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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Redt Energy Plc | LSE:RED | London | Ordinary Share | GB00B11FB960 | ORD EUR0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 52.50 | 50.00 | 55.00 | 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
TIDMRED
RNS Number : 3482O
RedT Energy PLC
17 May 2018
This announcement contains inside information
17 May 2018
redT energy plc
("redT" or the "Company")
2017 Full Year Results
redT energy plc (AIM: RED), ("redT energy" or the "Company"), the energy storage technology company, today announces its Full Year Results for the 12 months ended 31 December 2017.
HIGHLIGHTS
Financial
2017 financials were in line with management expectations. redT strategically deployed capital during the year in order to scale the business for growth, investing heavily in building redT functional teams, key facilities and making significant progress on the development of the company's next generation product. Following the successful fundraise of GBP3.85m post-year end.
-- Year end free cash EUR7.4m (2016: EUR2.8m) -- Revenue up 9% to EUR11.8m (2016 EUR10.8m) -- Trading loss ((1) EUR6.9m (2016: EUR5.3m loss) due to operational expansion -- Operating loss of EUR7.9m (2016: loss EUR5.7m) -- Loans and borrowings EURNil (2016: EURNil)
(1) Operating profit excluding share-based payments
Following the exit from the Euro denominated Carbon business in January 2018, the Group now predominantly comprises the GBP denominated redT business. The Board has therefore decided to change the Group's reporting currency to GBP with effect from 1 January 2018.
Operational
redT focussed on three main areas during 2017, scaling and streamlining operations for growth, gaining significant commercial traction within new and existing markets and the continuation of on-going research and development ("R&D") activity on our Gen 3, margin-generating product.
redT energy storage business:
-- Company headcount more than doubled from 24 to 60 during the period, strengthening engineering, research and development, business development and software development capabilities
-- Orders closed for 14 units to a Botswana based customer, with sub-Saharan Africa remaining a key market for redT
-- "Flagship" projects were bought online during the period: The Olde House (UK) and Thaba Eco Lodge (South Africa)
-- Order closed for the first vanadium flow / lithium hybrid energy storage system in Australia, Monash University
-- Agreements signed with partners to supply redT products in target markets, such as South-East Asia and Eastern Europe
-- Order closed for 9 redT tank units to a customer in South-East Asia, marking the Company's entry into the Asian energy storage market
Camco business:
-- Camco business made a positive contribution in 2017, generating an operating profit of EUR0.7m (2016: EUR0.9m)
Post period activity
-- redT's flow machine technology was selected for a large scale tidal generation project in the UK, subject to finance and formal contract awards
-- 15kW-75kWh energy storage machine installed and operational at Thaba Eco Hotel, South Africa
-- Secured a GBP750,000 funding grant from the UK Government for R&D purposes -- Successful fundraise of GBP3.85m (before expenses) in April 2018
-- redT selected as finalists in the energy storage category for the British Renewable Energy Awards 2018
-- Strategy to exit Camco business substantially completed in January 2018 with divestment of Camco Africa and cessation of Camco Carbon businesses
Commercial Update (as at 31 December 2017)
Hot Features
Premium
December April 2017 % change
2017 (2)
In production or
deployed (1) 54 units 9 units +500%
------------- ------------- --------------
43 units
Orders signed (1) (EUR2.5m) 5 units +760%
------------- ------------- --------------
Final stage customer EUR18.3m EUR6.5m +182% (value)
selection (330 units) (101 units)
(3)
------------- ------------- --------------
Active customer
pipeline EUR357m EUR246m +45%
------------- ------------- --------------
(1) Cumulative figures
(2) April 2017 was the first time these metrics were reported
(3) Includes EUR1.7m (40 units) related to Gen 3
Outlook
-- Important relationships being forged with key partners and industry bodies, leaving redT well placed for continued commercial success in 2018
-- redT set to capitalise on growing demand for storage solutions as the global energy storage market continues its rapid expansion (c.$2bn December 2017) (1)
-- Extensive R&D in 2017 led to the completion of the Gen 3 "stack" prototype earlier in 2018 -- Market launch of the Gen 3 product scheduled for H2 2018
-- Growing customer interest for Gen 3, final stage customer selection for Gen 3 sales was approximately EUR11m at end of Q1 2018
-- Focus on delivering existing Gen 2 orders and closing and delivering Gen 3 orders
-- 2018 will see redT continue to build upon the solid foundations for growth put in place, pursuing the delivery of commercial, margin-generating orders for energy storage within its core markets
(1) Estimate by Delta Energy & Environment, 2018
Commenting, Scott McGregor, Chief Executive Officer said:
"2017 was a pivotal year for redT, with the Company successfully bringing a commoditised, pure vanadium flow machine to the market, in the form of our Gen 2 product. Orders for 43 tank units for use in multiple applications were secured, covering key target markets.
Much of our focus during the period was on building out our functional teams for growth, to ensure that we have the resource in place to take advantage of our market leading position in the energy storage sector. We have strengthened our engineering, R&D, software development and business development teams and made a number of key strategic senior hires, that we believe give us unrivalled expertise in the storage market.
We are excited about the launch of our margin generating Gen 3 product later this year and we look forward to delivering further commercial success and contract wins for our stakeholders in due course."
