TIDMRED

RNS Number : 8702N

RedT Energy PLC

27 September 2019

27 September 2019

redT energy plc

("redT" or the "Company")

Interim Results 2019

redT energy plc (AIM:RED), the energy storage technology company, is pleased to announce its results for the six months ended 30 June 2019

HIGHLIGHTS

Financial

   --           Revenue from continuing operations GBP0.2m (H1 2018 GBP0.2m) 
   --           Trading loss(1) reduced to GBP3.8m (H1 2018: GBP5.5m loss) as operating costs cut 
   --           Operating loss from continuing operations GBP3.5m (H1 2018: GBP5.7m loss) 
   --           Operating loss is net of GBP0.6m profit on disposal of Camco USA business 
   --           Half year end free cash GBP3.1m (31 December 2018: GBP3.3m) 
   --           Loans and borrowings GBPNil (H1 2018: GBPNil) 
   --           Profit from discontinued operations GBPNil (H1 2018 GBPNil) 

(1) Operating loss from continuing operations excluding profit on disposal of Camco USA and share-based payments

2019 interim financials were in line with management expectations.

Proposed Merger and Fundraising

On 25 July 2019, the Group announced it had agreed to outline terms, via a non-binding Memorandum of Understanding, for a proposed merger with Avalon Battery Corporation ("Avalon"). To drive the growth and development of the enlarged Group, provide working capital and take advantage of the substantial opportunity presented by the merger, the enlarged Group intends to raise at least GBP24m of new funds as part of the merger. redT and Avalon have received substantial preliminary support for this fundraising from a strong, new strategic investor that intends to make a cornerstone investment in the merged business, as well as from existing institutional investors in redT and both existing and certain proposed new investors in Avalon. The outline terms incorporate some interim financing to fund the business and additional costs associated with the merger process whilst it is underway. It is expected that the merger and the fundraising will be inter-conditional and complete at the same time.

Further details on the interim funding are expected to be announced in the near future, at which time a conference call will be held for investors.

Operational

During H1 2019 redT focused on its near-term pipeline, cutting costs and other expenditure where possible.

Developments during the period include:

-- First Gen 3 machine manufactured and tested awaiting Anglian Water to complete civil works at their site ready to accept the machine. Once this machine is commissioned, there are significant follow-on opportunities to optimise energy storage across other of Anglian Water's water treatment sites via a Collaborative Partnership agreement.

-- Solar plus Storage Partnership with Statkraft. In March 2019, the Group signed a heads of terms partnership with Norwegian state utility company, Statkraft, to provide a fully financed solar plus storage solution to UK C&I customers. This is the first time a solar plus storage product, financed under a PPA model, has been offered to the UK market. The partnership aims to roll out approximately 100MWp of PV and 60MWh of redT flow machines (800 units) to the UK market over the next 3 years.

-- Energy Superhub Oxford, redT's first large, UK grid project. In March 2019 the Group signed an agreement as a member of a consortium set up to deliver a GBP41m project incorporating a 50MW, grid-connected, vanadium flow / lithium-ion hybrid energy storage system in Oxford, UK. redT will supply and install 5MWh (72 units) of vanadium redox flow machines together with ancillary components. The project will be the largest deployment of flow machines in the UK and will be the largest vanadium flow / lithium-ion hybrid energy storage system globally. The project is now scheduled for delivery in 2020.

-- German grid portfolio - our revised proposition for the first project remains under consideration with our funding partner, however progress has been delayed as a result of ongoing changes to the German Secondary Control Reserve market by the German regulatory bodies. Clarity on the changes is not expected before December 2019. An update on the project will be provided once the implication of the proposed changes has been assessed, likely during H1 2020.

Commercial Update

As at 31 August 2019, the Group estimates its weighted sales opportunity pipeline to be circa GBP203m (31 May 2019: GBP199m), determined as detailed in the table below. These estimates do not represent forecasts of the future financial performance of the Group.

