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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hydrodec Group Plc | LSE:HYR | London | Ordinary Share | GB00BFD2QZ40 | ORD 50P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHYR
RNS Number : 1954A
HydroDec Group plc
10 September 2018
10 September 2018
Hydrodec Group plc
("Hydrodec", the "Company" or the "Group")
Unaudited Interim Results
Hydrodec Group plc (AIM: HYR), the clean-tech industrial oil re-refining group, today announces unaudited results for the six months ended 30 June 2018.
Strategic highlights
- Strategic focus on increased feedstock supplies resulting in the US demonstrating significant performance improvements in late Q2 and post period end
- First initiative arising from Group-wide business review leads to decision to either sell Australian operating business or relocate the plant to US - considered non-core given sub-scale market and Group's focus on US; to be treated as "discontinued business"
- Concluded successful sale of historic carbon credits from 2009 to 2013 vintages during H1 - progress underway on selling remaining historic carbon credits up to June 2018
- Recent new patent validation in US extended to Europe - UK, Germany and Denmark. Further European applications being progressed
- Board's business review well developed with full outcomes currently on schedule to be announced by end of September
Trading update
- New executive management team (Lord Moynihan appointed Executive Chairman and Interim CEO and David Dinwoodie appointed Interim CFO in April 2018) complete five months in post having introduced new governance measures into Hydrodec of North America with first of regular quarterly board meetings and a strong relationship with leading feedstock suppliers and partners, G&S Technologies ("G&S")
- Historical average run rate of 45% plant utilisation in Canton during the first five months of 2018 has increased to 65% in June and 69% in July with support from G&S
- While sales volumes in H1 from continuing US business of 10.3 million litres were down on prior year (H1 2017: 13.2 million litres) driven by challenging feedstock conditions in Q1, these have been addressed and supplies continue to increase with demand for products and margins remaining strong
- Higher margin transformer oil sales as proportion of all oil sales in US improved at 64% (H1 2017: 59%)
Financial update
- Income from continuing operations broadly flat at US$6.6 million (H1 2017: US$6.7 million) following challenging Q1 - expected to materially improve in H2
- Group EBITDA from continuing operations slightly improved at loss of US$161k (H1 2017: US$204k loss). Operational EBITDA at Canton up at US$799k (H1 2017: US$660k) despite the challenging conditions in Q1. Significant improvement expected in H2 with operational EBITDA at Canton for the month of July alone at US$463k and August expected to be at a similar level
- Overall loss for the period increased to US$3.3 million (H1 2017: US$2.6 million) due to under performance from discontinued Australian operation
- Increased loan facility from Andrew Black to pay Australian creditor balances and provide ongoing working capital support
Lord Moynihan, Executive Chairman and Interim Chief Executive Officer of Hydrodec, commented: "This is an important period for Hydrodec and the strong start to the second half of the year has reinforced our belief in the market-leading quality of our technology, plant, product and our ability to resolve the feedstock challenges of the past. The Group-wide business review continues to be the principal assignment for David Dinwoodie and myself. We have already concluded that our Australian business does not possess sufficient materiality or near term growth prospects to merit further capital deployment when we can deliver stronger returns, especially in North America where there is a significant market for us to grow the business. Our objective is to continue to work to put in place the platform on which to grow Hydrodec rapidly. The business review is on track and subject to Board approval is expected to be announced by the end of September. We are excited about what lies ahead for the Company and its shareholders."
For further information, please contact:
Hydrodec Group plc hydrodec@vigocomms.com
Lord Moynihan, Executive Chairman and Interim Chief Executive Officer
Arden Partners plc (Nominated Adviser and Broker) 0207 614 5900
Chris Hardie
Ciaran Walsh
Alex Penney
Vigo Communications (PR adviser to Hydrodec) 020 7390 0240
Patrick d'Ancona
Chris McMahon
Notes to Editors:
Hydrodec's technology is a proven, highly efficient, oil re-refining and chemical process principally targeted at the multi-billion US$ market for transformer oil used by the world's electricity industry. MarketsandMarkets forecasts that the global transformer oil market is expected to grow from US$1.98 billion in 2015 to US$2.79 billion by 2020 at a CAGR of 7.14% from 2015 to 2020. Used transformer oil is processed with distinct competitive advantage delivered through very high recoveries (near 100%), producing 'as new' high quality oils at competitive cost and without environmentally harmful emissions. The process also completely eliminates PCBs, a toxic additive banned under international regulations.
