RNS Number : 7671E
Voller Energy Group PLC
01 October 2008
1 October 2008
Voller Energy Group Plc
(*Voller* or *the Company*)
Preliminary Results for the year ended 30 June 2008
Voller Energy Group Plc a leader in portable fuel cell systems and one of the first companies in the world with deliverable technology,
announces its preliminary results for the year ended 30 June, 2008.
Highlights
� First commercial shipments of the Emerald 1kW Auxiliary Power Unit achieved
� Welfare cabin, supplied by GenQuip Plc
� CCTV camera for traffic monitoring
� Mobile information sign for the Dutch Ministry of Works
� Manufacturing facility extended in Basingstoke, England
� Loss for the year before taxation of �2.8 million (2007: �2.2 million) , better than budget
� Core patents filed strengthening Intellectual Property
� Development commenced on the next generation of Emerald Product
� Additional funding is required to develop the business for the future and the directors have sufficient reason to believe that the
strategic review which commenced in February 2008 will, if successful, achieve this. The options include, but are not limited to, strategic
alliances, mergers or a sale of the business.
Robin Francis, Chief Executive Officer, commented:
*This year has seen encouraging progress by the Company and we have passed the important milestone of shipping the first commercial Emerald
units to customers. The Company is therefore excellently placed to meet the large and growing demand for environmentally friendly power
generation systems. However, securing additional financing to take the company to the next stage of development remains of critical
importance. While we have a number of ongoing discussions with interested partners and are optimistic that these will lead to a positive
conclusion, the ultimate outcome of these discussions remains uncertain.*
www.voller.com
For further information please contact:
Robin Francis, Chief Executive
Voller Energy Group Plc
Tel: +44 (0) 1256 813 900
John Depasquale
Seymour Pierce
Tel: +44 (0) 207 107 8010
Voller Energy Group Plc
Chairman's statement
I am pleased to report that encouraging progress has been achieved in the year to 30 June 2008. The Group has begun shipping pilot
commercial units of the Emerald 1kW APU (Auxiliary Power Unit) system running from LPG.
The Emerald system is being installed in a number of differing customer situations in the target markets of construction, leisure and
infrastructure management. These include the installation of units in welfare cabins supplied by GenQuip Plc, the installations of a unit to
power a CCTV camera in a traffic monitoring system and the installation of a unit in a mobile information sign for the Dutch Ministry of
Works. The units delivered to GenQuip represented the initial batch of 5 systems as part of the total order received from them for twenty
units.
I can also report that following the successful participation of Voller's Beneteau Oceanis 411 yacht in the Atlantic Rally for Cruisers
it is considered that the marketing profile of the product in the marine market has been successfully accomplished and as a consequence the
yacht has been sold. This race and other trials have proven the utility of the Emerald system in the marine and leisure space and the
extensive interest in the product in these applications is reflected in the initial units ordered by our appointed distributors in our
target geographic markets.
The Emerald units are manufactured at the Group's facility in Basingstoke which was extended in October 2007. In addition further
development work has resulted in the filing of new patents on the Emerald system and a further strengthening of the Group's intellectual
property.
The feedback from our customers is very encouraging and this feedback combined with our ongoing testing programme, is being used to make
further improvements to the product. The manufactured cost of the initial units has not been recouped in its entirety from the revenue
generated and a gross loss has been sustained per unit, which was in accordance with the financial plan for the year. As sales increase a
reduction in the cost of components will be secured which together with continuing re-design of the product will minimise the excess of cost
over revenue. Nonetheless the absorption of this cost together with continuing development expenditure and other overhead costs continues to
deplete the cash resources of the Company.
Financial results
These financial results are the first results following the adoption of International Financial Reporting Standards (IFRS) as adopted by
the European Union.
Sales for the year of �105k (2007:�42k) included for the first time revenue generated from the sales of the Emerald 1Kw APU. This is
encouraging progress and reflects on the initial successful delivery of commercial product.
Research and development expenses of �1.1m remained in line with the previous year of �1.0m reflecting the continued work on the
development of the Emerald product.
Administrative expenses of �2.795m (2007:�2.543m) increased during the year primarily as a result of the costs of the manufacturing
operation expanded at our Basingstoke facility during the current year and the increased charge for Share Options.
Interest receivable fell as a consequence of the reduction in the cash balance.
The loss before taxation for the year of �2.799m (2007:�2.248m) was better than budget.
At the end of year the group had cash in hand of �1.948m (2007: �4.732 million) and, as indicated in my comments below, additional
funding is required to enable the Group to complete its development programme.
Voller Energy Group Plc
Chairman's statement (Continued)
People
During the year we have strengthened our development team but have taken action to reduce sales and marketing personnel as we focus on a
more targeted approach of limited key accounts.