 
 Deal Stage of           Gross(1)    Weighted(1)    Average Expected 
  Project                                            Conversion Rate 
                                                   ----------------- 
 Project Development      GBP48m        GBP25m            52% 
                       -----------  -------------  ----------------- 
 Quoted                   GBP80m        GBP14m            17% 
                       -----------  -------------  ----------------- 
 Early stage            GBP1,132m      GBP164m            14% 
                       -----------  -------------  ----------------- 
 Total                  GBP1,260m      GBP203m            16% 
                       -----------  -------------  ----------------- 
 

1. The "gross" amounts in the above table are extracted from the Group's customer relationship management (CRM) system which tracks the progress and status of live commercial sale enquiries. The "weighted" figures are calculated by applying a probability weighting to the gross value of each enquiry based on management's estimate of the likelihood that an enquiry will result in a firm order at some point in the future. The probability weighting does not take into account the timing of when an enquiry might become an order. Management uses the following broad guidelines when allocating probability weightings:

 
 Remote        0-10% 
 Possible      10-40% 
 Reasonably 
  likely       40-60% 
 Probable      60-90% 
 

This pipeline excludes the recent 72 unit Energy Superhub Oxford project win, as this is considered an order.

Financial Review

As previously announced, it is necessary for the Group to raise additional financing to fund operations until production and sales are increased to a level at which the business becomes cash generative. On 14 March 2019 the Board launched a comprehensive Strategic Review to explore all the options available to the Group to fund its business. On 9 April 2019 the Group raised GBP3.2m (before expenses) from a placing and open offer to fund the business whilst the Strategic Review is completed and long-term funding secured. At the same time, a cost cutting exercise was implemented to reduce operating costs to a minimum whilst ensuring that the long-term value of the business is maintained. The main element of this cost cutting was a redundancy process which reduced ongoing staff costs by 25%, a monthly saving of GBP83k after the redundancies are fully effective.

On 5 April 2019 the Camco USA business was sold completing the exit from the legacy Camco activities. This transaction resulted in a cash inflow of GBP0.6m, net of cash sold with the business. GBP0.5m of this was received by 30 June 2019 with the balance received at the end of July 2019. The results from Camco USA, up to the date of sale (GBP35k loss), are reported in the results from discontinued operations in these financial statements. The transaction generated a profit on disposal of GBP0.6m.

The cash balance at 30 June 2019 was GBP3.1m. The Group's latest cash flow forecasts indicate that, without further funding, such as the interim funding mentioned above, cash will run out in December 2019. Unless additional funding is obtained by December, the Group would have no option but to cease trading.

The Group's need to raise additional investment creates a material uncertainty that casts significant doubt about its ability to continue as a going concern, however, based on the developments described above, the Board is optimistic that the necessary funding will be secured in the appropriate time scale. The Board therefore considers it appropriate to present these financials on a going concern basis.

Outlook

The immediate focus is on securing interim funding to complete the proposed Merger and Fundraise and ensure a satisfactory conclusion to the Strategic Review process This should provide both the immediate funding required by the Group and in the near term create a leading, global player with the secure financial position, global footprint and industry expertise required to succeed in the rapidly emerging energy storage market.

Alongside this process, which is being led by the Board, the executive team remain focussed on the manufacture, delivery and operation of our existing projects and securing further business from our sales opportunity pipeline.

Work has already started to identify and plan for the exciting opportunities that will be created by the merger with Avalon. Further details of these will be provided later in the process.

Commenting on the results, redT Executive Chairman, Neil O'Brien said:

"The global energy storage market is continuing its rapid growth as our energy system progresses strongly towards widespread decarbonisation. I am highly optimistic about the growing role our products will play in the inevitable global energy transition and retain my confidence in the redT team's ability to deliver shareholder value.

It is my strong belief that the proposed merger with Avalon and accompanying fundraise, if successful, will create a strong and financially robust company that will become a leader in the vanadium redox flow sector, and can compete effectively in one of the world's fastest growing markets.

I would like to thank our shareholders for their patience and support throughout the Strategic Review process to date and I look forward to providing further news on progress soon."

Enquiries:

 
 redT energy plc                           +44 (0)20 7121 6111 
 Neil O'Brien, Executive Chairman 
 Fraser Welham, Chief Financial Officer 
  Joe Worthington, Investor & Media 
  Relations 
 
 Investec Bank plc (Nominated Adviser 
  and Broker)                              +44 (0)20 7597 5970 
 Jeremy Ellis / Chris Sim / Cassie 
  Herlihy 
 
   VSA Capital (Joint Broker) 
   Andrew Monk / Andrew Raca / Simon 
   Barton                                    +44 (0)20 3005 5000 
 
 
 
 