In 2016 Hydrodec received carbon credit approval from the American Carbon Registry ("ACR"), enabling its product to be sold with a carbon offset and creating an incremental revenue stream. The Group is now generating carbon offsets through the re-refining of used transformer oil, which would otherwise ordinarily be incinerated or disposed of in an unsustainable manner. This is a highly distinctive feature for the Group, confirming (as far as the Board is aware) Hydrodec as the only oil re-refining business in the world to receive carbon credits for its output. This is a significant endorsement of the Company's proprietary technology and standing as a leader in its field.
Hydrodec's main operating plant is located at Canton, Ohio, US.
Hydrodec's shares are listed on the AIM Market of the London Stock Exchange. For further information, please visit www.hydrodec.com.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Executive Chairman and Interim Chief Executive Officer's Report
Recent months have been transformational for Hydrodec operationally. Our focus on creating a platform from which to maximise the value of the Company, a process in which David as CFO and I have immersed ourselves, has begun to bear fruit.
At the centre of the previously announced Group-wide business review that I updated shareholders on at the Annual General Meeting in June has been a relentless drive to identify - and then deliver - ways to address the historical drag on our business performance in recent years - namely our inability to access both sufficient working capital and feedstock to maximise the value of the core, value additive elements of our business: our IP; the carbon credits we have been awarded; and the 'closed loop sustainability offer' we can make as the first 'Green Oil Company' in the global transformer oil market.
That we have now begun to deliver through a combination of initiatives including strengthening our relationship with G&S Technologies and focusing our activities on the growing demand within the US market for sustainable product. David, as interim CFO, and I have been asked by the Board to see through the delivery of the review and, subject to Board approval, will deliver the implementation phase following which the senior management team will be reviewed in order to deliver continuity and specialist expertise.
Operational review
The US business sold 10.3 million litres of premium quality SUPERFINE transformer oil and base oil during the period, a decrease of 22% on the corresponding period in 2017, reflecting the challenging feedstock market in Q1. Current trading is much improved and sales volumes for July and August are ahead of forecast with demand for product remaining strong.
The sales mix between higher margin transformer oil and lower margin base oil produced at the Canton plant improved over the period with transformer oil sales representing 64% of sales (H1 2016: 59%).
Plant utilisation has been improving, averaging 51% (H1 2017: 61%) during the period but rising significantly to 65% in June with improvements maintained in H2 to date. These rates indicate the spare capacity, the operational gearing and the potential for further significant operational and financial improvement as the feedstock position improves further. Strategic initiatives in respect of sourcing additional feedstock are underway.
Discontinued operations - Australia
As part of the Company's Group-wide business review the Board decided that with the capacity of one train in Australia (as opposed to six in Canton, Ohio); the impact of the business on management bandwidth; the nature of the small, fragmented domestic market and the feedstock challenges experienced in recent years, shareholder equity was better invested behind the US growth plans. As a result we have initiated a formal process to sell our business in Australia to a vertically integrated participant in the market whilst simultaneously commissioning a business case to consider the relocation of the plant to the US. This decision reinforces the Board's clear priority to ensure that every investment dollar is put to secure maximum returns for the shareholders.
Carbon credits
Having received carbon credit approval from the American Carbon Registry ("ACR") in 2016, Hydrodec's products can be sold with a carbon offset creating an incremental revenue stream. This is a highly distinctive feature for the Company, confirming (as far as the Board is aware) Hydrodec as the only oil re-refining business in the world to receive carbon credits for its output. This is a significant endorsement of the Company's proprietary technology and standing as a leader in its field.
Hydrodec of North America ("HoNA") generates carbon offsets through the re-refining of used transformer oil, which would otherwise ordinarily be incinerated or disposed of in an unsustainable manner. The ACR recognised 165,000 credits for HoNA's previous production between 2009 and 2013 and the Board was pleased to announce during the period that all of these historic credits have been sold, generating US$170k of net income. Whilst these historic credits only generated nominal sums, the Company anticipates that it could generate between 50,000 to 60,000 tons of carbon offset annually going forward and the ongoing generation of such credits for future production could realise a value of between US$3 and US$5 per ton based on recent industry reports. Management are currently looking at the potential sale of the remaining historic credits up to June 2018.