Enquiries:
redT energy plc +44 (0)20 7061 6233 Scott McGregor, Chief Executive Officer Fraser Welham, Chief Financial Officer Joe Worthington, Investor & Media Relations Investec Bank plc (Nominated Adviser and Broker) +44 (0)20 7597 5970 Jeremy Ellis / Chris Sim / Alexander Ruffman VSA Capital (Joint Broker) Andrew Monk / Andrew Raca +44 (0)20 3005 5000 Celicourt Communications (Financial PR) Mark Antelme / Jimmy Lea / Ollie Mills +44 (0)20 7520 9266
Notes to Editors
About redT energy
redT energy plc are experts in energy storage, specialising in the design, manufacture, installation and operation of energy storage systems which create revenue alongside reliable, low-cost renewable generation for businesses, industry and electricity distribution networks. Using patented vanadium redox flow technology to store energy in liquid, redT's own energy storage machines can be run continually with no degradation: charging and discharging for over 25 years, matching the lifespan of renewable assets in on-grid, off-grid and weak-grid settings.
redT's energy storage solutions, developed over the past 15 years, address today's changing energy market by providing a flexible platform for time shifting surplus renewable power, securing electricity supplies and earning revenue through grid services. The company has operating machines deployed with customers in the UK, Europe, sub-Saharan Africa, Australia and Asia Pacific. redT energy plc is listed on the London Stock Exchange (AIM:RED) and has offices in the UK, Africa and the USA. For more information, visit www.redTenergy.com
For sales, press or investor enquiries, please contact the redT team on +44 (0)207 061 6233.
Chairman's Report
The global, stationary, energy storage market continues to expand rapidly, valued at almost $2bn at the end of 2017, with strong future growth predictions expressed by many of the market's leading commentators. As this market matures, our prospective customers also become increasingly knowledgeable about how to use energy storage effectively and which solutions are most appropriate to meet their needs. In the past few years, the market has focussed on the need for short term storage to provide grid stability, but fundamentally the real driver is the need to smooth out peaks and troughs from intermittent renewable energy generation and varying demand - an issue which will increase in prominence as more renewables come online and our demand profile changes in line with factors such as the increasing popularity of electric vehicles. This requirement applies to both off-grid and on-grid markets and the solution requires 4-6 hours of energy storage infrastructure, not the short duration batteries which have been focussed on to date and which take advantage of prevailing, unsecured revenue opportunities from short term grid service contracts. I'm pleased to report that in the past year, we have seen customers recognise this fact and therefore, the competitive benefits that our products can bring. It has also allowed us to position ourselves as an energy storage solutions business that supports and educates customers in how to maximise the benefits of our products.
The result of this is that our pipeline has continued to grow and we are increasingly seen as a trusted long-term partner. Conversion of pipeline to sales is not a fast process for new products in new markets, but our expanding pipeline demonstrates the size and potential of this market and the commercial sales we have closed show that our pricing is at a competitive level. These sales figures will increase rapidly as more of our products come online in customer applications and, as I reported last year, we have made excellent progress in deploying our Generation 2 ("Gen 2") machines into target markets to build credibility and drive 'multiplier' sales.
We started 2017 with shareholder approval for the injection of nearly GBP15m of new capital into the Group, which has enabled us to expand our team and recruit key personnel. The skills of the team are fundamental to the success of redT and I am confident that we have now assembled the most experienced and expert team in flow energy storage. This has been demonstrated by the innovations in product design, research and development and commercial, business case modelling that we have achieved during the year. The new funding has allowed redT to progress the development of a 3rd generation product ("Gen 3") with improved performance and reduced production costs.
I would like to commend our executives and the whole team on their dedication and enthusiasm. There are inevitable challenges and time pressures to address and we are fortunate for the efforts that the team make to overcome any issues and achieve deadlines. I would also like to thank my Board colleagues for their support and contribution, in particular Scott Laird who resigned as Financial Director after more than 3 years leading redT's finance function. I am also pleased to welcome Fraser Welham who has joined the Board as Chief Financial Officer. Fraser brings with him considerable and highly relevant experience within renewable energy finance which will serve to further strengthen our Board.
In summary, 2017 saw key milestones for redT; a maturing market that recognises the benefit of flexible energy storage infrastructure such as flow machines, commercial sales that endorse our pricing and secure our credibility in key markets, and future product development that will serve to enhance our sales margins. Together, these achievements will serve to accelerate pipeline conversion into sales and thereby drive shareholder value.
I look forward to another successful year.
Jeffrey Kenna
Chairman
Chief Executive Officer's Report
Summary
In 2017, redT successfully brought a commoditised, pure vanadium flow machine to market in the form of the Group's 2nd Generation ("Gen 2") commercial product offering. In total 43 tank unit orders were secured, spanning the UK, Europe, Africa, Asia and Australia, in a variety of on and off-grid applications for customers ranging from business owners to multinational utility companies and corporates. In conjunction with this, the Group also utilised new capital, secured via a successful fundraise concluded in December 2016, to rapidly scale up its operations in line with considerable demand for redT machines. During the year, redT successfully built its credibility within a nascent market, not only as a technology leader, but also as a market expert with the experience and expertise to unlock economic business models for distributed energy solutions in the UK and further afield. Having successfully deployed capital to scale our operations for growth, the Company is now in a strong, market leading position on which to capitalise during 2018 and beyond.
Outlook
As a business, we have intentionally focussed on building solid foundations for sustainable equity value. Disruptive business models and technologies require multi-discipline expertise and in response to this, we have developed strong technical competence across all engineering disciplines: chemical, mechanical, electrical and software. In addition to core product technology knowledge, redT also differentiates itself in the energy storage sector through its strong financial and project development credentials gained through nearly three decades of corporate heritage spent developing renewable energy projects globally.
Our foundations set us apart from our competition and this differentiation has enabled redT to rapidly attain a position as one of the leading flow technology solutions for businesses globally. Furthermore, as we move through 2018, redT is quickly being recognised as an expert and trusted energy storage solutions provider across the full range of energy storage technologies, including lithium-ion and hybrid systems, as well as our own, patented flow machines.
2018 will see redT continue to build upon these solid foundations for growth and pursue the delivery of commercial, margin-generating orders for energy storage within our established markets. We will also target large-scale "mega projects" for our 3rd Generation ("Gen 3") systems both in the UK and in selected markets abroad, utilising market leading, independently verified, economic models to design, install and operate distributed, energy storage infrastructure which meets our customers' core requirements.
