25 Mar 2010 07:00
| Press Release | 25 March 2010 |
Acta S.p.A.
Preliminary Results for the year ended 31 December 2009
Acta S.p.A ("Acta" or the "Company"), the provider of clean energy products and environmental catalysts, today announces its Preliminary Results for the twelve months ended 31 December 2009.
2009 Commercial Highlights
| ● | Successful implementation of product strategy announced in 2008 - Launch of unique hydrogen generator with multiple commercial applications - Launch of fuel cell power generator product range (100W to 1KW) - Trade show attendance and communications programme launched |
| ● | Operational restructuring from research to full commercialisation making good progress - Launch of Acta Energy products division - Appointed key commercial and sales staff - Supply chain and production capacity increasing to meet demand forecast |
| ● | Continued success in development contracts, R&D and grant activities - Improvements in ammonia cracking catalyst for automotive applications - Second stage development contract with Sumitomo and global manufacturer completed - Joint development contract signed with DuPont |
2009 Financial Results
| ● | Successful implementation of 2008 cost reduction programme |
| ● | Operating loss reduced by 23% to €4.2m (2008: €5.4m) |
| ● | FIT project grant income of €504k recognized in period (2008: Nil) |
| ● | Other grant income received for €273k (2008: €119k) |
| ● | Grant project applications submitted and approved for €174k (2008: €750k) |
| ● | Operating cash outflow, including grant receipts, reduced by 36% to €2.7m (2008: €4.2m) |
| ● | Year end cash of €3.6m (2008: €2.9m) |
Highlights since Period End:
| ● | Solar panel installation programme to complete the renewable energy value chain and to provide immediate revenue stream - Preliminary Contract signed in 1Q 2010 for major installation project of up to €50 million - Joint Venture formed with leading Italian installation company - First phase of contract expected to produce €8.8m in JV revenues in 2010. - Additional installation projects are expected to be added for delivery during the year - Programme forecast to generate sufficient cash flow to bring Company to profitability without further shareholder funding |
| ● | Significant commercial progress in Acta Energy product distribution - Appointment of 8 product distributors covering 6 countries and 3 sectors - 3 joint product development agreements in UPS, nautical and RV sectors - Sumitomo marketing agreement amended to allow direct distribution in Asia (ex-Japan) - Hydrogen generator wins prestigious Qualitec Technology Award for innovation - Hydrogen generator product certification completed |
Robert Drummond, Chairman, said today:
"2009 has been a transformational year for Acta, during which we refocused our business strategy, repositioned our activities, and brought our first products to the market. Achieving this significant transition has required the utmost of our staff, and I thank them for their continued support and enthusiasm.
"2010 will be an exciting year for us. We will be focusing on equipping our business for the full commercialisation of our "hydrogen product line", and on the successful delivery of these new products and of the photovoltaic programme, while remaining prudently within our financing capabilities. The commercial demand for our hydrogen generator, and for the fuel cell products that it brings to market, has been outstanding, from the public and press, from distributors, and from manufacturers seeking to incorporate our products into theirs. We see a great commercial opportunity arising from our ability to deliver a low-cost, "do-it-yourself" hydrogen infrastructure, and we believe that this year will see us become one of the first companies to build a business in the fuel cell sector with true commercial viability.
"We look forward to achieving significant financial growth in 2010 in our commercial engagements, our product shipments and our revenues. We believe that the Company will become profitable and cash generative on a monthly basis for the first time during the second half of this year, and will continue to see rapid growth into 2011 and thereafter."
For further information please contact:
| Acta S.p.A: |
|
| Paul Barritt, Chief Financial Officer www.acta-nanotech.com | Tel: +39 050 644281 www.actaenergy.it
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| Charles Stanley Securities (Nominated Adviser): |
|
| Russell Cook / Jen Boorer | Tel: +44 (0) 20 7149 6000 |
Media enquiries:
| Abchurch Communications Limited |
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| Justin Heath / Monique Tsang / Hannah Sharman hannah.sharman@abchurch-group.com | Tel: +44 (0) 20 7398 7725 www.abchurch-group.com |
Chairman's Statement
I am pleased to present the full year results for the year ended 31 December 2009 and to provide this statement on our commercial progress.
Overview
At the end of 2008 we outlined our programme to reduce costs and to focus on the development of products with near-term revenue opportunities. I am delighted to report our success in delivering this strategy, through which we have brought to market a unique hydrogen generator, a range of fuel cell power generators, a number of joint product development partnerships, and a rapidly growing commercial network of distributors. Our trade show programme, which began in November 2009, has generated high levels of commercial interest among distributors, OEM's and the general public, and our products have started to attract a great deal of publicity and media interest.
Also during 2009 we developed new commercial and technical partnerships to address the attractive opportunities available in the Italian solar panel installation sector, where we see long term market synergies with our core hydrogen generator product range. These developments have recently borne fruit with the creation of a new joint venture and the signing of a Preliminary Contract with a specialist Italian clean energy investment fund for the installation of large photovoltaic parks during 2010, with a potential contract value of up to €50 million. Further details of these developments are given in the Chief Executive's review.