Financial review
Income from continuing operations were broadly flat at US$6.6 million (H1 2017: US$6.7 million), impacted by a challenging Q1, with higher pricing offsetting lower sales volumes. Revenues are expected to materially improve in H2 as the recent improved feedstock position and plant utilisation translate into increased sales.
The improvement in sales mix between higher margin transformer oil and lower margin base oil, coupled with higher sales prices, enabled delivery of further margin enhancement with gross margin improving significantly to 16% (H1 2017: 11%).
Group EBITDA from continuing operations improved slightly to a loss of US$161k (H1 2017: US$204k loss). Operational EBITDA at Canton increased to US$799k (H1 2017: US$660k) despite the challenging conditions in Q1. Significant improvements are expected in H2 with operational EBITDA at Canton for the month of July alone at US$463k and August expected to be at a similar level.
The overall loss for the period increased to US$3.3 million (H1 2017: US$2.6 million) due to under performance from the discontinued Australian operation.
Operating cash outflow (before working capital movements) increased to US$0.9 million (H1 2017: US$0.1 million).
The amount of working capital required by the Group's operations continues to be closely monitored and controlled, and forms a key part of management information. The Group is not yet sufficiently cash generative from its operations to meet all central costs, having taken account of the need to retain sufficient working capital in the operations. As a result, the Company announced in April 2018 that it had agreed an additional working capital facility (the "Facility") with Andrew Black, the Company's largest shareholder and a non-executive Director (the "Lender"). The Facility was initially for up to GBP500,000 and was extended to GBP1.5 million in May 2018. It bears no interest and is secured over the assets of the Company. The Company announces today that it has agreed with the Lender to extend this Facility further to up to GBP3 million to cover the costs of meeting Australian creditors during recent performance issues in Australia and on-going central costs during the Board's wider business review (including the potential sale or relocation of the Australian plant).
The Group's principal financing facilities are a seven year US$10 million finance lease arrangement with First Merit fully drawn and repayment under which commenced on 1 October 2015, and shareholder loans from Andrew Black of US$12.8 million as at 30 June 2018, currently repayable on 31 December 2018. The interest (where applicable) on these shareholder loans is accrued and rolled-up in order that ongoing interest payments are not a cash drain on the Company. As noted above, an extension to the most recent facility to up to GBP3 million bearing no interest has been made available by Mr Black post period end and the Company now has the option, at the Company's sole discretion, to extend the repayment date of all of these shareholder loans to 31 December 2019.
Net financial expense was US$0.7 million (H1 2017: US$0.5 million) and relates to the interest payable under the lease in the US and interest accruing on the shareholder loans in the UK.
Going concern
Taking into account the Group's current forecast and projections, available facilities and on-going support from Andrew Black (a non-executive Director of the Company and its largest shareholder), the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue operating for at least the next 12 months. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.
Related party transaction
As Andrew Black is a non-executive Director and a substantial shareholder of the Company (as defined in the AIM Rules for Companies ("AIM Rules")), the agreement by Mr. Black to increase the amount available under the working capital loan facilities (as referred to above), when aggregated with previous agreements between Mr. Black and the Company in respect of the facilities in the previous 12 months, constitutes a related party transaction for the purposes of the AIM Rules.
The Directors, with the exception of Andrew Black and David Dinwoodie who were excluded from the Board's discussions to approve the proposed loan, consider that, having consulted with the Company's Nominated Adviser, Arden Partners plc, the terms of the increase in the facilities are fair and reasonable insofar as shareholders are concerned. The Company is indebted to Andrew Black for his continued support and enthusiasm for Hydrodec.
Outlook
Recent trading in the continuing US business has been very encouraging with all key metrics - feedstock, utilisation, sales volumes, pricing and margins - continuing to show significant improvement on the challenging conditions faced earlier in the year. The outlook for the rest of this year is promising as these trends continue and the Board expects H2 performance to show material improvement over H1.
As previously reported, the Board is also focused on developing a stronger balance sheet and finalising the Board's review of its various growth options, which it intends to conclude by the end of September 2018. These include opportunities for internal and organic business growth as well as strategic opportunities and partnerships if, and only if, they are seen by the Board to add shareholder value.