All of our employees make a valued contribution to the Group's activities and I would like to thank them for all their continued
contribution. As announced on 5 August 2008, Stephen Voller stepped down as the CEO to pursue other business interests and Robin Francis,
the Group's Chief Technology Officer, took over as CEO.
Strategic Review
In February 2008 the Group announced that a strategic review of the options open to the Group would be undertaken by Deloitte Corporate
Finance. The objective of this Strategic Review was to maximise shareholder value. The Company announced in February that these options may
include, but were not limited to, strategic alliances, mergers, refinancing or a sale of the business. In February we said that this
process may or may not lead to an offer being made for the Company. Whilst this review has been in progress action has been taken to reduce
overhead cost wherever possible without damaging the future development of the business. Headcount in Sales & Marketing has been reduced
which, along with other overhead savings, will reduce the cost base for the new financial year. However there is no doubt that progress of
putting the Emerald units into the market place has been slower than we would have wished; therefore the Company will not have the cash
resources to achieve its development programme and further funding will be required, which is why we engaged Deloitte Corporate Finance to assist in the process of securing the necessary funding
to allow the Group to continue in operation.
Whilst the outcome of the process remains uncertain, in the opinion of the directors, there is sufficient reason to believe that the
outcome, if successful, could provide sufficient funding for the Company to develop the business for the foreseeable future. Accordingly the
financial statements have been prepared on a going concern basis.
John Brown FCCA
Chairman
1 October 2008
Voller Energy Group Plc
Chief Executive's review
The Group's clean, environmentally friendly power systems address two topics of particular importance for both users and the wider
world: the desire to reduce fuel costs, and the need to reduce harmful atmospheric emissions. As concern grows over the rising cost of fuel
and the environmental impact of energy generation, the market and demand for these products will only get stronger.
In 2005 following our initial AIM listing we began the programme of developing a fuel cell system that runs from available fuels, which
we refer to as the Emerald product family. The first of the Emerald products, a 1kW fuel cell system running from LPG (liquefied petroleum
gas, propane or Calor Gas) has begun to be shipped. Emerald acts as an automatic and intelligent battery charger, providing a far more fuel
efficient system than an equivalent diesel or LPG generator.
The emissions from Emerald are considerably lower than those from a conventional generator. Emissions of the main greenhouse gas carbon
dioxide are substantially reduced, while emissions of noxious emissions such as nitrogen oxide, sulphur dioxide and carbon monoxide are
almost zero.
There are two aspects of Voller's developments that make them unique :
Hydrogen is not required; use available fuels
Many fuel cell developers still rely on very pure hydrogen to fuel their products. Hydrogen remains a difficult fuel to obtain, and is
costly to store and transport. In the markets that Voller operate in; being construction, traffic management and leisure, there is no
widespread adoption of hydrogen, nor is it likely that there will be any widespread adoption of the fuel in the near future.
Many analysts are now agreed that unless hydrogen is produced from a sustainable source, using hydrogen as a distributed fuel source has
a very limited positive effect on the environment and may even have a negative effect. This is because the energy needed to produce,
compress, store and transport the fuel is a very high proportion of the energy ultimately delivered. Sustainable sources of hydrogen are
very limited at present.
A much more effective way to produce hydrogen is by using a reformer based system, where a conventional hydrocarbon fuel such as propane
is converted to hydrogen and carbon species. The hydrogen produced is used directly in the fuel cell system so that expensive storage and
transportation cost are avoided.
Every Emerald system has a reformer system inside so that a standard bottle of propane or LPG can be connected to the system and used
directly. Propane is a universally available, familiar and economic fuel.
Systems and hybrid approach
Fuel cells make very efficient battery chargers, and all of Voller's systems use a combination of fuel cell and battery technology.
Batteries are low-cost and reliable, and provide an effective way of meeting peak power demands, while the fuel cell is used to service the
average power demands.
Voller is a systems integrator, providing a complete and easy system for our customers. The Emerald units are designed as 'fit and
forget' systems that are easy to install. Inside the unit is a complex system that uses Ballard fuel cell stack technology at its heart;
however this component is one of many inside the Emerald system. As stack technology evolves, Voller will be able to further enhance the
Emerald system.
Voller Energy Group Plc
Chief Executive's review (continued)
Technology Review
This year has seen the 1kW Emerald product moving from laboratory pre-production prototypes into pilot manufacture and the installation
of these units in a number of platforms. These include the first site welfare cabins supplied by GenQuip PLC, a traffic monitoring system
used by the Highways Agency on the A38 in Somerset, England, and a mobile traffic sign platform under a Dutch government programme. These
installations, following on from the successful field trials last year, have convincingly demonstrated the utility and attractiveness of the
Emerald system in both mobile and static off-grid applications and represent the important step of placing the units in the hands of "real
users" in the actual application environments.