Notes to Editors

About redT energy

redT energy plc are experts in energy storage, specialising in the design, manufacture, installation and operation of energy storage infrastructure which creates revenue alongside reliable, low-cost renewable generation for businesses, industry and electricity distribution networks. Using patented vanadium redox flow technology to store energy in liquid, redT's own energy storage machines can be run continually with no degradation: charging and discharging for over 25 years, matching the lifespan of renewable assets in on-grid, off-grid and weak-grid settings.

redT's energy storage solutions, developed over the past 15 years, address today's changing energy market by providing a flexible platform for time shifting surplus renewable power, securing electricity supplies and earning revenue through grid services. The Company has customers in the UK, Europe, sub-Saharan Africa, Australia and Asia Pacific. For more information, visit www.redTenergy.com

For sales, press or investor enquiries, please contact the redT team on +44 (0)207 061 6233.

Consolidated Statement of Financial Position

At 30 June 2019

 
 
                                                      H1 2019          H1 2018  FY 2018 (audited) 
                                                  (unaudited)      (unaudited) 
                                                      GBP'000          GBP'000            GBP'000 
Non-current assets 
Property, plant and equipment                             398              574                538 
Intangible assets and goodwill            4            13,402           13,265             13,491 
Deferred tax assets                                         -               85                  - 
                                                       13,800           13,924             14,029 
                                              ---------------  ---------------  ----------------- 
 
Current assets 
Inventory                                 5               494            1,785                525 
Prepayments and accrued income            6               404              989                626 
Trade and other receivables               7               339              696                559 
Corporation tax receivable                                  -                -                  - 
Cash and cash equivalents                 8             3,072            4,319              3,344 
                                                        4,309            7,789              5,054 
                                              ---------------  ---------------  ----------------- 
 
Total assets                                           18,109           21,713             19,083 
                                              ---------------  ---------------  ----------------- 
 
Current liabilities 
Trade and other payables                  9             (856)          (1,390)            (1,567) 
Deferred income                           10            (276)          (1,558)              (173) 
                                                      (1,132)          (2,948)            (1,740) 
                                              ---------------  ---------------  ----------------- 
 
Non-current liabilities 
Deferred income                           10                -             (46)               (35) 
                                                                          (46)               (35) 
                                              ---------------  ---------------  ----------------- 
 
Total liabilities                                     (1,132)          (2,994)            (1,775) 
                                              ---------------  ---------------  ----------------- 
 
Net assets                                             16,977           18,719             17,308 
                                              ---------------  ---------------  ----------------- 
 
 
  Equity attributable to equity holders 
  of the parent 
Share capital                                           8,157            6,135              6,777 
Share premium                                         101,023           95,325             99,473 
Share-based payment reserve                             2,411            1,904              2,225 
Retained earnings                                    (94,464)         (84,211)           (91,072) 
Translation reserve                                     1,272              988              1,327 
Other reserve                                         (1,422)          (1,422)            (1,422) 
Non-controlling interest                                    -                -                  - 
 
Total equity                                           16,977           18,719             17,308 
                                              ---------------  ---------------  ----------------- 
 

Consolidated Statement of Comprehensive Income

For the 6 months to 30 June 2019

 
 
 
                                                      H1 2019      H1 2018    FY 2018 
                                                  (unaudited)  (unaudited)  (audited) 
Continuing operations                                 GBP'000      GBP'000    GBP'000 
 
Revenue                                                   192          192      2,525 
Cost of sales                                            (25)        (176)    (2,170) 
                                                  -----------  -----------  --------- 
Gross profit                                              167           16        355 
 
Administrative expenses                               (4,069)      (5,745)   (12,636) 
Gain on sale of discontinued operations                   578            -          - 
                                                  -----------  -----------  --------- 
Results from operating activities                     (3,491)      (5,729)   (12,281) 
 
Finance expense                                           (3)            -          - 
Financial income                                            -           13         14 
Foreign exchange movement                                (30)        (168)      (162) 
                                                  -----------  -----------  --------- 
Net financing expense                                    (33)        (155)      (148) 
 
Loss before tax                                       (3,357)      (5,884)   (12,429) 
Income tax charge                                           -          (7)       (92) 
                                                  -----------  -----------  --------- 
Loss from continuing operations                       (3,357)      (5,891)   (12,521) 
 
Discontinued operations 
 
(Loss)/profit from discontinued operations 
 (net of tax)                                 2          (35)           46        (1) 
                                                  -----------  -----------  --------- 
Loss for the period                                   (3,392)      (5,845)   (12,522) 
 
