tower improvements and thermal
desalination. The Monitoring division currently holds 13 granted
patents (2015: 18) and Modern Water has 5 (2015: 7) innovative
wastewater treatment patents. Altogether the Group holds 107
granted patents (2015: 129) with a further 22 pending applications
(2015: 29).
Group Resources
Modern Water strives to create a community, not just a workplace
and makes an effort to encourage collaboration and networking
across the Group. We also support the ongoing development of our
employees and have an excellent track record in the retention of
key employees.
Our strategy of employing local workers wherever we operate
continued during 2016, especially in Oman where our operations
continue to be 100% locally managed with support from our central
technical team. Both our Membrane and Monitoring divisions have
adopted this strategy, which is working well.
As at 31 December 2016 the Group employed 44 permanent staff
(2015: 49), supplemented by contract staff as required.
Group Financial Review
The Group had GBP1.1m cash in the bank and no debt at 31
December 2016 (2015: GBP3.2m cash) and has subsequently put a trade
finance facility of GBP0.5m in place. During the year the Group as
a whole continued to incur losses, reflecting the early stage of
commercial roll out of the Membrane division, however the
Monitoring division broke even at the EBITDA level. The overall
loss before interest, tax, depreciation and amortisation reduced to
GBP2.5m (2015: GBP3.7m). The reduction on the prior year losses was
primarily due to a further reduction in operating costs during 2016
and an improvement in gross margin from the Monitoring division.
The ongoing reorganisation, started in 2015, has now removed over
GBP1.4m of administrative expenses.
The Group generated revenues of GBP3.6m in 2016 (2015: GBP3.2m).
Total comprehensive loss reduced to GBP2.2m (2015: GBP3.9m).
Cash Flows
The Group cash outflow, for the year was GBP2.0m (2015:
GBP3.6m). This reduction in cash burn was due to the increase in
gross profit, reduction in operating expenses and an improvement in
working capital movement during the year.
Cash inflow from R&D tax credits was GBP0.5m (2015:
GBP0.1m). Cash outflows comprised GBP0.1m on property, plant and
equipment (2015: GBP0.1m), GBP0.1m on patents (2015: GBP0.1m) and
GBP2.0m on operating activities (2015: GBP3.5m).
Accounting Policies
The Group financial statements have been prepared in accordance
with EU Endorsed IFRS, IFRS Interpretations Committee (IFRIC)
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The key accounting policies to note are those
concerned with intangible assets and share-based payments.
Capital Structure
The Group is entirely equity funded which is appropriate during
the current stage of development. As the Group develops, the
capital structure will be reassessed on a project by project
basis.
Treasury Management
The Group has adopted a low risk approach to treasury
management. Cash balances are invested in instant access current
and deposit accounts. Credit risk is addressed by the Group's
treasury policy. Deposits are selected based on achieving the
optimum balance of yield, security and liquidity. Foreign exchange
risk is primarily mitigated through natural hedging of receipts and
payments.
Going Concern
The directors are required by company law to be satisfied that
the Group has adequate resources to continue in business for the
foreseeable future. A review has been conducted and the directors
have concluded that such resources are available and that the going
concern basis is justified in preparation of the financial
statements.
The Group's forecasts prepared by the directors reflect that
funding requirements have reduced since 2015, as the result of the
restructuring plan, delivering an annual net GBP1.4m reduction in
expenditure. The cash position as at 31 December 2016 was
GBP1,072,000 and as of 9 March 2017 stood at GBP906,000. The Group
remains loss making, but its cash burn is expected to decrease
further through 2017 and 2018 as revenues increase and the full
year effect of 2016 cost reductions impact.
The Group's funding requirements will be met from:
-- GBP0.9m opening cash balance as of 9 March
2017;
-- R&D tax credits receipts from HMRC for 2016;
-- GBP0.5m credit line secured on Modern Water
Inc.'s trade receivables;
-- favourable movement in the Group's working
capital, specifically reduction in inventories
and aged trade receivables in the Monitoring
division; and
-- first meaningful revenues from the commercialisation
of the Membrane division's technology.
In addition, Modern Water is pursuing a number of commercial
opportunities, which would provide incremental positive cash
inflows, the most significant of which is the joint venture between
Modern Water and Northumbrian Water, where our JV has preferred
bidder status and has satisfied all its responsibilities and
obligations.
Principal Risks and Uncertainties
The principal risks inherent in the operation of the Group are
well understood by the Board of Directors and the Management Team.