One of the challenges of the last year has been to re-engineer the business to manage new commercial and operational activities, and this process continues as we make ready for the full commercialisation of our products this year. Achieving this significant transition has required the utmost of our staff, and I thank them for their support and enthusiasm as we continue on this journey.
Financial Results
Our financial performance during 2009 showed a significant benefit from the actions taken in late 2008 to reduce our non-core cost base. Operating losses were reduced by €1.2 million to €4.2 million, a reduction of 22% from the losses of 2008.
While our revenues in the year were lower by €250,000, we were able to recognise grant income of €816k during the period (2008: €132k), primarily in relation to the €2.1m FIT grant project that was completed in 2008. We continue to pursue new grant funded development projects where they fit within our technical development programme, and in 2009 we received approvals for new grants totalling €174k.
Operating cash outflow, including grant receipts, fell by 36% to €2.8 million, resulting in cash balances of €3.6m at the end of the year. While these funds are sufficient to fund the business at current cash utilisation rates until the middle of 2011, we are confident that the profits and cash flow generated from the rapid growth of our hydrogen products business, together with the photovoltaic joint venture, will be sufficient to carry the Company through to monthly profitability and positive cash flow for the first time during the second half of this year.
Outlook
We entered 2010 in confident mood, and this confidence has been validated by the rapid progress that we have made in the year to date.
As announced on 23 March 2010, we have entered the photovoltaic installation sector through a joint venture with one of Italy's leading PV installation companies, and a contract for a large scale PV installation programme with the renewable energy fund of a listed Italian investment bank. This new initiative, developed over the last year, allows us to complete the renewable energy value chain from power generation, through energy conversion and storage, to utilisation in fuel cell products and applications, as well as bringing a substantial new revenue and cash generating activity to our business.
We will maintain careful financial management of the photovoltaic installation programme, while dedicating our main operational resources to the production and commercialisation of our unique hydrogen generator product range.
During the second quarter of 2010 we will continue to build out the commercial and operational structures of the business, and this will lead to the full commercialisation of our "hydrogen product line" by the middle of the year, and significant growth in our product revenue streams from the second half onwards.
Development partnerships to integrate our hydrogen generation technology into third party products, including UPS devices and fuel enrichment systems, will also be a key priority, and these partnerships are progressing well: they too will start to produce significant revenue streams by the end of the year, with rapid growth in 2011.
We look ahead to the current year with anticipation, and we will be keeping you informed of our commercial progress and project developments as we go through the year.
Chief Executive's Review
Introduction
Our corporate focus has always been on the development of practical, economically viable technologies for the development of renewable energy resources, clean technology products, and environmentally friendly industrial applications. In 2009 we have made significant progress towards realising these goals, developing a range of products and projects that will see full realisation in 2010.
We believe that these products and projects make a meaningful contribution to addressing the problems of environmental sustainability, and that, as their full commercial potential is realised, we will be able to generate for the first time monthly profits during the second half of 2010, with significant growth thereafter and very significant value creation for our shareholders during this year and beyond.
Commercial Progress
2009 was a year of exciting commercial progress. We moved from the demonstration of our prototype hydrogen generator in February 2009, through completion of its technical development in the Summer, to commercial launch in November and first orders received by the year end. Commercial demand for this unique product, which generates clean, dry, compressed hydrogen from a compact, light weight, low cost unit, has been outstanding. We then developed a range of fuel cell products and applications (power generators, a fuel cell powered electric bicycle) to demonstrate the commercial feasibility of these applications when combined with our hydrogen generator, and also these products have met with significant commercial demand.
Our trade show and corporate communications programme has resulted in product enquiries, agency and distribution requests, and joint product development proposals from across the globe, covering many key and early adopter sectors: UPS systems (China, USA, Italy, Australia, Spain); light transport applications (Italy, Belgium); renewable energy storage, including energy independent homes (Japan, Italy); nautical accessories and power systems (Italy, France, Finland, Greece, Turkey, Belgium, New Zealand); camper van and other recreational vehicle systems (Italy); and onsite hydrogen gas generation and industrial electrolysers (Japan, Italy).
In addition, during the year we used our breakthrough technology to develop a small, low cost onboard automotive accessory capable of generating hydrogen for diesel engine fuel enrichment. This system enhances the combustion of diesel fuel in the engine, lowering carbon emissions and improving fuel economy. The unit was demonstrated at the Bologna International Motor Show in December 2009, and is currently undergoing live testing both by Acta and by a major truck manufacturer at their Italian testing facilities. With a payback period of less than one year from the fuel savings alone, this product has the potential to become a mass market automotive accessory that can be built into or retrofitted to any diesel truck or car.