Other comprehensive income 
Exchange differences on translation 
 of foreign operations                                   (55)          105        260 
Total comprehensive loss for the period               (3,447)      (5,740)   (12,262) 
                                                  -----------  -----------  --------- 
 
Loss for the period attributable to: 
Equity holders of the parent                          (3,392)      (6,004)   (12,681) 
Non-controlling interest                                    -          159        159 
                                                  -----------  -----------  --------- 
Loss for the period                                   (3,392)      (5,845)   (12,522) 
                                                  -----------  -----------  --------- 
 
Total comprehensive loss attributable 
 to: 
Equity holders of the parent                          (3,447)      (5,899)   (12,421) 
Non-controlling interest                                    -          159        159 
                                                  -----------  -----------  --------- 
Total comprehensive loss for the period               (3,447)      (5,740)   (12,262) 
                                                  -----------  -----------  --------- 
 
 
Basic loss per share in GBP pence 
From continuing operations                    11       (0.39)       (0.89)     (1.77) 
From continuing and discontinued operations   11       (0.39)       (0.88)     (1.77) 
 
Diluted loss per share in GBP pence 
From continuing operations                    11       (0.39)       (0.89)     (1.77) 
From continuing and discontinued operations   11       (0.39)       (0.88)     (1.77) 
 
 

Consolidated Statement of Changes in Equity

For the 6 months to 30 June 2019 (unaudited)

 
                                                                                         Equity           Equity 
                                                                                   attributable     attributable 
                                                                                             to               to 
                                    Share-based                                    shareholders  non-controlling 
                   Share     Share      payment   Retained  Translation     Other        of the         interest     Total 
                 Capital   premium      reserve   Earnings      reserve   reserve       Company                     equity 
                 GBP'000   GBP'000      GBP'000    GBP'000      GBP'000   GBP'000       GBP'000          GBP'000   GBP'000 
 
Balance at 1 
 January 2019      6,777    99.473        2,225   (91,072)        1,327   (1,422)        17,308                -    17,308 
Total 
comprehensive 
loss for the 
period 
Loss for the 
 period                -         -            -    (3,392)            -         -       (3,392)                -   (3,392) 
Other 
comprehensive 
income 
Foreign 
 currency 
 translation 
 differences           -         -            -          -         (55)         -          (55)                -      (55) 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
Total 
 comprehensive 
 loss for the 
 period            6,777    99,473        2,225   (94,464)        1,272   (1,422)        13,861                -    13,861 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
Transactions 
with owners, 
recorded 
directly in 
equity 
Contributions 
by and 
distributions 
to owners 
Share-based 
 payments              -         -          186          -            -         -           186                -       186 
Issuance of 
 shares            1,380     1,821            -          -            -         -         3,201                -     3,201 
Transaction 
 costs arising 
 on share 
 issues                -     (271)            -          -            -         -         (271)                -     (271) 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
Total 
 contributions 
 by and 
 distributions 
 to owners         1,380     1,550          186          -            -         -         3,116                -     3,116 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
Balance at 30 
 June 2019         8,157   101,023        2,411   (94.464)        1,272   (1,422)        16,977                -    16,977 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
 

For the 6 months to 30 June 2018 (unaudited)

 
                                                                                         Equity           Equity 
                                                                                   attributable     attributable 
                                                                                             to               to 
                                    Share-based                                    shareholders  non-controlling 
                   Share     Share      payment   Retained  Translation     Other        of the         interest     Total 
                 Capital   premium      reserve   Earnings      reserve   reserve       Company                     equity 
                 GBP'000   GBP'000      GBP'000    GBP'000      GBP'000   GBP'000       GBP'000          GBP'000   GBP'000 
 
Balance at 1 
 January 2018      5,560    92,198        1,707   (78,207)          883   (1,422)        20,719            (159)    20,560 
Total 
comprehensive 
loss for the 
period 
Loss for the 
 period                -         -            -    (6,004)            -         -       (6,004)              159   (5,845) 
Other                  -         -            -          -            -         -             -                -         - 
comprehensive 
income 
Foreign 
 currency 
 translation 
 differences           -         -            -          -          105         -           105                -       105 
                   _____     _____        _____      _____        _____      ____         _____            _____     _____ 
Total 
 comprehensive 
 loss for the 
 period                -         -            -    (6,004)          105         -       (5,899)              159   (5,740) 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
Transactions 
with owners, 
recorded 
directly in 
equity 
Contributions 
by and 
distributions 
to owners 
Share-based 
 payments              -         -          197          -            -         -           197                -       197 
Issuance of 
 shares              575     3,352            -          -            -         -         3,927                -     3,927 
Transaction 
 costs arising 
 on share 
 issues                -     (225)            -          -            -         -         (225)                -     (225) 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
Total 
 contributions 
 by and 
 distributions 
 to owners           575     3,127          197          -            -         -         3,899                -     3,899 
                   _____     _____         ____      _____        _____     _____         _____            _____     _____ 
Balance at 30 
 June 2018         6,135    95,325        1,904   (84,211)          988   (1,422)        18,719                -    18,719 
                   _____     _____        _____      _____        _____     _____         _____            _____     _____ 
 