Against a backdrop of ever reducing renewable energy prices, our team is using their skills and experience, alongside our disruptive, energy storage business models and redT's patented technology to unlock energy storage applications for customers around the world. redT is now in a position to capture this global opportunity and lead the way towards unlocking cheap, clean renewables for baseload power, a major element of the "Fourth Industrial Revolution".
redT's achievements during 2017 can be categorised into three key areas; scaling and streamlining operations for growth, gaining significant commercial traction within new and existing markets and the continuation of on-going research and development activity on our Gen 3, margin-generating product which is expected to launch in 2018.
Expanding and streamlining operations
During the year, redT significantly increased company headcount by securing additional resources in areas identified as challenges to scaling production. We are now pleased to report that these resource gaps have been filled with headcount more than doubling from 24 to 60 during the year. Key hires included senior positions within software development, business development, R&D and application engineering alongside the appointment of Jean-Louis Cols as Technology Director, leading the engineering function. The redT management team was also strengthened with the post year-end announcement of David Stewart's promotion to Chief Operating Officer and the hire of Fraser Welham as Chief Financial Officer.
In addition to increasing headcount, redT also expanded its Operational, Engineering and Design hub in Livingston and its R&D, Customer Demonstration and Testing centre in Wokingham. Alongside investing in these key locations, we also took steps to de-risk our supply chain by signing an agreement with a new, UK manufacturing partner to handle prototyping and smaller volume orders.
redT has been able to address the challenges which we communicated in July 2017, namely delays in recruitment and disruption to production schedules caused by the closure of the Jabil manufacturing facility in Livingston. I am now confident that redT is better positioned to secure, deliver and significantly scale its commercial success as a result.
In January 2018 the Company divested its interest in the Camco Africa investment advisory business and ceased its legacy Camco Carbon activity, thereby substantially completing the transition to a pure play energy storage business.
Significant commercial traction through flagship projects and entry into new markets
In 2017, the market challenged us to secure significant commercial orders for our Gen 2 product and I am pleased to report that by the 2017 year-end, we achieved an 8-fold increase in secured orders and a 6-fold increase in production since April 2017.
December April 2017(2) % change
2017
In production
or deployed (1) 54 units 9 units +500%
------------- -------------- --------------
Orders signed 43 units
(1) (EUR2.5m) 5 units +760%
------------- -------------- --------------
Final stage customer EUR18.3m EUR6.5m +182% (value)
selection (330 units) (101 units)
(3)
------------- -------------- --------------
Active customer
pipeline EUR357m EUR246m +45%
------------- -------------- --------------
(1) Cumulative figures
(2) April 2017 was the first time these metrics were reported
(3) Includes EUR1.7m (40 units) related to Gen 3
In line with our commercial strategy, "flagship" commercial sites are being established in core markets, which are used by the commercial team to demonstrate product capabilities and build business case credibility within those markets. Existing flagship sites include The Olde House (UK) and Thaba Eco Lodge (South Africa), with the Monash project in Australia currently in construction. redT have also signed agreements with partners in other target markets such as South-East Asia and Eastern Europe, allowing the Company to expand its presence in these regions with the support of experienced and respected partners, who will also provide maintenance and after-sales care to local customers.
2017 saw further strong development of energy storage adoption in redT's key UK market. Our team of energy analysts pioneered the development of independently verified, financial returns models for energy storage in the UK. This work has further enhanced redT's product proposition for customers and these models have been a direct factor in increasing the customer pipeline.
By positioning the Company as an energy storage expert rather than a pure technology supplier, redT has been able to forge important relationships with key partners and industry bodies which have also had a positive effect on commercial progress. These include several utility companies such as Centrica, industry bodies such as the Renewable Energy Association (REA) and the British Standards Institute (BSI) for which redT chairs a steering committee for energy storage technical standards. The Company also has strong ties with the UK Government via the Department for Business, Energy and Innovation (BEIS), with whom we worked closely on the Olde House project.
Next generation research and development
The Company's research and development activity continued apace throughout 2017 and we are pleased to report the completion of the Gen 3 stack design prototyping phase earlier in 2018. This advanced product will offer improved power output and efficiency performance at a reduced size and cost. The Company is currently accepting Gen 3 expressions of interest, with approximately EUR11m worth of orders in "final stage" customer selection. We are planning a formal product launch later this year.
In parallel to product development, our team have been working on other areas including electrolyte improvement, research on new, advanced materials and the development of software for a cutting-edge, management system. This integrated software solution aims to use the latest developments in machine learning and Artificial Intelligence (AI) to dynamically and autonomously adapt redT machine run strategies to create maximum financial benefit for customers.
redT's achievements within R&D were given a significant boost during the year with the hiring of Adam Whitehead as Head of Research. Adam is one of the world's foremost experts in flow machines and joined redT in September from competitor Gildemeister Energy Storage. We also secured the award of a GBP750,000 R&D funding grant from the UK government which will be used to further accelerate the development of future product generations.
Camco business
The Camco business made a positive contribution to the group over the period, supporting lower than expected redT sales, enabling overall 2017 revenue expectations to be met. As mentioned previously, the Group ceased its Camco Africa and Camco Carbon businesses in early 2018 in line with our previously announced corporate strategy.
In closing, I would like to thank the entire redT team for their dedicated work and commitment in bringing our disruptive, energy storage technology and business models to the forefront of the energy market and securing our leading position within the flow machine technology sector. This has not been easy; it has been a significant challenge given the stage of the Company's development, requiring complete focus and unwavering dedication from the highly skilled team we have built throughout 2017. My thanks also to our many customers and shareholders, for their continued support as we focus on delivering our solutions into this fast growing, energy storage market.