Our catalyst development activities have continued to make good progress, in automotive and other industrial applications, although as was noted last year, commercial results will be seen from these developments only in the medium term. This is nonetheless an important area of activity for us, addressing very significant market opportunities which are described in more detail below. We will continue to defray the cost of these activities through grant funded projects and joint development contracts, and during 2009 we received grant funding approval for one project with a total project value of €2.1m and a grant income value for the Company of €174k. In addition, we were awarded a joint development contract by DuPont Inc, the inventor and manufacturer of the NafionTM membrane, for the US Dept of Defense, which focuses on the development of a new alkaline membrane for fuel cell applications, an area of strategic interest for our activities.
Product Pricing, Features and Benefits
The price and performance advantages of our low cost hydrogen generators against existing water electrolyser technologies have been a key aspect of their market demand. The EL100, which produces 100l/hr of hydrogen at 20 bar (pressure range up to 100 bar) with a purity of 99.98%, is priced at €2,800 excl VAT; while the EL500, currently under test and capable of producing 500l/hr, or 1kg per day, of hydrogen at up to 100 bar pressure with an enhanced purity of 99.998%, will be launched in mid-year at an expected price of €9,000.
What is so unique about these systems? First it is necessary to understand the three features that allow a water electrolyser to be viable as a recharger for fuel cell products. Firstly, it must produce hydrogen compressed at 15-25 bar: this is necessary for refilling metal hydride hydrogen storage cylinders (minimum of 15 bar required), and is essential for the energy density of the fuel cell system. Secondly, it must produce pure hydrogen: while some trace of water is permissible, there must be no residue of alkaline KOH, which is highly damaging to the acidic chemistry of the fuel cell. Thirdly it must be low cost, at a price that the market will sustain for the combined fuel cell product and recharger.
Acta's system is the only electrolyser on the market that offers this combination of features. Alternative systems are either alkaline, liquid electrolyte systems, or PEM membrane systems, but each of these lacks one or more of the essential features needed to be viable as fuel cell recharger.
Alkaline electrolyser systems use a liquid potassium hydroxide (KOH) electrolyte, and are complex, usually large and heavy systems. A 500 l/hr system, producing hydrogen at 15 bar maximum, will cost a minimum of €15,000. However, even after purification, trace levels of KOH will remain in the hydrogen, rendering it potentially damaging for fuel cell use (and inapplicable to high specification uses such as laboratory use). The size and weight, gas quality and entry cost of the system, render it uncompetitive for domestic or small scale applications (they are typically used for large scale industrial or chemical applications).
PEM electrolysers, on the other hand, use no KOH, and are therefore usually chosen for high quality applications, such as laboratory, space or military (eg submarines). The technology is however very expensive, requiring high levels of noble metals, particularly platinum-iridium, and systems range from €5,000 for a low pressure, low capacity system (6 bar, 25 l/hr), to €75,000 for a high pressure, high capacity system (75 bar, 500 l/hr). The lack of compression and/or prohibitive price clearly makes such systems inapplicable as a consumer technology.
We believe that the price and performance specifications of our hydrogen generator will allow us to be the first mover into a new addressable market for small scale, distributed hydrogen generation systems, finally opening the market for consumer fuel cell products and applications.
Market Strategy
i) Hydrogen Generators
Our product strategy addresses a number of significant market opportunities. The first of these is the battery replacement market, particularly in the sectors of UPS, light transport applications, and portable power.
Each of these sectors is addressed by the fuel cell market, and by hydrogen-air fuel cells in particular. Hydrogen-air fuel cells are a fully developed and commercially available technology which offers a premium performance over battery technologies in terms of energy density and system longevity, and the Carbon Trust forecasts that the fuel cell sector will be worth $26 billion by 2020. The main reason why such systems are not already widely available is that their usage requires safe access to low cost, pure compressed hydrogen for refilling the system. While the lack of an accessible, cost effective hydrogen infrastructure has been recognised as a major hurdle for the adoption of fuel cell vehicles, it is equally true that consumer fuel cell products will struggle to reach mass market adoption until an accessible hydrogen infrastructure is in place.
We believe that our unique hydrogen generator directly addresses this problem of accessibility by delivering a low cost, "do-it-yourself" distributed hydrogen infrastructure. Our system is safe, low cost, easy to use, compact (the size of a desktop PC), and delivers clean, dry, compressed hydrogen that is ideal for refilling the hydrogen cylinders of fuel cell products. Nothing with a comparable technical performance or price is currently available on the market. The technical aspects of our unique system are described below.