Control measures have been established to ensure that these and
other, risks are adequately controlled both in terms of frequency
and consequence. The internal control environment is described in
the Corporate Governance Statement. The principal risks and
uncertainties affecting the Group and the steps taken to manage
these are:
Customer acceptance of the Group's technologies and emergence of
competing technologies
The Group's success depends on potential customer acceptance of
its products and processes. There are significant risks in
predicting the size and timing of material revenue. The target
customers of the Group's products and processes are often in
developing countries which carry additional potential risks. The
Group seeks to address these risks by building a track record and
proving technology capabilities to future customers and industry
players. The Group has increased investment in business development
as product development progresses. Modern Water has formed a number
of strategic partnerships to create local presence in target
countries, overcome pre-qualification criteria on contract
tendering and establish new routes to market. The range of
applications for the Group's products provides mitigation against
the risk of failure in a specific country or application. The Group
continues to invest in research and development (R&D) to
mitigate the risk of the emergence of competitor technologies.
Socio-political risks
Modern Water operates, and is looking to secure further
contracts and sales, in a number of countries around the world.
This exposes the Group to a range of social and political
developments and consequentially to potential changes in the
operating, regulatory and legal environment. The Group operates and
generates revenue in countries where political, economic and social
transition is taking place. Some countries have experienced, or may
experience in the future, political instability, changes to the
regulatory environment, changes in taxation, expropriation or
nationalisation of property, civil strife, strikes, acts of war and
insurrections. Any of these conditions occurring could disrupt our
operations and revenue. The Group seeks to manage these risks
through diversifying the regions in which it operates.
Scaling up the technology
The Group's Membrane division and certain monitoring products
are not yet well established commercially. They have been developed
over recent years and whilst the proving of the technology is
largely complete there remain significant risks associated with
commercialising technology and a portfolio of new products. There
are technology and procurement risks in scaling up the products
through to large scale commercial deployment. The Group seeks to
mitigate these risks through the use of partners with proven
manufacturing and fabrication capabilities, rather than developing
in-house capabilities, and through the development and operation of
pilot plants prior to full commercial deployment.
Additionally there are risks related to developing the optimum
contract, royalty and licensing models to derive value from the
products. The Group manages these risks through employment of
executives and senior management with significant experience both
in the water industry and in the development and growth of early
stage companies.
Intellectual Property (IP) protection
The Group's ability to generate value from its products depends
in part on the development and protection of its IP. The Group
assigns significant resources, both internally through the
Company's General Counsel and technical staff, and externally
through patent attorneys, to enhance and protect its patented and
non-patented IP.
Recruitment and retention of key personnel
The Group's directors and employees are highly qualified and
experienced. Recruiting and retaining key staff is critical to the
overall success. Knowledge and experience of the Group's products
and customer base is retained by a relatively small number of
individuals. The risk of staff loss is mitigated through its HR
policies, competitive remuneration (including the Modern Water plc
Incentive Plan), performance appraisals and training.
Health and safety
There are inherent health and safety risks with the deployment
of the core membrane and monitoring products. The mitigation of any
health and safety events involving the Group's products is key to
the strategy for growth. The Group mitigates its health and safety
risks through its Group Health and Safety Policy, which includes
regular reporting to the Board and to the Management Team.
Capital risks
It may be desirable for the Company to raise additional capital
by way of the further issue of Ordinary Shares to enable the
Company to progress through further stages of development. Any
additional equity financing may be dilutive to shareholders. There
can be no assurance that such funding, if required, will be
available to the Company.