For the year ended 31 December 2018 (audited)

 
 
 
                                                                                                          Equity            Equity 
                                                                                                    attributable      attributable 
                                             Share-based                                                      to                to 
                        Share        Share       payment   Retained   Translation     Other         shareholders   non-controlling         Total 
                      capital      premium       reserve   earnings       reserve   reserve               of the          interest        Equity 
                                                                                                         Company 
                      GBP'000      GBP'000       GBP'000    GBP'000       GBP'000   GBP'000              GBP'000           GBP'000       GBP'000 
Balance as at 1 
 January 2018           5,560       92,198         1,707   (78,391)         1,067   (1,422)               20,719             (159)        20,560 
Total 
comprehensive 
loss for 
the year 
Loss for the 
 year                       -            -             -   (12,522)             -         -             (12,522)                        (12,522) 
Minority 
 interest loss 
 not 
 recoverable                                                  (159)                                        (159)               159             - 
Other 
comprehensive 
loss 
Foreign 
 currency 
 transaction 
 differences                -            -             -                      260         -                  260                 -           260 
                        _____        _____         _____      _____         _____     _____                _____            ______         _____ 
Total 
 comprehensive 
 loss for 
 the year                   -            -             -   (12,681)           260         -             (12,421)               159      (12,262) 
                          ___        _____         _____      _____         _____     _____                _____            ______         _____ 
Transactions 
with owners, 
recorded 
directly in 
equity 
Contributions 
by and 
distributions 
to owners 
Share-based 
 payments                   -            -           518          -             -         -                  518                 -           518 
Issuance of 
 shares                 1,217        7,834             -          -             -         -                9,051                 -         9,051 
Transaction 
 costs arising 
 on 
 share issues               -        (559)             -          -             -         -                (559)                 -         (559) 
                        _____        _____         _____      _____         _____     _____                _____            ______         _____ 
Total 
 contributions 
 by and 
 distributions 
 to owners              1,217        7,275           518          -             -         -                9,010                 -         9,010 
                        _____        _____         _____      _____         _____     _____                _____            ______        ______ 
                        _____        _____         _____      _____         _____     _____                _____            ______         _____ 
Balance at 31 
 December 2018          6,777       99,473         2,225   (91,072)         1,327   (1,422)               17,308                 -        17,308 
                        _____        _____         _____      _____         _____     _____                _____            ______         _____ 
 

Consolidated Statement of Cash Flow

For the 6 months to 30 June 2018

 
 
                                                    H1 2019      H1 2018     FY 2018 
                                                (unaudited)  (unaudited)   (audited) 
                                                    GBP'000      GBP'000     GBP'000 
Cash flows from operating activities 
Loss for the year                                   (3,392)      (5,845)    (12,522) 
Adjustments for: 
Depreciation, amortisation and impairment               130          130         274 
Foreign exchange loss on translation                     30          168         162 
Financial income                                          -         (13)        (14) 
Impairment of receivables - bad debt 
 write-off                                                -            -         (4) 
Equity settled share-based payment 
 expenses                                               220          225         570 
Gain on disposal of continuing operations             (578)            -           - 
Taxation                                                  -            7          92 
                                                -----------  -----------  ---------- 
                                                    (3,590)      (5,328)    (11,442) 
 
Decrease/(increase) in trade and other 
 receivables                                            302        1,243       1,433 
Increase in inventory                                    31      (1,235)          25 
Decrease in trade and other payables                  (365)        (343)     (1,500) 
                                                -----------  -----------  ---------- 
                                                       (32)        (335)        (42) 
 
Net cash from operating activities                  (3,622)      (5,663)    (11,484) 
                                                -----------  -----------  ---------- 
 