During 2009 we developed and assembled a number of fuel cell applications to demonstrate the technical and commercial feasibility of these products, when combined with our hydrogen generator as a "recharger". The commercial response that we have received has been overwhelming, and has convinced us of the very substantial opportunity for our hydrogen generator products, to be distributed in tandem with fuel cell products and applications developed by ourselves or others.
ii) Onsite Hydrogen Generation
A second addressable market for our hydrogen generator is the market for onsite hydrogen gas generation. This market is more industrial in nature, including laboratory usage, light commercial applications such as jewellery production, and larger industrial applications. It is an existing market of approximately $200m per annum, although we believe that this market is constrained by the economics and performance of current electrolyser systems: the entry level price for a high purity, compressed hydrogen electrolyser is currently such that, below a certain volume requirement, it is more cost-effective for users to buy hydrogen in cylinders, rather than to generate it on site.
By introducing our system, at a price well below the cheapest comparable systems currently available on the market, we believe that we can address a much larger market opportunity for small, onsite hydrogen generation systems. We are working with electrolyser manufacturers to address this opportunity first in Europe and then internationally, through the development of standalone generators and system units. We are also exploring large industrial electrolyser applications in Japan through our partners.
iii) Automotive Applications
The internal combustion engine (ICE) is a highly mature technology that delivers cheap, light, energy dense automotive power from burning hydrocarbon fuels. Despite the significant efforts being made by automotive companies, governments, and independent specialists, alternative technologies such as batteries, fuel cells, and hybrid vehicles remain far from competing with the ICE on an economic basis. The limitations of battery solutions (weight, energy density, durability, materials availabilities) mean that even major manufacturers engaged in the development of electric vehicles, such as Honda, continue to express doubts as to whether they will ever represent more than a niche product. Fuel cell solutions, on the other hand, continue to struggle with the cost and impracticality of establishing a nationwide hydrogen distribution infrastructure.
Our approach, developed over the last three years, has been that it is not the engine that is the problem, but rather it is the choice of fuel. What is required to solve the "Big Transport" problem is an ICE that runs on a non-hydrocarbon fuel.
Such a solution has in fact been available since the early 1930's in the form of an internal combustion engine running on ammonia, and was used during the second world war, for example in Belgium, to fuel the provincial bus fleet in the absence of petroleum supplies. Ammonia is carbon free (NH3), and at full combustion produces only nitrogen and water as exhaust gases. It can be produced from renewable resources, is liquid under modest pressure (9 bar), has a very high hydrogen content (higher than liquid hydrogen itself), has a good safety record (safer in use than gasoline), and is produced and distributed on a mass global scale. And the world's leading producers are China and India, two nations with underdeveloped petroleum infrastructure and booming automotive demand.
In order to accelerate the combustion rate of ammonia in an ICE, the ammonia needs to be enriched with hydrogen. Our strategy in this area has been to develop a noble metal free catalyst that can crack ammonia on board in an energy efficient way, in order to release the hydrogen needed for effective combustion of the ammonia fuel in the engine.
During 2009 we have advanced the performance of our ammonia cracking catalysts so that they are able to decompose ammonia entirely at a temperature that is comparable with commercial ruthenium catalysts, but with no ruthenium or other precious metal content (a mass market application of this type cannot become commercially viable if based on ruthenium or similar noble metal catalysts); and we have obtained approval for a grant-funded project to develop this technology as a range extender for a Piaggio Porter electric urban vehicle.
We are hopeful that this demonstration project will lead to further engagement with major automotive manufacturers, and that the ammonia internal combustion engine may become part of the solution to the world's need for a viable, carbon-free automotive power system.
Photovoltaic Installation Projects
During 2009 we have pursued partnerships and opportunities within the Italian photovoltaic (PV) installation sector, and these efforts have recently culminated in announcement, on 23 March 2010, of the SolGen joint venture and PV installation programme, with a potential value of up to €50 million.
This area of our business is strategic to us for two key reasons. Firstly, it is highly complementary with our hydrogen generator technology, which, for a low cost electrolyser with no noble metals, is unique in being able to produce compressed hydrogen running from intermittent renewable power sources such as photovoltaics. By incorporating the ability to offer solar panel installations, we can therefore complete the renewable energy value chain from power generation, through energy conversion and storage (in the form of hydrogen), to stationary, mobile or portable fuel cell products and applications.
Utility scale, commercial and domestic PV panel installations can all benefit from the facility to convert surplus energy production into hydrogen for storage, to be recovered later either through reconversion in a fuel cell for feeding back into the power grid, or through use of the hydrogen for mobile or portable power products (eg light electric vehicles), or for heating or other applications (eg hydrogen fuelled vehicles). It is significant that our development of this technology began two years ago from the request of Enel, Italy's electricity utility company, to develop a technology for storing renewable energy as hydrogen; and we have received several requests for the development of solutions combining PV panels with hydrogen generation and fuel cell applications (gas station power systems, city bike-sharing schemes incorporating fuel cell e-bikes, hydrogen generation, and PV panels located on the roof of the bike parking bay, etc). We believe that the technical capabilities of our hydrogen generator make us uniquely positioned to be able to offer such a range of compatible clean energy technologies.