Scott McGregor
Chief Executive Officer
Financial Review
Overall Group result
The legacy Camco carbon trading and consultancy business continued to have a significant influence on the overall 2017 result, particularly at revenue and gross profit level as can be seen from the table below. The Camco business was substantially discontinued early in January 2018.
redT Camco Group
----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- -----
2017 2016 Variance 2017 2016 Variance 2017 2016 Variance
----------------------- ----- ----- ------------ ----- ----- ------------ ------ ----- ------------
EURm EURm EURm % EURm EURm EURm % EURm EURm EURm %
----------------------- ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- -----
Revenue 0.9 0.3 0.6 194 10.9 10.5 0.4 4 11.8 10.8 1.0 9
Gross profit 0.5 (1.5) 2.0 133 3.1 3.8 (0.7) (18) 3.6 2.3 1.3 59
Admin (excl. SBP (1) ) (8.0) (4.7) (3.3) (71) (2.5) (2.9) 0.4 15 (10.5) (7.6) (2.9) (38)
----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- -----
Trading (loss)/profit (7.5) (6.2) (1.3) (21) 0.6 0.9 (0.3) (28) (6.9) (5.3) (1.6) (30)
SBP (1) (1.0) (0.4) (0.6) (178) - - - - (1.0) (0.4) (0.6) (178)
Operating loss (8.5) (6.6) (1.9) (30) 0.6 0.9 (0.3) (28) (7.9) (5.7) (2.2) (39)
----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- -----
(1) SBP - Share-based payments
Despite delays in the ramp-up of the redT revenue caused by longer than expected initial production times resulting from delays in recruitment of key engineering resources, Group revenue grew EUR1.0m to EUR11.8m (2016 EUR10.8m) as the Camco business delivered a strong performance.
Group operating loss for the year was EUR7.9m (2016: EUR5.7m loss) which, excluding non-cash, share-based payments, corresponds to a trading loss of EUR6.9m (2016: EUR5.3m loss), EUR1.6m more than 2016 due to the expansion of redT's operations as explained below.
Share-based payments increased to EUR1.0m (2016: EUR0.4m). This non-cash charge is intended to estimate the value of share-based incentives, such as options, given to employees. It is derived by forecasting the probability weighted, potential increases in value of the share instruments based on historical volatility of the share price. The increase in charge this year is the result of additional options issued to employees during the year.
redT energy storage business
The redT business model is to be an energy storage expert as well as a supplier of its own patented energy storage machines. In 2017 the focus has been on building up the team and developing our products to achieve this.
Overall the redT business generated a trading loss of EUR7.5m (2016: EUR6.2m loss).
The revenue of EUR0.9m (2016: EUR0.3m) comprised EUR0.4m of grant funding on the successfully operating Thaba Eco Lodge Project in South Africa together with EUR0.5m from the release of licence fees deferred from 2016. The gross profit of EUR0.5m is attributable to the licence fee. Revenue is yet to be recognised on the 2017 commercial Gen 2 orders as these had not been fully commissioned by year end.
New hires in product development, engineering and commercial activities increased average staff numbers from 24 in 2016 to 45 in 2017. Increased staff and product development costs accounted for substantially all of the EUR3.3m (71%) increase in redT administrative expenses (excluding SBP) to EUR8.0m (2016: EUR4.7m). As none of the Gen 2 sales revenue was recognised in 2017, amortisation of redT's EUR6.8m R&D intangible asset did not commence during the year.
Camco business
The Camco business comprises the legacy Carbon and consultancy activities in Africa and the USA. Overall this business continued to generate a positive cash contribution to the Group.
During 2017 Camco Africa managed the Renewable Energy Performance Platform (REPP) mandate in partnership with Greenstream Network Ltd. Camco US continued its focus on the management of the previously disposed biogas assets via a service contract agreement. Camco Carbon provided ad hoc EU ETS Compliance Services.
The Camco business generated revenue of EUR10.9m (2016: EUR10.5m), gross profit EUR3.1m (2016: EUR3.8m) and trading profit EUR0.7m (2016: EUR0.9m). Increased year-on-year revenue, the reduction in gross profit and the smaller drop in trading profit are due to a change in the mix of contributions from each of the activities. Carbon generated more revenue, however this was low margin and had little impact on gross and trading profit. The reduction in gross profit was a result of the end of Camco Africa's involvement in the co-advisory mandate to Green Africa Power LLP (GAP) by mutual agreement back in November 2016. The US activity remained positive and broadly in line year-on-year.
As detailed in Note 24, Post Balance Sheet Events, the Group divested its holdings in Camco Africa on 5 January 2018 for a nominal amount and ceased its Carbon activities on 10 January 2018.
Fundraising
On 30 December 2016 shareholders approved the issue of 150,000,000 ordinary shares through a placing to institutional and other investors, and up to an additional 35,994,530 ordinary shares by way of an open offer, to raise a total of GBP14.88m (before expenses). Following the placing of 9,220,156 open offer shares not taken up with institutional investors, a total of 185,994,530 new ordinary shares were admitted to trading on AIM on 3 January 2017, resulting in a revised total issued and voting share capital comprising 653,923,424 ordinary shares. This capital issue was recorded within the 2017 financial year.
On 13 April 2018 the Company announced that it had raised GBP3.85 million (before expenses) from institutional investors through the placing of 65,392,342 ordinary shares, at a price of 5.9p, and the new shares were admitted to trading on AIM on 19 April 2018. Following admission, the Company's enlarged issued share capital now comprises 719,315,766 Ordinary Shares. The capital raised is being used by the Group to support the continued growth of the business, including the development of further product generations to satisfy orders and the pipeline of customer interest.