Cash flows from investing activities 
Acquisition of property, plant & equipment                -        (276)       (382) 
Net cash from investing activities                        -        (276)       (382) 
                                                -----------  -----------  ---------- 
 
Cash flows from financing activities 
Proceeds from the issue of share capital              2,929        3,702       8,492 
Proceeds from sale of discontinued 
 operations                                             476            -           - 
Interest received                                         -           13          14 
Net cash from financing activities                    3,405        3,715       8,506 
                                                -----------  -----------  ---------- 
 
Net (decrease)/increase in cash and 
 cash equivalents                                     (217)      (2,224)     (3,360) 
Net cash and cash equivalents at 1 
 January                                              3,344        6,603       6,603 
Effect of foreign exchange rate fluctuations 
 on cash held                                          (55)         (60)         101 
Net cash and cash equivalents at period 
 end                                                  3,072        4,319       3,344 
                                                -----------  -----------  ---------- 
 

Notes

Significant accounting policies

redT energy plc (the "Company") is a public company incorporated in Jersey under Companies (Jersey) Law 1991. The address of its registered office is 3(rd) floor, Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ. The consolidated interim financial report of the Company for the period from 1 January 2018 to 30 June 2018 comprises the Company and its subsidiaries (together the "Group").

Basis of preparation

The annual financial statements of the Group for the year ended 31 December 2018 have been prepared in accordance with IFRSs as adopted by the EU ("Adopted IFRSs"). The interim set of financial statements included in this half-yearly report has been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU. The interim set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 December 2018. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2018.

This interim financial information has been prepared on the historical cost basis. The accounting policies applied are consistent with those adopted and disclosed in the annual financial statements for the period ended 31 December 2018. The accounting policies have been consistently applied across all Group entities for the purpose of producing this interim financial report.

The financial information included in this document does not comprise of statutory accounts within the meaning of Companies (Jersey) Law 1991. The comparative figures for the financial year ended 31 December 2018 are not the company's statutory accounts for that financial year within the meaning of Companies (Jersey) Law 1991. Those accounts have been reported on by the company's auditors and delivered to the Jersey Financial Services Commission. The report of the auditors was unqualified.

Estimates

The preparation of the interim financial report in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Going Concern Basis

The redT business is still a young business in an emerging market and has not yet reached the stage in its development when it is cash generative. As such, it is still dependent on its ability to attract additional investment to fund its operations.

The cash balance at 30 June 2019 was GBP3.1m. The Group's latest cash flow forecasts indicate that, without further funding such as the interim funding, cash will run out in December 2019. Unless additional funding is obtained by then the Group would have no option but to cease trading. However, the Board is optimistic, based on the progress and the advanced status of discussions, interim funding will be secured which, combined with the current cash reserves, will provide the Group with adequate time to conclude the Strategic Review and secure the necessary long-term funding that it requires.

It is still not certain that the Group will be able to secure the level of investment required before cash runs out. This therefore creates a material uncertainty that casts significant doubt about the Group's ability to continue as a going concern.

In addition to the funding issue discussed above, the Directors have also reviewed other varying, and wide-ranging information relating to both present and future conditions when reaching their conclusion regarding going concern. These included:

   --      the opportunity presented by the rapidly emerging energy storage market; 

-- the commercial viability of redT's vanadium redox flow energy storage product within this market;

   --      contracts being delivered and projects currently in the pipeline. 

The Group also has established relationships with a number of customers and suppliers and has the continuing support of existing investors, as evidenced by recent fundraises.

Having taken all of the above factors into account, the Directors continue to believe it is appropriate to prepare these financial statements on a going concern basis, noting the material uncertainty that exists arising from the need to secure long-term funding within the coming few months.

The financial statements do not include any adjustments that would be necessary should the going concern basis of preparation not be appropriate.

   1    Segmental Reporting 

Following the disposal of the Camco USA business in April 2019 the Group comprises one reporting segment, "redT". redT provides energy storage solutions with financing options, using various energy storage technologies including its own durable and robust energy storage machines based upon proprietary vanadium redox flow technology. The redT segment also contains the corporate costs of the Group.

   2    Discontinued operations 

On 5 April 2019 the Group completed the divestment of its legacy Camco business with the sale of its wholly owned subsidiary Camco International Group Inc. ('CIG'). This business provides project development and asset management services to biogas projects in the USA.