The second strategic benefit of the joint venture is that by entering the fast-growing Italian PV installation market we will start generating significant revenues within the short term. We have sought to minimise operational risks on these projects through our choice of partners with specialist technical, legal and project support experience. The cash exposure on the programme will remain well within our financing capabilities. The investment period of each single project is short (approximately four months), and from our planning we believe that the funds generated from our growing hydrogen product sales, together with the PV installation programme, will be sufficient to carry the Company through to profitability on a monthly basis during the second half of 2010.
2010 will be a year of great activity in the Italian PV market, where high feed-in tariff rates have combined with low component costs and continued availability of prime sites (southern Italy benefits from one of the highest incidence rates of sunshine in Europe) to create an ideal investment environment. We are addressing this opportunity through SolGen, a 50%-50% joint venture with Fedi Impianti S.r.l., one of Italy's largest and most highly reputed specialist PV installation companies. Acta will contribute commercial management, technical consultancy and short term working capital, together with financial and administrative control of the new operations, while Fedi Impianti will be responsible for managing the installation projects and the operational aspects of the joint venture's activities.
Acta has recently signed a Preliminary Contract with SPF Energy S.p.A., a renewable energy investment fund created and managed by Sopaf S.p.A., an independent Italian investment bank listed on the Milan stock exchange. The Preliminary Contract agrees to the development, installation and sale to SPF of large scale photovoltaic parks within Italy during 2010; and subject to satisfactory market conditions the programme is expected to continue into 2011 and thereafter. The total contract value is estimated to be in the region of €50 million, subject to the joint venture being able to secure and deliver the installed capacity requested by SPF. The first phase of this contract, incorporating three installation projects, has been approved subject to final contracts with an aggregate value of €8.8 million, and installation is expected to commence within the next two months.
The full value of these initial projects is expected to be recognised in the revenues of the joint venture company within 2010. 50% of the revenues, costs and profits generated by the joint venture will be recognised simultaneously by Acta. Additional projects will be added under the terms of the Preliminary Contract as they complete their authorisation procedures and due diligence requirements over the coming months, and further project negotiations are in progress with other potential institutional and large corporate clients.
Technical Review
During 2009 we filed seven new patent applications, incorporating four new areas of invention and three PCT extensions. This brings our patent portfolio to a total of 43 patent applications covering 28 areas of invention.
The key focus of our technical development during the year was to take our hydrogen generator from demonstrator to finished product. A key milestone in this process was the development of a unique membrane technology that allows us to run our electrolyser with water on the oxygen side of the electrolyser membrane only. This extraordinary breakthrough allows hydrogen to be generated from the dry side of the membrane, and therefore to be produced already dry, clean, pure (99.98% in its raw form, or 99.998% with a simple additional dryer component) and under pressure (up to 100 bar of differential pressure).
This approach allows enormous improvements to be achieved in the cost, complexity and energy efficiency of the system: none of the usual balance of plant for drying, cleaning and compression of the gas is required. Aside from the significant cost and energy savings, this also allows the entire system to be compact, with a footprint no larger than a typical desktop PC for a domestic 100 lt/hr model. Furthermore, as it has been designed to be a membrane-based system capable of maintaining differential pressure between the hydrogen side and the oxygen side, the oxygen that is produced can be safely vented to the atmosphere. This feature not only increases the safety of the system (since the hydrogen and oxygen are never held within the system at the potentially dangerous ratio of two to one), but also allows the unit to be switched on and off safely and repeatedly without needing to control the relative gas pressures. It is this safety feature which allows the unit, uniquely at its price, to be both compatible with an intermittent renewable energy input and safe for consumer applications.
The 100l/hr version of this product has completed the CE certification and will be on general sale through our distributors, with a two-year performance warranty, from the second quarter of 2010 onwards. A 500l/hr model is currently undergoing testing, and is expected to be certified and available for sale under warranty by the middle of the year, while larger units are now under development.
Also during 2009 we have developed a range of fuel cell power generators, from 100W up to 1KW. These products will primarily be sold through system integrators (eg for UPS systems, electric bikes and other light transport applications, electric outboard motors, onboard power systems for the nautical and RV sectors etc), rather than as standalone end user devices, although even in this area the level of end user demand has been higher than we had anticipated.
Our catalyst developments and other technical applications continued to make progress, particularly in relation to ammonia cracking, where the performance of our non-noble metal catalyst has proven superior to commercially available ammonia cracking catalysts based on ruthenium (an expensive and very rare platinum group metal typically used for ammonia catalyst applications).
Operational Review
Acta is currently managing the transition from a research company to an operating, commercial business. This transition has required us to review our resources and facilities, to ensure that they are appropriate to the business that we are becoming, and to make changes where necessary. In particular, this has meant a reduction in the number of chemical research staff in our team, and an increase in commercial staff, engineering staff and production staff and facilities.
Among these new recruitments has been Mr Davide Casetti, whom we appointed as Commercial Director and General Manager of the Acta Energy business division in October 2009, after acting as consultant to the Company since June 2009. Davide brings an impressive track record in the international development of medium-sized Italian product businesses, together with valuable experience and relationships in the photovoltaic sector, and we are very pleased to have him heading up our new commercial activities.