Cash and cash equivalents
At 31 December 2017, the Group held free cash reserves of EUR7.4m (2016: EUR2.8m). The Group continues to have no loans or borrowings. The key movements in cash during 2017 were; proceeds from issue of share capital of EUR16.5m, cash outflow from operating activities of EUR10.6m, and cash utilised for the acquisition of property, plant and equipment of EUR0.5m. The cashflow from operating activities includes a net EUR3.4m increase in working capital reflecting the increase in production of redT machines combined with the move from Jabil to a new UK manufacturing partner for the manufacture of the initial machines. The credit terms with this manufacture are less favourable than those with Jabil.
Fraser Welham
Chief Financial Officer
Consolidated Statement of Financial Position
At 31 December 2017
Notes 2017 2016
EUR'000 EUR'000
Non-current assets
Property, plant and equipment 12 482 103
Intangible assets and
goodwill 13 14,989 14,989
Deferred tax assets 9 96 175
15,567 15,267
Current assets
Inventory 14 619 -
Prepayments and accrued
income 15 1,065 509
Trade and other receivables 16 2,221 775
Corporate tax receivable 7 7
Cash and cash equivalents 7,431 2,753
11,343 4,044
Total assets 26,910 19,311
Current liabilities
Trade and other payables 17 (1,675) (3,972)
Deferred income 18 (2,013) (480)
(3,688) (4,452)
Non-current liabilities
Deferred income 18 (70) (222)
(70) (222)
Total liabilities (3,758) (4,674)
Net assets 23,152 14,637
Share capital 19 6,539 4,679
Share premium 103,800 89,201
Share-based payment reserve 19 1,936 1,118
Retained earnings (87,518) (79,340)
Translation reserve 19 195 729
Other reserve 19 (1,621) (1,621)
Non-controlling interest 19 (179) (129)
Total equity 23,152 14,637
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Notes 2017 2016
EUR'000 EUR'000
Revenue 3 11,838 10,829
Cost of sales (8,227) (8,563)
Gross profit 3,611 2,266
Administrative expenses (11,497) (7,927)
Loss from operating activities (7,886) (5,661)
Financial income 8 1 38
Foreign exchange movement 8 (288) (168)
Net financing expense (287) (130)
Loss before tax (8,173) (5,791)
Income tax (charge)/credit 9 (55) 154
Loss for the year (8,228) (5,637)
Other comprehensive loss
Items that are or may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations (534) (164)
Total comprehensive loss for the
year (8,762) (5,801)
Loss for the year attributable
to:
Equity holders of the parent (8,178) (5,517)
Non-controlling interest (50) (120)
_______ _______
(8,228) (5,637)
Total comprehensive loss for the
year attributable to:
Equity holders of the parent (8,712) (5,681)
Non-controlling interest (50) (120)
_______ _______
(8,762) (5,801)
For the year ended 31 December 2017
Notes 2017 2016
Basic loss per share in EUR cents 10 (1.28) (1.23)
Diluted loss per share in EUR cents 10 (1.28) (1.23)
Consolidated Statement of Changes in Equity
For year ended 31 December 2017
2017 2017 2017 2017 2017 2017 2017 2017 2017
Notes Share Share Share-based Retained Translation Other Equity Equity Total
capital premium payment earnings reserve reserve attributable attributable Equity
reserve to to
shareholders non-controlling
of the interest
Company
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at
1 January
2017 4,679 89,201 1,118 (79,340) 729 (1,621) 14,766 (129) 14,637
Total
comprehensive
loss for the
year
Loss for the
year - - - (8,178) - - (8,178) (50) (8,228)
Other
comprehensive
loss
Foreign
currency
transaction
differences - - - - (534) - (534) - (534)
______
Total
comprehensive
loss for the
year - - - (8,178) (534) - (8,712) (50) (8,762)
______
Transactions with
owners,
recorded directly in
equity
Contributions
by and
distributions
to owners
Share-based
payments 6 - - 818 - - - 818 - 818
Issuance of
shares 19 1,860 14,722 - - - - 16,582 - 16,582
Transaction
costs arising
on share
issues - (123) - - - - (123) - (123)
______
Total
contributions
by and
distributions
to owners 1,860 14,599 818 - - - 17,277 - 17,277
______
______
Balance at 31
December
2017 6,539 103,800 1,936 (87,518) 195 (1,621) 23,331 (179) 23,152
______
Consolidated Statement of Changes in Equity
For year ended 31 December 2016
2016 2016 2016 2016 2016 2016 2016 2016 2016
Notes Share Share Share-based Retained Translation Other Equity Equity Total
capital premium payment earnings reserve reserve attributable attributable Equity
reserve to to
shareholders non-controlling
of the interest
Company
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance as at
1 January
2016 4,098 85,375 773 (73,823) 893 (1,621) 15,695 (9) 15,686
Total
comprehensive
loss for the
year
Loss for the
year - - - (5,517) - - (5,517) (120) (5,637)
Other
comprehensive
loss
Foreign
currency
transaction
differences - - - - (164) - (164) - (164)
______
Total
comprehensive
loss for the
year - - - (5,517) (164) - (5,681) (120) (5,801)
______
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Share-based
payments 6 - - 345 - - - 345 - 345
Issuance of
shares 19 581 3,991 - - - - 4,572 - 4,572
Transaction
costs arising
on share
issues - (165) - - - - (165) - (165)
______
Total
contributions
by and
distributions
to owners 581 3,826 345 - - - 4,752 - 4,752
______
______
Balance at 31
December
2016 4,679 89,201 1,118 (79,340) 729 (1,621) 14,766 (129) 14,637
______
Consolidated Statement of Cash Flow
For year ended 31 December 2017
Notes 2017 2016
EUR'000 EUR'000
Cash flows from operating
activities
Loss for the year (8,228) (5,637)
Adjustments for:
Depreciation, amortisation
and impairment 12 130 57
Foreign exchange loss/(gain)
on translation 8 288 168
Financial income 8 (1) (38)
Impairment of receivables
- bad debt write-off 4 (36)
Equity settled share-based
payment expenses 6 1,030 345
Taxation 9 55 (59)
_______ _______
(6,722) (5,200)
(Increase)/decrease in trade
and other receivables (1,999) 170
Increase in inventory (619) -
Decrease in trade and other
payables (1,232) (1,314)
(3,850) (1,144)
_______ _______
Net cash outflow from operating
activities (10,572) (6,344)
Cash flows from investing
activities
Acquisition of property,
plant and equipment 12 (519) (72)
Net cash inflow from investing
activities (519) (72)
Cash flows from financing
activities
Proceeds from the issue of
share capital 16,459 4,406
Proceeds from other financial
assets - 2,420
Interest received 8 1 38
Net cash inflow from financing
activities 16,460 6,864
Net increase in net cash
and cash equivalents 5,369 448
Net cash and cash equivalents
at 1 January 2,753 2,935
Effect of foreign exchange
rate fluctuations on cash
held (691) (630)
Net cash and cash equivalents
at 31 December 7,431 2,753
Notes
1 Accounting policies
redT energy plc (the "Company") is a public company incorporated in Jersey under the Companies (Jersey) Law 1991. The address of its registered office is 3rd floor, Standard Bank House, 47-49 La Motte Street, St Helier Jersey, JE2 4SZ. The consolidated financial statements of the Company for the year ended 31 December 2017 comprise of the Company and its subsidiaries (together the "Group"). The Company's shares are quoted on AIM, a market operated by London Stock Exchange Plc.