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2016
2016 2015
Total Total
GBP000 GBP000
----------------------------------------- -------- --------
Revenue 3,629 3,232
Cost of sales (1,764) (2,024)
------------------------------------------- -------- --------
Gross profit 1,865 1,208
Administrative expenses (4,414) (4,936)
Other gains - net - 18
Operating loss before depreciation
and amortisation (2,549) (3,710)
Depreciation and amortisation (502) (527)
Operating loss (3,051) (4,237)
Finance income 514 210
Finance costs (30) -
Loss on ordinary activities before
taxation (2,567) (4,027)
Taxation 465 249
------------------------------------------- -------- --------
Loss for the year (2,102) (3,778)
------------------------------------------- -------- --------
Other comprehensive income
Foreign currency translation
differences on foreign operations (76) (93)
------------------------------------------- -------- --------
Total comprehensive loss for
the year (2,178) (3,871)
------------------------------------------- -------- --------
Loss attributable to:
Owners of the parent (2,102) (3,778)
(2,102) (3,778)
----------------------------------------- -------- --------
Total comprehensive loss attributable
to:
Owners of the parent (2,211) (3,871)
Non-controlling Interest 33 -
(2,178) (3,871)
Earnings / (Loss) per share for
the year (attributable to owners
of the parent):
Basic earnings / (loss) per share (2.64p) (4.75p)
Diluted earnings / (loss) per
share (2.64p) (4.75p)
------------------------------------------- -------- --------
GROUP STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
Group Company
2016 2015 2016 2015
GBP000 GBP000 GBP000 GBP000
------------------------------ --------- --------- --------- ---------
Assets
Non-current assets
Property, plant and
equipment 255 339 - -
Intangible assets 3,388 3,647 - -
Investments - - 1,730 1,628
------------------------------ --------- --------- --------- ---------
3,643 3,986 1,730 1,628
------------------------------ --------- --------- --------- ---------
Current assets
Inventories 1,319 1,459 - -
Trade and other receivables 1,559 1,046 5,567 4,141
Cash and cash equivalents 1,072 3,161 419 2,218
------------------------------ --------- --------- --------- ---------
3,950 5,666 5,986 6,359
------------------------------ --------- --------- --------- ---------
Total assets 7,593 9,652 7,716 7,987
------------------------------ --------- --------- --------- ---------
Equity and liabilities
Equity
Ordinary shares 199 199 199 199
Share premium account 40,032 40,032 40,032 40,032
Merger reserve 398 398 398 398
Foreign exchange reserve (248) (139) - -
Accumulated losses (33,629) (31,634) (33,009) (32,722)
------------------------------ --------- --------- --------- ---------
6,752 8,856 7,620 7,907
Non-controlling interests 159 126 - -
------------------------------ --------- --------- --------- ---------
Total equity 6,911 8,982 7,620 7,907
------------------------------ --------- --------- --------- ---------
Liabilities
Non-current liabilities
Deferred tax liabilities 29 42 - -
------------------------------ --------- --------- --------- ---------
Current liabilities
Trade and other payables 653 628 96 80
653 628 96 80
------------------------------ --------- --------- --------- ---------
Total liabilities 682 670 96 80
------------------------------ --------- --------- --------- ---------
Total equity and liabilities 7,593 9,652 7,716 7,987
------------------------------ --------- --------- --------- ---------
GROUP STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2016
(Accumulated
Share Foreign losses)/
Ordinary premium Merger exchange Retained Non-controlling Total
shares Account reserve reserve Earnings Total Interest Equity
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
January 2015 199 40,032 398 (46) (27,912) 12,671 126 12,797
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Comprehensive loss
Loss for the year - - - - (3,778) (3,778) - (3,778)
Foreign currency
translation
differences - - - (93) - (93) - (93)
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Total comprehensive
loss - - - (93) (3,778) (3,871) - (3,871)
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Transactions with
owners
Share-based payments - - - - 56 56 - 56
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Total transactions
with owners - - - - 56 56 - 56
Balance as at 1
January 2016 199 40,032 398 (139) (31,634) 8,856 126 8,982
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Comprehensive loss
Loss for the year - - - - (2,102) (2,102) - (2,102)
Foreign currency
translation
differences - - - (109) - (109) 33 (76)
Total comprehensive
loss - - - (109) (2,102) (2,211) 33 (2,178)
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Transactions with
owners
Share-based payments - - - - 107 107 - 107
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Total transactions
with owners - - - - 107 107 - 107
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Balance as at 31
December 2016 199 40,032 398 (248) (33,629) 6,752 159 6,911
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Company
Balance as at 1
January 2015 199 40,032 398 - (26,188) 14,441 - 14,441
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Comprehensive loss
Loss and total
comprehensive loss
for year - - - - (6,590) (6,590) - (6,590)
Total comprehensive
loss - - - - (6,590) (6,590) - (6,590)
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Transactions with
owners
Share-based payments - - - - 56 56 - 56
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Total transactions
with owners - - - - 56 56 - 56
Balance as at 1
January 2016 199 40,032 398 - (32,722) 7,907 - 7,907
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Comprehensive loss
Loss and total
comprehensive loss
for year - - - - (394) (394) - (394)
Total comprehensive
loss - - - - (394) (394) - (394)
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Transactions with
owners
Share-based payments - - - - 107 107 - 107
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Total transactions
with owners - - - - 107 107 - 107
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
Balance as at 31
December 2016 199 40,032 398 - (33,009) 7,620 - 7,620
--------------------- --------- --------- -------- ---------- ------------- -------- ---------------- --------
GROUP STATEMENT OF CASH FLOWS
Year ended 31 December 2016
Group Company
2016 2015 2016 2015
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- -------- -------- --------
Cash flows from operating
activities
Cash used in operations (1,974) (3,487) (1,809) (3,475)
Net cash flows used in operating
activities (1,974) (3,487) (1,809) (3,475)
------------------------------------ -------- -------- -------- --------
Cash flows from investing
activities
Purchase of property, plant
and equipment (70) (109) - -
Purchase of patents and
development costs (44) (54) - -
Interest received 4 20 4 20
Net cash flows (used in)/generated
from investing activities (110) (143) 4 20
------------------------------------ -------- -------- -------- --------
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares - - - -
Net cash flows generated
from financing activities - - - -
------------------------------------ -------- -------- -------- --------
Net (decrease) /increase
in cash and cash equivalents (2,084) (3,630) (1,805) (3,455)
Cash and cash equivalents
at the beginning of the
year 3,161 6,801 2,218 5,666
Exchange (losses) / gains
on bank balances (5) (10) 6 7
------------------------------------ -------- -------- -------- --------
Cash and cash equivalents
at the end of the year 1,072 3,161 419 2,218
------------------------------------ -------- -------- -------- --------
NOTES TO THE FINANCIAL STATEMENTS
1. Authorisation and basis of preparation
The board of directors approved these results on 14 March 2017.