The capital investment requirements of our production facilities remain low, due to our production strategy based on external component manufacture and internal product assembly and quality control. We believe that this strategy will allow us to maintain operational flexibility, low overheads and strong product quality management, as we grow our operations. As critical mass is achieved, we intend to manufacture in volume through subcontract manufacturers, to allow speed of growth and lower capital intensity for our business, while retaining the inhouse production of the critical system elements of membrane, electrode and stack construction.
In the current year, as well as further strengthening our commercial team, we have increased our resources in the areas of engineering and production management through the recruitment of Dr. Claudio Mannetti (Ing.) and a small team of specialist electronic and mechanical engineers.
We are rolling out our products to our distributors and development partners as each product reaches certification. By the end of the year we expect to have in place an internal production capacity for 100 units per month, an operating platform which will be increased thereafter to meet customer demand.
Chief Financial Officer's Review
Acta's financial performance during 2009 has benefitted substantially from the cost reduction programme put in place at the end of 2008. The principal elements of this programme included the reduction of non-core costs, including external support activities and professional fees, together with the realignment of staffing resources to equip the business for its new activities.
A reduction in revenues to €371,000 (2008: €625,000), arising from a lower level of development contract activity, was more than offset by a like-for-like cost reduction of €1.2 million, representing 22% of our 2008 cost base. The benefits of these lower baseline costs will continue into 2010, as we expand again into our new operational activities.
Total grant income of €816,000 was recognised during the year (2008: €132,000), of which €504,000 related to the recognition of grant contribution for the second and third phases of the €2.1 million FIT Lombardia grant project, which was completed in late 2008 (2008: Nil). These funds are expected to be received during 2010. Also recognised as grant contribution was a benefit of €42,000 (2008: €13,000) in relation to low interest financing for the FIT project. In addition, an Italian government grant of €213,000 (2008: Nil) was awarded during the year against prior research costs, and this amount was cashed during the year. Finally, a European grant for the WelTemp project, which we continued to work on during the year, was received and recognised for €57,000 (2008: €119,000).
This aggregate increase in grant income was offset by an exceptional increase of €513,000 in non-cash amortisation costs, relating to the write-off of capitalised costs on a part of the Group's patent portfolio, following an impairment review.
As a result of these movements, net overheads fell by €1.5 million to €4.6 million (2008: €6.1 million), with key savings being achieved in personnel costs (including share option costs), external professional fees, and external research costs. The loss from operations was substantially reduced, falling by €1.2 million (22%) to €4.2 million (2008: €5.4 million).
At the end of 2008 we also took care to reduce our capital expenditure programme, in order to conserve cash while we repositioned the business. As a result, capital investments during 2009 fell to €140,000, including investment in patents (2008: €397,000). We expect capital expenditure to rise again in the current year, as we equip our production facilities for volume production, although total investments will remain modest.
Net cash outflow, excluding receipts from the disposal of available-for-sale investments, was €2.8 million, a reduction of €1.6 million (36%) from comparable net cash outflow in 2008 (2008: €4.4 million net cash outflow excluding capital increase). This result benefitted from the receipt of €757,000 in long term, low interest bearing loans in relation to the FIT Lombardia grant project (2008: Nil). Cash reserves at the end of the year amounted to €3.6 million.
The savings achieved in 2009 in costs and cash flow have been key to preserving the Company's cash during the transitional phase of last year, and to reducing our underlying cost base ahead of our expansion into our new commercial activities this year. We are conscious that this prudence needs to be balanced with the needs of the business for investment in these new activities, including investments in staff, promotional activities, product development, production facilities, and operational working capital. We will continue to monitor these requirements carefully, and to manage the growth of the business during 2010 and 2011 from existing cash resources.
Outlook
We expect 2010 to be an exciting and challenging year for the Company, as we balance the priorities of our product commercialisation and photovoltaic installation programmes against the careful management of our cash.
Our operational focus will remain on building out our product portfolio, including standalone hydrogen generator and power generator products, as well as distributorships and system integration partnerships in UPS systems, light mobility, power independent homes, fuel enrichment systems, and nautical and RV systems. We see a very significant commercial opportunity arising from these products this year and into 2011. We will continue to expand our commercial team and promotional activities, and will steadily increase our production capacity during the year in response to our commercial progress and market demand.
Through our joint venture company SolGen we will undertake a programme of solar panel installation projects, while remaining prudently within the limits of our financial and management resources. The operational aspects of these projects will be managed by our experienced partner, Fedi Impianti, while our role will be in commercial management, technical consultancy and working capital financing, together with financial and administrative control of the venture. We expect this programme to bring a significant benefit to our financial performance and cash resources during this year and next, while completing our strategic positioning within the renewable energy value chain.