A Statement of compliance
These consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union ("adopted IFRS").
These consolidated financial statements have been prepared in accordance with and in compliance with the Companies (Jersey) Law 1991, an amendment to which means separate parent company financial statements are not required.
These consolidated financial statements were approved by the Board on 17 May 2018.
B Basis of preparation
The financial statements are presented in Euros, the functional currency of the Company, rounded to the nearest thousand Euros.
The accounting policies set out below have been applied consistently in the year and presented in these consolidated financial statements. The accounting policies have been consistently applied across all Group entities for the purposes of producing these consolidated financial statements.
The financial statements have been prepared on historical cost and going concern basis.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised, if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:
Impairment of goodwill - goodwill is tested annually for any impairment in accordance with the accounting policy stated in Note 1 G below. These tests require the use of management estimates and assumptions as detailed in Note 13 - Intangible & goodwill.
Share-based payments - the expense relating to share-based payments is determined in accordance with the accounting policy stated in Note 1 L below. The calculation of this expense requires the use of various management estimates.
Critical accounting Judgements and assumptions
In the view of the directors there are no critical accounting judgements in the Group's financial statements.
Going Concern Basis
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executives Report. The financial position of the Group, its cash flows and liquidity position are described in the Financial Review. In addition, Notes 20 and 21 to the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposures to credit risk and liquidity risk.
The Group has sufficient financial resources together with long-term relationships with a number of customers and suppliers. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.
The Directors are satisfied that the Group has adequate resources to continue to operate for the foreseeable future. For this reason, they consider it appropriate for the financial statements to be prepared on a going concern basis.
Basis of consolidation
Subsidiaries - subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
Transactions eliminated on consolidation - intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Business Combinations
The Group adopted IFRS 3 Business Combinations (2008) and IAS 27 Consolidated and Separate Financial Statements (2008) for all business combinations occurring in the financial year starting 1 January 2009. All business combinations occurring on or after 1 January 2009 are accounted for by applying the acquisition method. The Group adopted IFRS 3 Business Combinations (2008) and IAS 27 Consolidated and Separate Financial Statements (2008) for acquisitions of non-controlling interests occurring in the financial year starting 1 January 2009. The Group also applied IAS 27 (2008) for the disposal and acquisition of non-controlling interests that do not result in loss of control.
Acquisitions and disposals of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions. Previously, goodwill was recognised arising on the acquisition of a non-controlling interest in a subsidiary; and that represented the excess of the cost of the additional investment over the fair value of the interest in the net assets acquired at the date of exchange. The change in accounting policy was applied prospectively and had no material impact on earnings per share.
The Group applied IAS 27 (2008) in accounting for transactions which result in the loss of control of subsidiaries. Under the accounting policy transactions that result in loss of control are accounted for by derecognising the previously consolidated assets and liabilities of the subsidiary and the carrying amount of any non-controlling interests in the former subsidiary and recognising the retained investment at its fair value at the date when control is lost and any consideration received. The resulting difference, including any related gains or losses previously recognised in other comprehensive income that qualify to be recycled to profit or loss, is recognised in profit or loss as a gain or loss on the disposal.
C Revenue recognition
US business
Revenue recognition on US service contracts
The US business generates revenue on the management of third party biogas facilities. Revenue is recognised monthly based upon the contractual monthly management fees.
Africa clean energy business
Revenue recognition on investment advisory services
The investment advisory business derives revenue from a mandate whereby it is the lead advisor to the Renewable Energy Performance Platform ("REPP"). Revenue is recognised monthly based upon contractual monthly management fees.
redT energy storage business
Revenue recognition on contract project work
Revenue is recognised in the income statement in proportion to the stage of completion of the contracted project work. The stage of completion is assessed by reference to the overall contract value.
Revenue recognition on energy storage machine sales
Revenue from system sales is recognised when the system has been delivered, installed, and fully commissioned (system fully operating). Only once successfully commissioned can revenue be recognised in line with standard sale of goods recognition criteria. Where the customer has been billed in advance, revenue will be deferred and recognised as deferred income on the balance sheet until the system has been fully commissioned.
Group (Other)
Revenue recognition on CDM carbon and EU ETS compliance services
The Group derives revenue from the sale of emissions allowances and offsets to its clients which it acquires in a separate transaction. The Group acts as principle in both the sale and purchase transactions with revenue and purchase cost recognised simultaneously on the transaction date.