The financial information set out above is abridged and does not
constitute the Group's statutory financial statements for the year
to 31 December 2016. Statutory financial statements for the year
ended 31 December 2016 have been reported on by the Group's
auditors. The report for the year ended 31 December 2016 was
unqualified.
The principal accounting policies have been applied consistently
throughout the year, unless otherwise stated, in the preparation of
these financial statements. The financial statements of Modern
Water plc ("the Company") have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the EU, IFRS Interpretations Committee (IFRIC) interpretations and
the Companies Act 2006 applicable to companies reporting under
IFRS. The financial statements have been prepared under the
historical cost convention.
2. Segmental analysis
The chief operating decision-maker is deemed to be the Board,
for whom monthly financial Information is provided by division to
gross profit and direct overheads; below this financial information
is reported in a consolidated Group format. For management
reporting purposes the Group is organised into two operating
segments (i) membranes; and (ii) monitoring, which matches this
divisional split.
Administrative expenses which are directly attributable to the
two main operating divisions (comprised of business development,
sales, operations and technical expenditure) are reported as
expenditure in the respective division. However, a significant
proportion of the Group's expenditure (legal, marketing, finance,
facilities and directors' expenditure) is managed and reported
centrally. As the commercial activities of the Group develop, this
financial information is expected to evolve.
2016 2015
--------- ----------- -------- -------- --------- ----------- -------- --------
Membrane Monitoring Central Total Membrane Monitoring Central Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- --------- ----------- -------- -------- --------- ----------- -------- --------
Revenue 148 3,481 - 3,629 10 3,222 - 3,232
Cost of sales (35) (1,729) - (1,764) (38) (1,986) - (2,024)
------------------- --------- ----------- -------- -------- --------- ----------- -------- --------
Gross profit
/ (loss) 113 1,752 - 1,865 (28) 1,236 - 1,208
Administrative
expenses (1,313) (1,692) (1,302) (4,307) (1,607) (1,744) (1,529) (4,880)
Share based
payments - - (107) (107) - - (56) (56)
Other gains
- net - - - - - - 18 18
Operating profit
/(loss) before
depreciation
and amortisation (1,200) 60 (1,409) (2,549) (1,635) (508) (1,567) (3,710)
Depreciation
and amortisation (69) (432) (1) (502) (60) (445) (22) (527)
Operating profit
/ (loss) (1,269) (372) (1,410) (3,051) (1,695) (953) (1,589) (4,237)
Finance income - - 514 514 - - 210 210
Finance costs - - (30) (30) - - - -
Profit / (loss)
before taxation (1,269) (372) (926) (2,567) (1,695) (953) (1,379) (4,027)
Taxation 318 134 13 465 93 - 156 249
------------------- --------- ----------- -------- -------- --------- ----------- -------- --------
Profit / (loss)
for the year (951) (238) (913) (2,102) (1,602) (953) (1,223) (3,778)
------------------- --------- ----------- -------- -------- --------- ----------- -------- --------
2015 figures have been restated to give better disclosure of
divisional financials
Geographical information
The Group operates in four main geographical regions, based on
customer location.
2016 2015
---------- ----------- ------- ---------- ----------- -------
Revenue Membranes Monitoring Total Membranes Monitoring Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ---------- ----------- ------- ---------- ----------- -------
Americas - 1,296 1,296 - 1,178 1,178
Europe - 733 733 - 725 725
Middle East
and Africa 148 155 303 10 383 393
Asia Pacific - 1,297 1,297 - 936 936
-------------- ---------- ----------- ------- ---------- ----------- -------
Total 148 3,481 3,629 10 3,222 3,232
-------------- ---------- ----------- ------- ---------- ----------- -------
The Group has non-current assets in four countries (2015: four),
based on location of the assets.