Lord Moynihan
Executive Chairman and Interim CEO
7 September 2018
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2018
Hot Features
Premium
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 31 December
2018 2017 2017
Note USD'000 USD'000 USD'000
------------ ------------ -------------
Continuing operations
Revenue 2 6,437 6,649 13,442
Other income 171 42 111
Total income 6,608 6,691 13,553
Cost of sales (5,432) (5,921) (11,716)
Gross profit 1,176 770 1,837
Administrative expenses (2,661) (2,925) (4,836)
Operating loss (1,485) (2,155) (2,999)
Finance income 1 - -
Finance costs (653) (501) (1,146)
Loss on ordinary activities
before taxation (2,137) (2,656) (4,145)
Taxation 35 127 129
------------ ------------ -------------
Loss for the period from
continuing operations 2 (2,102) (2,529) (4,016)
Discontinued operations
Loss from discontinued
operations, net of tax 4 (1,171) (26) (239)
Loss for the period (3,273) (2,555) (4,255)
------------ ------------ -------------
Loss for the period attributable
to:
Owners of the parent
company (3,135) (2,368) (3,936)
Non-controlling interest (138) (187) (319)
(3,273) (2,555) (4,255)
------------ ------------ -------------
Loss per Ordinary Share
From continuing operations
Basic and diluted, cents
per share 5 (0.28) (0.34) (0.54)
------------ ------------ -------------
From continuing and discontinued
operations
Basic and diluted, cents
per share 5 (0.44) (0.34) (0.57)
--------- --------- ---------
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2018
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 31 December
2018 2017 2017
USD'000 USD'000 USD'000
------------ ------------ -------------
Total loss for the period (3,273) (2,555) (4,255)
Other comprehensive income
Items that may be subsequently
reclassified to profit
and loss:
Foreign currency translation
differences on foreign
operations 21 1,039 986
Foreign currency translation
differences on discontinued
operations 166 (988) (914)
------------ ------------ -------------
187 51 72
------------ ------------ -------------
Total comprehensive income
for the period (3,086) (2,504) (4,183)
------------ ------------ -------------
Total comprehensive income
for the period attributable
to:
Owners of the parent
company (2,948) (2,317) (3,864)
Non-controlling interest (138) (187) (319)
(3,086) (2,504) (4,183)
------------ ------------ -------------
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 June 30 June 31 December
2018 2017 2017
Note USD'000 USD'000 USD'000
------------ ------------ -------------
Non-current assets
Property, plant and equipment 30,665 37,630 36,627
Intangible assets 6,181 6,169 6,677
36,846 43,799 43,304
------------ ------------ -------------
Current assets
Trade and other receivables 1,678 2,033 2,054
Inventories 651 497 585
Cash and cash equivalents 302 235 126
Assets held for sale 6 2,565 - -
5,196 2,765 2,765
Current liabilities
Bank overdraft - (747) (340)
Trade and other payables (4,906) (4,449) (5,288)
Other interest-bearing
loans and borrowings 7 (15,631) (3,048) (14,140)
(20,537) (8,244) (19,768)
------------ ------------ -------------
Net current liabilities (15,341) (5,479) (17,003)
Non-current liabilities
Employee obligations - (79) (39)
Other interest-bearing
loans and borrowings 7 (4,551) (16,443) (6,177)
Provisions (792) (821) (777)
Deferred taxation (1,002) (1,028) (1,062)
(6,345) (18,371) (8,055)
------------ ------------ -------------
Net assets 15,160 19,949 18,246
------------ ------------ -------------
Equity
Called up share capital 9 6,200 6,200 6,200
Share premium account 130,539 130,539 130,539
Merger reserve 48,940 48,940 48,940
Profit and loss account (177,933) (173,414) (174,985)
Equity attributable to
owners of the parent
company 7,746 12,265 10,694
------------ ------------ -------------
Non-controlling interest 7,414 7,684 7,552
Total equity 15,160 19,949 18,246
------------ ------------ -------------
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
Total Total
Profit profit attributable
Employee Foreign Capital Share and and to owners
Share Share Merger benefit exchange redemption option loss loss of the Non-controlling Total
capital premium reserve trust reserve reserve reserve account account parent interest equity
USD USD USD USD USD USD USD USD USD USD USD USD
'000 '000 '000 '000 '000 '000 '000 '000 '000 '000 '000 '000
At 1 January
2018 6,200 130,539 48,940 (1,150) (10,419) 420 647 (164,483) (174,985) 10,694 7,552 18,246
Transactions
with owners
in their
capacity
as owners:
Share-based - - - - - - - - - - - -
payments
Effect of - - - - - - - - - - - -