CIG was sold to an entity controlled by Jim Wiest, Managing Director of CIG therefore the divestment constituted a related party transaction under the AIM Rules. The Directors concluded, having consulted with Investec acting in its capacity as the Company's Nominated Adviser, that the terms of the sale were fair and reasonable insofar as the Company's shareholders were concerned.

Cash receipts from the sale consist of a distribution of US$1.0m (GBP0.8m) received by the UK Group funded by a loan into CIG from a third party plus US$0.5m (GBP0.4m) of further consideration paid in two instalments, the first paid in April 2019 and the balance in July 2019. The book and fair value of the net assets of CIG at the date of sale were GBP0.59m, including cash of GBP0.55m, giving rise to a profit on disposal of GBP0.6m

In the prior year, the Group ceased its Carbon activities on 10 January 2018 and, on 5 January 2018, it divested its holdings in Camco Africa Limited (CAL) for a nominal amount. The book and fair value of the net assets of CAL at the time of sale were GBPnil, so the profit on the disposal was also GBPnil.

The above businesses constitute the discontinued operations in these financial statements. Financial information relating to the discontinued operations to the dates of their disposal / cessation is set out below.

Results of the discontinued operations

 
                                                    H1 2019       H1 2018      FY 2018 
                                                (unaudited)   (unaudited) 
                                                                             (audited) 
                                                    GBP'000       GBP'000      GBP'000 
Revenue                                                 638         1,502        2,134 
Expenses                                              (669)       (1,456)      (2,135) 
                                               ------------  ------------  ----------- 
Operating loss for the period                          (31)            46          (1) 
Income tax charge                                       (4)             -            - 
                                               ------------  ------------  ----------- 
(Loss)/profit for the period                           (35)            46          (1) 
Decrease in trade and other receivables                  47           432          266 
Increase in trade and other payables                     50           157          134 
                                               ------------  ------------  ----------- 
Net cash (used in)/from operating activities             62           635          399 
                                               ------------  ------------  ----------- 
 
   3    Share based payments 

During the period, the Group operated share-based incentive plans. The expense recognised in the period in respect to the plans is set out below.

 
                                     H1 2019          H1 2018     FY 2018 (audited) 
                                 (unaudited)      (unaudited) 
                                     GBP'000          GBP'000               GBP'000 
redT Employee Share Plans                220              225                   570 
                             ---------------  ---------------  -------------------- 
 
   4    Intangible assets and goodwill 
 
Goodwill - Subsidiary acquisition (REDH) 
                                                   H1 2019          H1 2018     FY 2018 (audited) 
                                               (unaudited)      (unaudited) 
                                                   GBP'000          GBP'000               GBP'000 
Cost at 1 January                                    7,362            7,257                 7,257 
Effects of movements in foreign exchange              (50)             (28)                   105 
                                           ---------------  ---------------  -------------------- 
Cost at end of period                                7,312            7,229                 7,362 
                                           ---------------  ---------------  -------------------- 
 
 
Intangible assets - R&D (REDH) 
                                                   H1 2019          H1 2018     FY 2018 (audited) 
                                               (unaudited)      (unaudited) 
                                                   GBP'000          GBP'000               GBP'000 
Cost at 1 January                                    6,129            6,046                 6,046 
Effects of movements in foreign exchange              (39)             (10)                    83 
                                           ---------------  ---------------  -------------------- 
Cost at end of period                                6,090            6,036                 6,129 
                                           ---------------  ---------------  -------------------- 
 
 
Total Goodwill & Intangible Assets 
                                                   H1 2019          H1 2018     FY 2018 (audited) 
                                               (unaudited)      (unaudited) 
                                                   GBP'000          GBP'000               GBP'000 
Cost at 1 January                                   13,491           13,303                13,491 
Effects of movements in foreign exchange              (89)             (38) 
                                           ---------------  ---------------  -------------------- 
Cost at end of period                               13,402           13,265                13,491 
                                           ---------------  ---------------  -------------------- 
 
   5    Inventory 
 
                       H1 2019 (unaudited)          H1 2018        FY 2018 
                                                (unaudited)      (audited) 
                                   GBP'000          GBP'000        GBP'000 
Stock                                  343              234            393 
Work in progress                       151            1,192            130 
Finished goods                           -              359              2 
                    ----------------------  ---------------  ------------- 
                                       494            1,785            525 
                    ----------------------  ---------------  ------------- 
 