D Goodwill
Subsidiary
On acquisitions since 1 January 2009 the Group measures goodwill as the fair value of the consideration transferred, including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.
The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.
Transaction costs that the Group incurs in connection with a business combination, such as finder's fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.
Subsequent measurement - goodwill is measured at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.
E Intangible assets
Intangible assets recognised within the balance sheet relate exclusively to 'research and development (R&D)' as part of the acquisition of the Renewable Energy Dynamics Holdings Limited (REDH) business in September 2015. The R&D related to expenditure incurred within two main categories, Technical Expertise (Personnel Costs) and Other Directly Attributable Administration Expenses incurred by the REDH business since 2010 until the date of acquisition. At the date of acquisition, R&D was capitalised as an intangible asset.
Amortisation of the intangible assets will begin once the redT energy storage system becomes fully commercialised, with the recognition of revenue in the Income Statement from the sale of commercial systems. This criterion was not met in the year ended 31 December 2017. The situation will be reviewed in 2018 to confirm the amortisation status of the intangible asset, as well as to determine its effective useful economic life.
F Property, plant and equipment
Computer and office equipment: computer and office equipment is held at historical cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight-line basis over the estimated useful life of three years.
Leasehold improvements: leasehold improvements are held at historical cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight-line basis over the remaining life of the lease.
Property plant and equipment: property plant and equipment is held at historical cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight-line basis over the estimated useful life of the assets (3 to 25 years).
G Impairment
The carrying amounts of the Group's property, plant and equipment, goodwill and other intangibles are reviewed at least annually to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. For assets that have an indefinite useful life the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised immediately in the income statement. The recoverable amount is the greater of the fair value less cost of disposal and the value in use. Value in use is calculated as the present value of estimated future cash flows, discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
An impairment loss is reversed when there is an indication that the impairment loss may no longer exist because of a change in the estimates used to determine the recoverable amount. An impairment loss is only reversed to the extent that the asset's carrying amount does not exceed the carrying amount that the asset would have had, net of depreciation and amortisation, if no impairment loss had been recognised. An impairment loss in respect of goodwill on acquisition is not reversed.
H Non-current assets held for sale and discontinued operations
A non-current asset or a group of assets containing a non-current asset (a disposal group) is classified as held for sale if its carrying amount will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly probable within one year.
On initial classification as held for sale, non-current assets and disposal groups are measured at the lower of previous carrying amount and fair value less costs of disposal with any adjustments taken to profit or loss. The same applies to gains and losses on subsequent re-measurement, although gains are not recognised in excess of any cumulative impairment loss. Any impairment loss on a disposal group is first allocated to goodwill and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Company's accounting policies. Intangible assets and property, plant and equipment, once classified as held for sale or distribution, are not amortised or depreciated.
A discontinued operation is a component of the Company's business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale. When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation has been discontinued from the start of the comparative period.
I Foreign exchange
Foreign currency transactions
Transactions in currencies different from the functional currency of the Group entity entering into the transaction are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rate at the date of transaction.
Year-end FX rates to Euros as applied in the financial statements: GBP 0.8886 (2016: 0.8524), USD 1.1999 (2016: 1.0520), CNY 7.8068 (2016: 7.3056), ZAR 14.8608 (2016: 14.4509).
J Inventory
Stock
Represents stock of "stack units" for maintenance and repairs of storage machines.
Work in progress
Consists of energy storage machine under construction.
Finished goods
Completed energy storage machines that are awaiting installation and commissioning.
Inventory is reviewed on an ongoing basis to ensure that any obsolete stock is written off and the carrying value of all inventory lines are at the lower of cost and net realisable value.
K Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to business combinations, items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or recoverable on the taxable income for the year using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to the tax payable in respect of previous years.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
L Employee benefits
Employee share schemes
The Group enters into arrangements that are equity-settled, share-based payments with certain employees (including Directors) in the form of share options. The fair value of these options are estimated at the date of grant and combined with the Group's estimate of options that will eventually vest to arrive at an overall expected value. This value is then amortised through the income statement on a straight-line basis over the vesting period year. Fair value is measured by use of an appropriate model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than market conditions linked to the price of the shares of the Company. The charge is adjusted at each balance sheet date to reflect the actual number of shares expected to vest based on non-market performance conditions such as Group profit targets and employment service conditions where appropriate. The movement in cumulative charges since the previous balance sheet is recognised in the income statement, with a corresponding entry in equity.
Where the Company grants share based payment awards over its own shares to employees of its subsidiaries it recognises the corresponding movement directly in equity and recharges in the full the share based payment charge to the relevant subsidiary.
Defined contribution pension scheme
In the UK, the Group operates a defined contribution retirement benefit plan for qualifying employees. A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss when they are due.
M Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by the Group's Chief Executive Officer (CEO) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, corporate expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.
N Earnings per share
The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.
The effects of anti-dilutive potential ordinary shares are ignored in calculating diluted EPS. Anti-dilution is when an increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.
O Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
P Leased assets
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Leases where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the use of the underlying asset.
At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group's incremental borrowing rate.
Q Finance income and expense
Finance income comprises interest income on surplus funds, unwinding of the discount on provisions and accrued costs. Interest income is recognised as it accrues in profit or loss using the effective interest method.
Finance expenses comprise interest expense on borrowings, finance leases and unwinding of the discount on provisions and accrued costs. All borrowing costs are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses arising from a group of similar transactions are reported on a net basis.
R Non-derivative financial assets
The Group has the following non-derivative financial assets: cash and cash equivalents, trade and other receivables and other financial assets. Such financial assets are recognised initially at fair value and subsequently carried at amortised cost and assessed for impairment at the end of each financial period.