foreign
exchange
rates
Total
transactions - - - - - - - - - - - -
with owners
in their
capacity
as owners
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
Loss for
the year - - - - - - - (3,135) (3,135) (3,135) (138) (3,273)
Other
comprehensive
income:
Currency
translation
differences - - - - 21 - - - 21 21 - 21
Currency
translation
differences
on
discontinued
operations - - - - 166 - - - 166 166 - 166
Total other
Comprehensive
Income for
the period - - - - 187 - - - 187 187 - 187
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
Total
Comprehensive
Income for
the period - - - - 187 - - (3,135) (2,948) (2,948) (138) (3,086)
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
At 30 June
2018 6,200 130,539 48,940 (1,150) (10,232) 420 647 (167,618) (177,933) 7,746 7,414 15,160
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Audited)
Total Total
Profit profit attributable
Employee Foreign Capital Share and and to owners
Share Share Merger benefit exchange redemption option loss loss of the Non-controlling Total
capital premium reserve trust reserve reserve reserve account account parent interest equity
USD USD USD USD USD USD USD USD USD USD USD USD
'000 '000 '000 '000 '000 '000 '000 '000 '000 '000 '000 '000
At 1 January
2017 6,200 130,539 48,940 (1,150) (10,491) 420 665 (160,547) (171,103) 14,576 7,871 22,447
Transactions
with owners
in their
capacity
as owners:
Share-based
payments - - - - - - (17) - (17) (17) - (17)
Effect of
foreign
exchange
rates - - - - - - (1) - (1) (1) - (1)
Total
transactions
with owners
in their
capacity
as owners - - - - - - (18) - (18) (18) - (18)
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
Loss for
the year - - - - - - - (3,936) (3,936) (3,936) (319) (4,255)
Other
comprehensive
income:
Currency
translation
differences - - - - 986 - - - 986 986 - 986
Currency
translation
differences
on
discontinued
operations - - - - (914) - - - (914) (914) - (914)
Total other
Comprehensive
Income for
the period - - - - 72 - - - 72 72 - 72
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
Total
Comprehensive
Income for
the period - - - - 72 - - (3,936) (3,864) (3,864) (319) (4,183)
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
At 31 December
2017 6,200 130,539 48,940 (1,150) (10,419) 420 647 (164,483) (174,985) 10,694 7,552 18,246
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
Total Total
Profit profit attributable
Employee Foreign Capital Share and and to owners
Share Share Merger benefit exchange redemption option loss loss of the Non-controlling Total
capital premium reserve trust reserve reserve reserve account account parent interest equity
USD USD USD USD USD USD USD USD USD USD USD USD
'000 '000 '000 '000 '000 '000 '000 '000 '000 '000 '000 '000
At 1 January
2017 6,200 130,539 48,940 (1,150) (10,491) 420 665 (160,547) (171,103) 14,576 7,871 22,447
Transactions
with owners
in their
capacity
as owners:
Share-based
payments - - - - - - 6 - 6 6 - 6
Total
transactions
with owners
in their
capacity
as owners - - - - - - 6 - 6 6 - 6
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
Loss for
the period - - - - - - - (2,368) (2,368) (2,368) (187) (2,555)
Other
comprehensive
income:
Currency
translation
differences - - - - 1,039 - - - 1,039 1,039 - 1,039
Currency
translation
differences
on
discontinued
operations - - - - (988) - - - (988) (988) - (988)
Total other
Comprehensive
Income for
the period - - - - 51 - - - 51 51 - 51
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
Total
Comprehensive
Income for
the period - - - - 51 - - (2,368) (2,317) (2,317) (187) (2,504)
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
At 30 June
2017 6,200 130,539 48,940 (1,150) (10,440) 420 671 (162,915) (173,414) 12,265 7,684 19,949
-------- -------- -------- --------- --------- ----------- -------- ---------- ---------- ------------- ---------------- ----------
HYDRODEC GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 June 2018
Unaudited Unaudited Audited
six months six months Year ended
ended ended
30 June 30 June 31 December
2018 2017 2017
USD'000 USD'000 USD'000
------------ ------------ ------------
Cash flows from operating activities
Loss before taxation from continuing
operations (2,137) (2,656) (4,145)
Cash outflow from discontinued
operations (577) (968) (556)
Finance costs 653 501 1,146
Adjustments for:
Amortisation, depreciation and
impairment 1,303 1,768 2,625
Share based payments - 6 (17)
Foreign exchange movement (166) 1,217 1,311
Operating cash (outflow)/inflow
before working capital movements (924) (132) 364