We will continue to invest in scientific research and development, in particular in relation to ammonia cracking catalysts, through grant funded projects and joint development contracts. We believe that these developments have the potential to address very substantial markets in the medium to long term.
We believe that the Company will become profitable and cash generative on a monthly basis for the first time during the second half of this year, and will continue to see rapid growth into 2011 and thereafter. We look forward to keeping our shareholders informed of our progress during this exciting period, and to sharing with them the benefits of our success.
| Consolidated statement of comprehensive income |
|
|
|
|
|
|
|
|
|
| Year ended |
| Year ended |
|
| 31 December 2009 |
| 31 December 2008 |
|
| €'000 |
| €'000 |
|
|
|
|
|
| Revenue | 371 |
| 625 |
|
|
|
|
|
| Raw materials and consumables used | (219) |
| (352) |
| Personnel expense | (2,606) |
| (3,560) |
| Depreciation and amortisation expense | (943) |
| (400) |
| Other operating expenses | (783) |
| (1,758) |
| Loss from operations | (4,180) |
| (5,445) |
|
|
|
|
|
| Financial income | 104 |
| 317 |
| Financial expenses | (80) |
| (57) |
| Loss before tax | (4,156) |
| (5,185) |
|
|
|
|
|
| Current tax credits | (12) |
| 3 |
|
|
|
|
|
| Loss for the period | (4,168) |
| (5,182) |
|
|
|
|
|
|
Attributable to: |
|
|
|
| Equity holders of the parent | (4,142) |
| (5,072) |
| Minority interest | (26) |
| (110) |
|
| (4,168) |
| (5,182) |
|
|
|
|
|
| Differences on the translation of assets in foreign currencies | (5) |
| (32) |
| Attributable to: |
|
|
|
| Equity holders of the parent | (4) |
| (30) |
| Minority interest | (1) |
| (2) |
|
|
|
|
|
| Differences on change in fair value available for sale | (20) |
| 26 |
| Attributable to: |
|
|
|
| Equity holders of the parent | (20) |
| 26 |
| Minority interest | 0 |
| 0 |
|
|
|
|
|
| Total comprehensive profit (loss) | (4,193) |
| (5,188) |
| Attributable to: |
|
|
|
| Equity holders of the parent | (4,166) |
| (5,076) |
| Minority interest | (27) |
| (112) |
|
|
|
|
|
| Basic earnings per share (euro cents) | (10) |
| (13) |
| Consolidated statement of financial position |
|
| ||
|
|
|
|
|
|
|
|
| Year ended |
| Year ended |
|
|
| 31 December 2009 |
| 31 December 2008 |
| ASSETS |
| €'000 |
| €'000 |
| Non-current assets |
|
|
|
|
| Property, plant and equipment |
| 1,707 |
| 1,919 |
| Goodwill |
| 11 |
| 11 |
| Intangible assets |
| 227 |
| 813 |
| Total non-current assets |
| 1,945 |
| 2,743 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Inventories |
| 140 |
| 63 |
| Other investments |
| 0 |
| 3,520 |
| Trade and other receivables |
| 1,287 |
| 619 |
| Cash and cash equivalents |
| 3,579 |
| 2,925 |
| Total current assets |
| 5,006 |
| 7,127 |
| Total assets |
| 6,951 |
| 9,870 |
|
|
|
|
|
|
| EQUITY AND LIABILITIES |
|
|
|
|
| Equity attributable to equity holders of the parent |
|
|
|
|
| Share capital |
| 246 |
| 246 |
| Capital reserves |
| 25,854 |
| 25,802 |
| Retained losses |
| (22,967) |
| (18,829) |
|
|
| 3,133 |
| 7,219 |
| Minority interest |
| (19) |
| 8 |
| Total equity |
| 3,114 |
| 7,227 |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Employee benefits |
| 134 |
| 112 |
| Long-term provisions |
| 904 |
| 526 |
| Long-term borrowings |
| 1,284 |
| 854 |
| Total non-current liabilities |
| 2,322 |
| 1,492 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
| Other financial liabilities |
| 57 |
| 57 |
| Short-term borrowings |
| 209 |
| 75 |
| Trade and other payables |
| 1,249 |
| 1,019 |
| Total current liabilities |
| 1,515 |
| 1,151 |
|
|
|
|
|
|
| Total liabilities |
| 3,837 |
| 2,643 |
|
|
|
|
|
|
| Total equity and liabilities |
| 6,951 |
| 9,870 |
| Consolidated statement of changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share | Reserve | Retained | Group | Minority | Total |
|
| Capital | Capital | Earnings | Total | Interest |
|
|
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 January 2008 | 234 | 22,380 | (13,762) | 8,852 | 120 | 8,972 |
|
|
|
|
|
|
|
|
| Issue of share capital | 12 | 2,896 | 0 | 2,908 | 0 | 2,908 |
|
|
|
|
|
|
|
|