The Emerald system is designed to operate as an automatic battery charger and to replace conventional generators in a variety of static
and mobile applications. The Emerald system provides reliable power to users with none of the noise, smell and vibration associated with
generator systems. Furthermore, the low servicing needs and fuel efficiency of the units means the overall lifetime costs to users are
projected to be lower, despite a higher up front capital cost.
In the construction market segment we have been working with our partner GenQuip Plc to prove the application of the Emerald system
within their range of welfare site cabins. A number of units have been installed and used by GenQuip personnel for several months and the
first commercial units are now being distributed to GenQuip's preferred hire company partners.
In the transport infrastructure market we have installed two units in government-funded trials, one in the UK and one in Holland. These
trials will prove the performance of the units in these applications prior to larger scale roll-out.
In the leisure market our field trials during the past year have helped us to prove the basic performance of the units in the
application space and to develop the products further. Along with our distribution partners, we are looking forward to shipping the first
units in the next year.
Over the year we have continued to strengthen our intellectual property position. We have filed three core patents on the Emerald system
and have further filings in progress relating to continuing improvements in the system design. Additionally, Emerald is controlled and
monitored by our proprietary software package "Emerald Talk", which forms an integral part of the system.
Looking further into the future work has begun on the next generation of Emerald products. The Company's product development strategy is
based around the expansion of the Emerald product platform in two main directions:
* The development of higher power systems with a net electrical power output of up to 5kW; and
* The development of systems capable of operating on liquid fuels, in particular diesel.
Higher power systems will allow Voller to target additional market segments with greater power requirements than can be supported by the
current Emerald product. These include some parts of the back-up power market, the materials handling market, and many specialist vehicle
applications. Furthermore these systems will expand the range of applications which can be served in the core markets for Emerald, for
example larger marine craft and Recreational Vehicles (RV), larger static cabins in the construction market, and large permanent traffic
signs. We have identified the core components for this product range and expect commercial systems to be available in approximately two
years.
The development of diesel systems will allow increased penetration of market segments where diesel is preferred over LPG. This includes
segments such as larger marine craft, truck Auxiliary Power Unit (APU) systems and the military. The Company is also working on a
diesel-reforming system in a collaboration with the University of Cambridge, along with other collaborations and in-house research.
Voller Energy Group Plc
Chief Executive's review (continued)
Ultimately these developments will result in a family of "transportable" or small stationary products with power outputs ranging from
1-5kW and which operate from a variety of fuels.
Outlook
The Company has demonstrated the basic effectiveness of the Emerald system in its chosen markets and is well positioned in the growing
market for low-emission technology. The Company has built considerable Intellectual Property (IP) and know-how in this complex area. The
focus now is to achieve follow-on sales in the chosen markets and to consolidate our supply position with strategic customers in our target
markets.
The future of the Company is however dependent upon additional funding. Further details are given in both the Chairman's statement under
"Strategic Review" and in Note 2 attached to this announcement.
Robin Francis
Chief Executive Officer
1 October 2008
Voller Energy Group Plc
Consolidated income statement for the year ended 30 June 2008
Restated
Note 2008�*000 2007�*000
Revenue 105 42
Cost of sales (310) (40)
Gross (loss)/profit (205) 2
Administrative expenses (2,795) ( 2,543)
Operating loss (3,000) (2,541)
Investment revenues 201 293
Loss before taxation (2,799) (2,248)
Taxation 5 260 238
Retained loss for the financial year (2,539) (2,010)
Basic and diluted loss per ordinary share 6 (11.03)p (8.74)p
All amounts relate to continuing operations.
Consolidated statement of total recognised income and expense
Restated
2008�*000 2007�*000
Retained loss for the financial year (2,539) (2,010)
Prior year adjustment 3 (28)
Total recognised income and expense for the (2,567)
period
Voller Energy Group Plc
Consolidated balance sheet at 30 June 2008
Restated Restated
2008�*000 2008�*000 2007�*000 2007�*000
Non current assets
Property, plant and 175 257
equipment
175 257
Current assets
Inventories 210 30
Trade and other 526 312
receivables
Cash and cash equivalents 1,948 4,732
Total current assets 2,684 5,074
Trade and other payables (307) (345)
Net current assets 2,377 4,729
Net assets 2,552 4,986
Equity
Called up share capital 459 459
Share premium account 8,884 8,884
Merger reserve 161 161
Share option reserve 132 27
Retained loss (7,084) (4,545)
Total equity 2,552 4,986
The financial statements were approved by the Board on 1 October 2008
Voller Energy Group Plc
Consolidated cash flow statement for the year ended 30 June 2008
Note 2008�*000 2008�*000 2007�*000 2007�*000
Net cash outflow from 4 (2,989) (2,231)
operating activities
Investing activities
Interest received 201 293
Purchase of property, (66) (120)
plant & equipment
Disposal of property, 70 6
plant & equipment
Net cash from financing 205 179
activities
Decrease in cash and cash (2,784) (2,052)
equivalents in the year
Cash and cash equivalents at 4,732 6,784
beginning of the year
Cash and cash equivalents at 1,948 4,732
end of the year
Notes
1. Basis of accounting
The financial statements have been prepared under the historical cost convention and are in accordance with the measurement and
recognition criteria of International Reporting Financial Standards ("IFRS") as adopted by the European Union. The consolidated group
financial statements incorporate the results of Voller Energy Group Plc and of its subsidiary undertaking, Voller Energy Limited, as at 30
June 2008.
This announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial
statements that comply with IFRS in October 2008.
The financial information set out in the announcement does not constitute statutory accounts as defined in S240 of the Companies Act
1985, for the years ended 30 June 2008 or 30 June 2007 but is derived from these accounts, which have been reported upon by the Company's
auditors. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain
statements under S237(2) or S237(3) of the Companies Act 1985. The audit report for the year ended 30 June 2008 included an emphasis of
matter paragraph consistent with the explanation in Note 2 below.
The preliminary announcement has been prepared on the basis of the accounting polices as stated in the financial statements for the year
ended 30 June 2008.
2. Basis of preparation
The financial statements have been prepared on a going concern basis, which assumes that the company will continue in operational
existence for the foreseeable future.
As a result of ongoing investment in the development of the Emerald product range and the recognition that it has not been possible
during the current financial year, nor is it likely that it will be possible during the next financial year, to recover the whole of the
manufactured cost of the product, the Company continues to be loss-making.
The Company currently does not have sufficient cash resources to continue trading in its current form for a period of at least 12 months
from the date of this announcement and, therefore, there is a material uncertainty regarding the Group's ability to continue in operation
for the foreseeable future without obtaining further funding. The Company appointed Deloitte Corporate Finance in February 2008 to conduct a
strategic review of the options available to raise further funding. Whilst the outcome of the process remains uncertain, in the opinion of
the directors there is sufficient reason to believe that the outcome, if successful, could provide sufficient funding for the Company to
develop the business for the foreseeable future.
Consequently, the Company is dependent upon future investments to continue as a going concern. Without these anticipated cash inflows,
the company may be unable to realise its assets and discharge its liabilities in the normal course of business.
3. Explanation of transition to IFRS
This is the first year in which the Company has presented its financial statements under IFRS. The following disclosures are required in
the year of transition. The last financial statements under UK GAAP were for the year ended 30 June 2007 and the date of transition to IFRS
was therefore 1 July 2006.
Management has undertaken an assessment of the impact of IFRS and had identified the following adjustments:
IAS 19 "Employee Benefits", this requires companies to make an accrual for holiday payment. At the date of transition no adjustment was
required; however as of 30 June 2007 a �15,000 holiday pay accrual was recognised, representing a charge to the comparative income
statement.
IAS 17 "Leases", this requires that any benefits received and receivable as an incentive to sign an operating lease are spread from the
inception to the termination of the lease, whereas under UK GAAP the incentives are spread over the period up to the break point under the
lease. At the date of transition no adjustment was required;
3. Explanation of transition to IFRS (continued)
however as of 30 June 2007 a �13,000 non current liability was recognised, representing a charge to the comparative income statement.
A corresponding adjustment has been made to retained earnings in respect of both of these items. These adjustments have no cash impact.
4. Note to the consolidated cash flow statement
2008 2007
�*000 �*000
Operating loss (3,000) (2,541)
Depreciation 78 60
Taxation 213 140
Increase in stock (180) (1)
Increase in debtors (172) (24)
Increase in creditors 72 135
Net cash outflow (2,989) (2,231)
5. Taxation
The tax credit of �260,000 in the accounts represents the Research and Development Grant claim for the year ended 30 June 2008 of
�245,000, together with an additional �15,000 received in respect of the year ended 30 June 2007 in excess of the amount recognised in those
accounts.
6. Loss per share
Loss per share for the year of 11.03p (2007: 8.74p) has been calculated on the basis of the loss after taxation of �2,539,000 (2007:
�2,010,000) and the weighted average number of shares in issue for 2008 and 2007 of �23,000,513.
IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or
increase net loss per share. For a loss making company with outstanding share options, net loss would only be increased by the exercise of
out-of-the-money options. Since it seems inappropriate to assume that the option holders would act irrationally, no adjustment has been made
to diluted EPS for out-of-the-money share options.
7. Research and Development
The R & D expenditure incurred during the year was �1,101,000 (2007: �1,031,000). This was recognised in the income statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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