(Increase)/decrease in inventories (386) 34 67
(Increase)/decrease in receivables (246) 22 (5)
Increase in trade and other payables 1,014 502 986
Net cash (outflow)/ inflow from
operating activities (542) 426 1,412
------------ ------------ ------------
Cash flows from investing activities
Purchase of property, plant and
equipment (99) (92) (346)
Purchase of intangible assets - - (120)
Cash (outflow)/inflow from discontinued
operations (26) (70) 18
Net cash outflow from investing
activities (125) (162) (448)
------------ ------------ ------------
Cash flows from financing activities
Proceeds from loans and borrowings 1,574 800 1,601
Interest paid (161) (181) (350)
Repayment of lease liabilities (740) (711) (1,435)
Cash outflow from discontinued
operations (217) (125) (396)
Net cash inflow/(outflow) from
financing activities 456 (217) (580)
------------ ------------ ------------
Net (decrease)/ increase in cash
and cash equivalents (211) 47 384
Cash and cash equivalents at beginning
of period (214) (574) (574)
Effect of movements in exchange
rates on cash held 18 15 (24)
Cash and cash equivalents at end
of period (407) (512) (214)
------------ ------------ ------------
Reported in the Consolidated Statement
of Financial Position as:
Cash and cash equivalents 302 235 126
Bank overdraft - (747) (340)
Included in assets held for sale (709) - -
------------ ------------ ------------
(407) (512) (214)
------------ ------------ ------------
HYDRODEC GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
1. ACCOUNTING POLICIES
Basis of preparation
This report was approved by the Directors on 7 September 2018.
The condensed consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs').
The condensed consolidated interim financial statements are presented in United States dollars ('USD') as the Group's business is influenced by pricing in international commodity markets which are primarily USD based.
The Company is domiciled in the United Kingdom. The Company's shares are admitted to trading on the AIM market.
The current and comparative periods to June have been prepared using the accounting policies and practices consistent with those adopted in the annual financial statements for the year ended 31 December 2017, and with those expected to be adopted in the Group's financial statements for the year ended 31 December 2018. This is the first set of the Group's financial statements where IFRS 15 and IFRS 9 have been applied. There is no material impact on the financial statements from the adoption of these standards.
In applying these policies to the interim financial results, the Board has exercised its judgement in respect of the fair value of the Australian assets classified as held for sale.
In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', the comparative income statement has been re-presented so that the disclosures in relation to discontinued operations relate to all operations that have been discontinued by the balance sheet date.
Comparative figures for the year ended 31 December 2017 have been extracted from the statutory financial statements for that period which carried an unqualified audit report, did not contain a statement under sections 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.
The financial information contained in this report does not constitute statutory financial statements as defined by section 434 of the Companies Act 2006, and should be read in conjunction with the Group's financial statements for the year ended 31 December 2017. This report has not been audited by the Group's auditors.
Taking into account the Group's current forecast and projections, available facilities and on-going support from Andrew Black (a non-executive Director of the Company and its largest shareholder), the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue operating for at least the next 12 months. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.
The principal risks and uncertainties of the Group have not changed since the publication of the last annual financial report where a detailed explanation of such risks and uncertainties can be found.
2. SEGMENTAL INFORMATION
The Group has one main operating segment, Re-refining, which is classified as the treatment of used transformer oil and the sale of SUPERFINE(TM) oil. Subsequent to the Board's decision to cease activities in Australia (see note 4), the operating segment arises from one geographic location, being USA. The remaining items disclosed within the Australia segment relates to the Group's royalty, patent and carbon credit assets.