| Share issue expenses | 0 | (6) | 0 | (6) | 0 | (6) |
|
|
|
|
|
|
|
|
| Net Change in foreign currency translation reserve | 0 | (35) | 5 | (30) | (2) | (32) |
|
|
|
|
|
|
|
|
| Net change in fair value available for sale | 0 | 26 | 0 | 26 | 0 | 26 |
|
|
|
|
|
|
|
|
| Share-based payment | 0 | 541 | 0 | 541 | 0 | 541 |
|
|
|
|
|
|
|
|
| Loss for the period | 0 | 0 | (5,072) | (5,072) | (110) | (5,182) |
|
|
|
|
|
|
|
|
| At 31 December 2008 | 246 | 25,802 | (18,829) | 7,219 | 8 | 7,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 January 2009 | 246 | 25,802 | (18,829) | 7,219 | 8 | 7,227 |
|
|
|
|
|
|
|
|
| Net Change in foreign currency translation reserve | 0 | (8) | 4 | (4) | (1) | (5) |
|
|
|
|
|
|
|
|
| Net change in fair value available for sale | 0 | (20) | 0 | (20) | 0 | (20) |
|
|
|
|
|
|
|
|
| Share-based payment | 0 | 80 | 0 | 80 | 0 | 80 |
|
|
|
|
|
|
|
|
| Loss for the period | 0 | 0 | (4,142) | (4,142) | (26) | (4,168) |
|
|
|
|
|
|
|
|
| At 31 December 2009 | 246 | 25,854 | (22,967) | 3,133 | (19) | 3,114 |
| Consolidated statement of cash flow |
|
|
|
|
|
|
|
|
|
| Year ended |
| Year ended |
|
| 31 December 2009 |
| 31 December 2008 |
| Cash flows from operating activities | €'000 |
| €'000 |
|
|
|
|
|
| Loss for the year | (4,168) |
| (5,182) |
|
|
|
|
|
| Adjustments for: |
|
|
|
| Amortisation of tangible assets | 284 |
| 264 |
| Amortisation and depreciation of intangible assets | 655 |
| 136 |
| Allowance for future risks | 378 |
| 437 |
| Gain or losses of investments | 10 |
| 0 |
| Gain on sale of property, plant and equipment | 0 |
| 18 |
| Expense recognised in profit or loss in respect of share based payments | 80 |
| 541 |
| Foreign Currency Translation Reserve | (5) |
| (35) |
| Net finance income | (24) |
| (260) |
|
|
|
|
|
| Movements in working capital |
|
|
|
| (Increase) decrease in trade and other receivables | (669) |
| 348 |
| (Increase) decrease in inventories | (77) |
| 11 |
| Increase (decrease) in trade and other payables | 30 |
| (554) |
| Increase in provision for employees' benefits (TFR) | 22 |
| 50 |
|
|
|
|
|
| Cash outflow from operations | (3,484) |
| (4,226) |
|
|
|
|
|
| Interest paid | (80) |
| (57) |
|
|
|
|
|
| Net cash from operating activities | (3,564) |
| (4,283) |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Interest received | 104 |
| 317 |
| Payments for property, plant and equipment | (71) |
| (326) |
| Proceeds from sale of property, plant and equipment | 0 |
| (11) |
| Proceeds from available for sale investments | 3,490 |
| 0 |
| Payments for intangible assets | (69) |
| (71) |
| Finance leases | 60 |
| 9 |
| Net cash used in investing activities | 3,514 |
| (82) |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
| Proceeds from issue of share capital | 0 |
| 2,908 |
| Payment for share issue costs | 0 |
| (6) |
| Proceeds from borrowings | 757 |
| 0 |
| Repayment of borrowings | (18) |
| (17) |
| Payment of finance lease liabilities | (35) |
| (37) |
|
|
|
|
|
| Net cash inflow from financing activities | 704 |
| 2,848 |
|
|
|
|
|
| Net increase in cash and cash equivalents | 654 |
| (1,517) |
| Cash and cash equivalents at the beginning of the financial year | 2,925 |
| 4,442 |
|
|
|
|
|
| Cash and cash equivalents at the end of the financial year | 3,579 |
| 2,925 |
Notes to preliminary financial results
1. Earnings per Share
The calculation of basic earnings per share is based upon the net loss attributable to the ordinary shareholders of €4,142,067 (2008: €5,072,097) and a weighted average number of shares in issue of 40,995,125 (2008: 40,518,413).
2. In view of its accumulated losses and in accordance with Italian law, the Company is not in a position to make payment of a final dividend (2008: £nil).
3. These financial statements are presented in Euros as that is the currency of the primary economic environment in which the Company operates.
4. Copies of the Company's Annual Report and Accounts will be available from the Company at Via di Lavoria 56 G, 56040 Crespina (PI), Italy. Alternatively this statement and the Annual Report and Accounts will be available to download from the investor relations section on the Company's website at www.acta-nanotech.com.