   6    Prepayments and accrued income 
 
                     H1 2019 (unaudited)          H1 2018        FY 2018 
                                              (unaudited)      (audited) 
                                 GBP'000          GBP'000        GBP'000 
Prepayments                          283              850            371 
Accrued income                       121              139            255 
                  ----------------------  ---------------  ------------- 
                                     404              989            626 
                  ----------------------  ---------------  ------------- 
 
   7    Trade and other receivables 
 
                        H1 2019 (unaudited)          H1 2018        FY 2018 
                                                 (unaudited)      (audited) 
                                    GBP'000          GBP'000        GBP'000 
Trade receivables                       113              332            373 
Other receivables                       226              364            186 
                     ----------------------  ---------------  ------------- 
                                        339              696            559 
                     ----------------------  ---------------  ------------- 
 
   8    Cash and cash equivalents 
 
                           H1 2019     H1 2018 (unaudited)        FY 2018 
                       (unaudited)                              (audited) 
                           GBP'000                 GBP'000        GBP'000 
Cash                         3.073                   3,939          3,344 
Restricted cash                  -                     380              - 
                   ---------------  ----------------------  ------------- 
                             3.073                   4,319          3,344 
                   ---------------  ----------------------  ------------- 
 

Restricted cash relates to an escrow account deposit to secure a bank guarantee issued to a customer.

   9    Trade and Other Payables 
 
                          H1 2019     H1 2018 (unaudited)        FY 2018 
                      (unaudited)                              (audited) 
                          GBP'000                 GBP'000        GBP'000 
Trade payables              (279)                   (452)          (505) 
Other accruals              (563)                   (938)        (1,028) 
Other payables               (14)                       -           (34) 
                  ---------------  ----------------------  ------------- 
                            (856)                 (1,390)        (1,567) 
                  ---------------  ----------------------  ------------- 
 

10 Deferred Income

 
                                   H1 2019     H1 2018 (unaudited)        FY 2018 
                               (unaudited)                              (audited) 
                                   GBP'000                 GBP'000        GBP'000 
Non-current liabilities 
Deferred income                          -                    (46)           (35) 
                           ---------------  ----------------------  ------------- 
 
Current liabilities 
Deferred income                      (276)                 (1,558)          (173) 
                           ---------------  ----------------------  ------------- 
 

11 Loss per share

 
Loss per share attributable to equity 
 holders of the company is as follows: 
                                                      H1 2019          H1 2018        FY 2018 
                                                  (unaudited)      (unaudited)      (audited) 
                                                    GBP pence        GBP pence      GBP pence 
                                                    per share        per share      per share 
Basic loss per share 
From continuing operations                             (0.39)           (0.89)         (1.77) 
From continuing and discontinued operations            (0.39)           (0.88)         (1.77) 
                                              ---------------  ---------------  ------------- 
 
Diluted loss per share 
From continuing operations                             (0.39)           (0.89)         (1.77) 
From continuing and discontinued operations            (0.39)           (0.88)         (1.77) 
                                              ---------------  ---------------  ------------- 
 
 
                                                      GBP'000          GBP'000        GBP'000 
Loss used in calculation of basic and 
 diluted loss per share 
From continuing operations                            (3,357)          (6,050)       (12,680) 
From continuing and discontinued operations           (3,392)          (6,004)       (12,681) 
 
 
 
 
                                                    H1 2019          H1 2018        FY 2018 
                                                (unaudited)      (unaudited)      (audited) 
                                                     Number           Number         Number 
Weighted average number of shares used 
 in calculation 
Number in issue at 1 January                    791,219,132      653,923,424    653,923,424 
Effect of shares issued in the year              73,658,244       28,541,409     64,847,915 
                                            ---------------  ---------------  ------------- 
Weighted average of basic shares at end 
 of period                                      864,877,376      682,464,833    718,771,339 
Effect of share options granted not yet                   -                -              - 
 exercised which are not anti-dilutive 
Weighted average number of diluted shares 
 at end of period                               864,877,376      682,464,833    718,771,339 
                                            ---------------  ---------------  ------------- 
 
 

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the period.

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares. Where the inclusion of potentially issuable shares decreases the loss per share (anti-dilutive), the potentially issuable shares have not been included. This was the situation for both the 2019 and 2018 calculations. The weighted average number of shares not included in the diluted share calculation because they were anti-dilutive was 58,971,918 (HY 2018: 50,632,374, FY 2018: 44,361,763).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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