Unaudited six months ended 30 June
2018
USA Australia Unallocated Total
USD'000 USD'000 USD'000 USD'000
--------- ---------- ------------ ---------
Income Statement
Revenue 6,437 - - 6,437
Other income - 171 - 171
EBITDA 799 150 (1,110) (161)
Depreciation and
loss on disposal
of property, plant
and equipment (972) - (1) (973)
Amortisation - (141) (189) (330)
Loss for the year
on continuing operations (278) (115) (1,709) (2,102)
--------- ---------- ------------ ---------
Unaudited six months ended 30 June
2018
USA Australia Unallocated Total
USD'000 USD'000 USD'000 USD'000
--------- ---------- ------------ ---------
Balance Sheet
Total assets 32,719 3,277 6,046 42,042
Total liabilities (11,484) (748) (14,650) (26,882)
--------- ---------- ------------ ---------
Net assets 21,235 2,529 (8,604) 15,160
--------- ---------- ------------ ---------
The total assets in respect of Australia include the net
assets held for sale disclosed in note 6.
Unaudited six months ended 30 June
2017
USA Australia Unallocated Total
USD'000 USD'000 USD'000 USD'000
--------- ---------- ------------ ---------
Income Statement
Revenue 6,649 - - 6,649
Other income 1 - 41 42
EBITDA 660 (114) (750) (204)
Depreciation and
loss on disposal
of property, plant
and equipment (969) - (2) (971)
Amortisation - (139) (658) (797)
Loss for the year
on continuing operations (611) (252) (1,666) (2,529)
--------- ---------- ------------ ---------
Unaudited six months ended 30 June
2017
USA Australia Unallocated Total
USD'000 USD'000 USD'000 USD'000
--------- ---------- ------------ ---------
Balance Sheet
Total assets 33,778 7,019 5,767 46,564
Total liabilities (11,605) (3,848) (11,162) (26,615)
--------- ---------- ------------ ---------
Net assets 22,173 3,171 (5,395) 19,949
--------- ---------- ------------ ---------
Audited year ended 31 December 2017
USA Australia Unallocated Total
USD'000 USD'000 USD'000 USD'000
--------- ---------- ------------ ---------
Income Statement
Revenue 13,442 - - 13,442
Other income 67 3 41 111
EBITDA 1,519 (125) (1,413) (19)
Depreciation and
loss on disposal
of property, plant
and equipment (1,994) - (4) (1,998)
Amortisation - (281) (346) (627)
Loss for the year
on continuing operations (1,023) (488) (2,505) (4,016)
--------- ---------- ------------ ---------
Audited year ended 31 December 2017
USA Australia Unallocated Total
USD'000 USD'000 USD'000 USD'000
--------- ---------- ------------ ---------
Balance Sheet
Total assets 32,969 6,777 6,323 46,069
Total liabilities (11,313) (3,733) (12,777) (27,823)
--------- ---------- ------------ ---------
Net assets 21,656 3,044 (6,454) 18,246
--------- ---------- ------------ ---------
3. DIVIDS
The Directors do not recommend the payment of a dividend for the period.
4. DISCONTINUED OPERATIONS
By the period end, and as part of the Company's Group-wide business review, the Board had decided that with the capacity of one train in Australia (as opposed to six in Canton, Ohio); the impact of the business on management bandwidth; the nature of the small, fragmented domestic market and the feedstock challenges experienced in recent years, shareholder equity was better invested behind the US growth plans. As a result, the Board has initiated a formal process to sell the operating business in Australia to a vertically integrated participant in the market whilst simultaneously commissioning a business case to consider the relocation of the plant to the US.
Accordingly, the Australian operations have been treated as discontinued operations for the period ended 30 June 2018. A single amount is shown on the face of the condensed consolidated income statement, comprising the post-tax result of discontinued operations. The income statement for the prior periods have been restated to conform to this presentation. In the cash flow statement, the cash used by the operating activities of the Australian operation has been reported as a single line item.