2016 2015
----------- ----------- ------- ----------- ----------- -------
Property, Intangible Property, Intangible
plant assets plant assets
and including and including
equipment goodwill Total equipment goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------- ----------- ----------- ------- ----------- ----------- -------
UK 16 3,388 3,404 85 3,647 3,732
US 236 - 236 245 - 245
Oman - - - - - -
Gibraltar 3 - 3 9 - 9
----------- ----------- ----------- ------- ----------- ----------- -------
Total 255 3,388 3,643 339 3,647 3,986
----------- ----------- ----------- ------- ----------- ----------- -------
Assets and liabilities are presented to the chief operating
decision maker in a consolidated Group format. Assets and
liabilities are not currently presented by segment, because they
are managed centrally. As the commercial activities of the Group
develop this financial information is expected to evolve.
Major customers
Within the Monitoring division revenue to one customer totalled
GBP603,000 (2015: GBP497,000), representing 17% (2015: 15%) of the
division's revenue. No other customer represented more than 10% of
the division's revenue. All revenue in the Membrane division came
from a single customer (2015: 100%).
3. Administrative expenses by nature
2016 2015
GBP000 GBP000
----------------------------------------- ------- -------
Employee benefits expense 2,495 2,573
Share-based payments 107 56
Operating lease payments 381 417
Research and development 200 156
Auditor's remuneration 64 103
Other administrative expenses 1,167 1,631
------------------------------------------ ------- -------
Total administrative expenses before
depreciation, amortisation and
exceptional charges 4,414 4,936
------------------------------------------ ------- -------
Depreciation and amortisation charges 502 527
Total administrative expenses including
depreciation, amortisation and
exceptional charges 4,916 5,463
------------------------------------------ ------- -------
4. Intangible assets
Research
and development,
and patented Customer
technology contracts
acquired acquired
Patent as part as part
and of a of a
trademark Development business business
Goodwill costs costs combination combination Total
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- --------- ----------- ------------ ------------------ ------------- ---------
At 1 January
2015
Cost 13,434 923 131 4,007 180 18,675
Accumulated
amortisation
and impairment
charge (11,902) (380) (131) (2,190) (180) (14,783)
----------------- --------- ----------- ------------ ------------------ ------------- ---------
Net book amount 1,532 543 - 1,817 - 3,892
----------------- --------- ----------- ------------ ------------------ ------------- ---------
Year ended 31
December 2015
Opening net
book amount 1,532 543 - 1,817 - 3,892
Additions - 54 - - - 54
Amortisation
charge - (44) - (255) - (299)
Closing net
book amount 1,532 553 - 1,562 - 3,647
----------------- --------- ----------- ------------ ------------------ ------------- ---------
At 31 December
2015
Cost 13,434 977 131 4,007 180 18,729
Accumulated
amortisation
and impairment
charge (11,902) (424) (131) (2,445) (180) (15,082)
----------------- --------- ----------- ------------ ------------------ ------------- ---------
Net book amount 1,532 553 - 1,562 - 3,647
----------------- --------- ----------- ------------ ------------------ ------------- ---------
Year ended 31
December 2016
Opening net
book amount 1,532 553 - 1,562 - 3,647
Additions - 44 - - - 44
Amortisation
charge - (48) - (255) - (303)
----------------- --------- ----------- ------------ ------------------ ------------- ---------
Closing net
book amount 1,532 549 - 1,307 - 3,388
----------------- --------- ----------- ------------ ------------------ ------------- ---------
At 31 December
2016
Cost 13,434 1,021 131 4,007 180 18,773
Accumulated
amortisation
and impairment
charge (11,902) (472) (131) (2,700) (180) (15,385)
Net book amount 1,532 549 - 1,307 - 3,388
----------------- --------- ----------- ------------ ------------------ ------------- ---------
5. Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Modern
Water plc will be held at 10.00am on 25 April 2017 at the offices
of Modern Water plc, Bramley House, The Guildway, Old Portsmouth
Road, Guildford, GU3 1LR.
6. Availability of Annual Report
Copies of the full statutory accounts will be posted to
shareholders at least 21 days before the Company's Annual General
Meeting and may be obtained from the date of posting from the
registered office of the Company office at Bramley House, The
Guildway, Old Portsmouth Road, Guildford, GU3 1LR, as well as from
the Company's website at www.modernwater.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAPDLFFFXEFF
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