The results of the discontinued operations, which have been included in the condensed consolidated income statement, were as follows:
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2018 2017 2017
USD'000 USD'000 USD'000
----------- ----------- ------------
Revenue 1,034 2,313 4,408
Expenses (2,138) (2,218) (4,507)
----------- ----------- ------------
Operating (loss)/profit (1,104) 95 (99)
Finance costs (67) (69) (140)
----------- ----------- ------------
Loss before taxation (1,171) (26) (239)
Taxation - - -
----------- ----------- ------------
Net loss attributable to discontinued
operations (1,171) (26) (239)
----------- ----------- ------------
Loss per Ordinary Share
Basic and diluted, cents (0.16) (0.00) (0.03)
----------- ----------- ------------
5. LOSS PER ORDINARY SHARE
Basic loss per Ordinary Share is calculated by dividing the net loss for the period attributable to ordinary shareholders by the weighted average number of Ordinary Shares in issue during the period. The calculation of the basic and diluted loss per Ordinary Share is based on the following data:
Unaudited six months Unaudited six months Audited year ended
ended 30 June 2018 ended 30 June 2017 31 December 2017
Continuing Continuing Continuing
and and and
Continuing discontinued Continuing discontinued Continuing discontinued
operations operations operations operations operations operations
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
----------------- ------------- ------------ ------------- ------------ ---------------
Losses
Losses for
the
purpose
of basic
loss per
Ordinary
Share (2,102) (3,273) (2,529) (2,555) (4,016) (4,255
----------------- ------------- ------------ ------------- ------------ -------------
Number Number Number Number Number Number
'000 '000 '000 '000 '000 '000
---------- ---------- -------- ---------- -------- ----------
Number of shares
Weighted average
number of shares
for the purpose
of basic loss
per Ordinary
Share 746,683 746,683 746,683 746,683 746,683 746,683
---------- ---------- -------- ---------- -------- ----------
Loss per Ordinary
Share
Basic and diluted,
cents per share (0.28) (0.44) (0.34) (0.34) (0.54) (0.57)
---------- ---------- -------- ---------- -------- ----------
Due to the losses incurred in the years reported there is no dilutive effect from the existing share options. or share based employment compensation plan.
6. ASSETS HELD FOR SALE
As described in note 4, by the period end the Board had resolved to dispose of the Group's interest in Hydrodec Australia Pty Limited and these operations were classified as non-current assets held for sale and presented separately in the Consolidation Statement of Financial Position.
The major classes of assets and liabilities comprising the operations classified as held for sale were as follows:
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2018 2017 2017
USD'000 USD'000 USD'000
----------- ----------- ------------
Property, plant and equipment 4,800 - -
Current assets including cash
and cash equivalents 565 - -
Current liabilities (1,663) - -
Non-current liabilities (1,137) - -
----------- ----------- ------------
Total net assets held for sale 2,565 - -
----------- ----------- ------------
The Directors consider that the carrying amount of the net assets held for sale approximates to their fair value and no provision for impairment is required.
7. OTHER INTEREST-BEARING LOANS AND BORROWINGS
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2018 2017 2017
USD'000 USD'000 USD'000
----------- ----------- ------------
Current liabilities
Finance lease liabilities 1,524 1,729 1,800
Unsecured bank facility 1,319 1,319 1,319
Shareholder loan 12,788 - 11,021
15,631 3,048 14,140
----------- ----------- ------------
Non-current liabilities
Finance lease liabilities 4,551 7,015 6,177
Shareholder loan - 9,428 -
4,551 16,443 6,177
----------- ----------- ------------
8. RELATED PARTY TRANSACTIONS
On 4 April 2018, the Company agreed an additional working capital facility of USD 0.7 million (GBP0.5 million) from Andrew Black, a non-executive Director and significant shareholder of the Company. The facility is secured over the assets of the Group, is non-interest bearing and is not subject to any arrangement or other fees. This facility was extended to USD 2.0 million (GBP1.5 million) on 31 May 2018. The principle of this additional facility was originally due for repayment on 31 December 2018, but the Company has subsequently agreed an option to extend the repayment date on all of the shareholder loans from Andrew Black to 31 December 2019.
9. SHARE CAPITAL
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2018 2017 2017
USD'000 USD'000 USD'000
----------- ----------- ------------
Allotted, issued and fully paid
746,682,805 Ordinary Shares of
0.5 pence each 6,200 6,200 6,200
----------- ----------- ------------
10. POST BALANCE SHEET EVENTS
On 7 September 2018, the Company agreed a further extension to the additional working capital facility referred to in note 8, taking the facility to USD 4 million (GBP3 million) on the same terms.
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
IR LLFLAAIIDIIT
(END) Dow Jones Newswires
September 10, 2018 02:00 ET (06:00 GMT)
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