S Non-derivative financial liabilities
The Group has the following non-derivative financial liabilities: trade and other payables and payments on account. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.
T New accounting standards and interpretations
(a) New standards, amendments and interpretations
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2017, these have had no material impact on the group.
-- Amendments to IAS 7 'Statement of cash flows' on disclosure initiative. These amendments to IAS 7 introduce an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The group does not currently hold any balance sheet liabilities for which cash flows are classified as financing activities.
-- Amendments to IAS 12 'Income taxes' on recognition of deferred tax assets for unrealised losses. These amendments on the recognition of deferred tax assets for unrealised losses clarify how to account for deferred tax assets related to debt instruments measure at fair value. The group does not currently hold applicable debt instruments.
-- IFRS 12 'Disclosure of interests in other entities' regarding clarification of the scope of the standard. This amendment clarifies that the disclosures requirement of IFRS 12 are applicable to interest in entities classified as held for sale except for summarised financial information. Previously it was unclear whether all other IFRS 12 requirements were applicable for these interests. The group does not currently interest in items requiring disclosure under the amended standard.
(b) New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2018, and have not been applied in preparing these financial statements. None of these are expected to have a significant impact on the preparation of the financial statements of the group.
-- Amendments to IFRS 2, 'Share based payments', on clarifying how to account for certain types of share-based payment transactions. This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications that change an award from cash-settled to equity-settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee's tax obligation associated with a share-based payment and pay that amount to the tax authority. Based on the initial assessment, this standard is not expected to have an impact as a result of the group not having entered, or expected to enter, into the types of share-based transactions applicable under the amended standard.
-- IFRS 9 'Financial instruments'. This amendment replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model. Based upon the initial assessment, this standard does not have a material impact on the group.
-- IFRS 15 'Revenue from contracts with customers' is a converged standard from the IASB and FASB on revenue recognition. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally. The core principle is to recognise revenue when control of the goods or service transfers to the customer. This is opposed to recognising revenue when the risks and rewards transfer to the customer under the existing revenue guidance and determining an appropriate transaction price when multiple performance obligations exist. The Group currently has no revenues which would be directly impacted by the new standard, however the group will continue to assess the potential impact of the adoption of this guidance.
-- IFRIC 22 'Foreign currency transactions and advance consideration'. This IFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or prices in a foreign currency. The interpretation provides guidance for when a single payment/receipt is made as well as for situations where multiple payments/receipts are made. The guidance aims to reduce diversity in practice. Based upon the initial assessment, this standard is not expected to have a material impact on the group.
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2019, and have not been applied in preparing these financial statements. The full impact of these standards has yet to be fully assessed.
-- IFRS 16 'Leases'. This standard replaces the current guidance in IAS 17 and is a far-reaching change in accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a 'right-of-use asset' for virtually all lease contracts.
-- IFRIC 23 'Uncertainty over income tax treatments'. This IFRIC clarifies how the recognition and measurement requirements of IAS 12 'income taxes', are applied where there is uncertainty over income tax treatments. The IFRS IC has clarified previously that IAS 12, not IAS 37 'Provisions, contingent liabilities and contingent assets', applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognize and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the tax authority.
2. Segmental reporting
Operating segments
The Group reports these results in line with the following main reporting segments:
redT - redT develops and supplies durable and robust energy storage machines based upon a proprietary vanadium redox flow technology for on and off-grid applications. This operating segment also contains the corporate costs of the Group.
Camco - Camco business segment comprises of Africa, US and Carbon. Camco Africa manages an investment advisory mandate with Renewable Energy Performance Platform (REPP) in partnership with Greenstream Network Ltd. The US comprises the management of divested biogas assets via a service contract agreement. Carbon contains the EU ETS Compliance Services business.
Inter segment transactions are carried out at arm's length.
Operating segments redT Camco Consolidated
2017 2016 2017 2016 2017 2016
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------- -------- -------- -------- -------- --------- --------
Revenue 889 302 10,949 10,527 11,838 10,829
Gross profit/(loss) 507 (1,540) 3,104 3,806 3,611 2,266
Administrative expenses (8,030) (4,644) (2,437) (2,875) (10,467) (7,519)
---------------------------------- -------- -------- -------- -------- --------- --------
Trading profit (7,523) (6,184) 667 931 (6,856) (5,253)
Share-based payments (1,030) (408) - - (1,030) (408)
Results from operating
activities (8,553) (6,592) 667 931 (7,886) (5,661)
Finance income/(expense) 1 38
Foreign exchange movement (288) (168)
Taxation (55) 154
---------------------------------- -------- -------- -------- -------- --------- --------
Loss for the year (8,228) (5,637)
---------------------------------- -------- -------- -------- -------- --------- --------
Total assets 24,473 17,387 2,437 1,924 26,910 19,311
Total liabilities (2,919) (4,100) (839) (574) (3,758) (4,674)
Capital expenditure 519 72 - - 519 72
Depreciation 129 53 1 4 130 57
3. Revenue
By reporting segments:
2017 2016
EUR'000 EUR'000
redT 889 302
Camco 10,949 10,527
Total revenue 11,838 10,829
4. Expenses and auditor's remuneration
Included in comprehensive income are the following:
2017 2016
EUR'000 EUR'000
Depreciation of property, plant
and equipment - owned assets (Note
12) 130 57
Operating lease rental - land and
buildings (Note 22) 332 211
Share-based payments (Note 6) 1,030 408
Services provided by the Group's auditor:
During the year the Group obtained the following services from the Company's auditor, PricewaterhouseCoopers LLP:
2017 2016
EUR'000 EUR'000
Audit of these financial statements 62 62
Amounts receivable by auditors and
their associates in respect of:
Audit of financial statements of
subsidiaries pursuant to legislation 10 11
Non-audit services 9 -
Total services 81 73
5. Staff numbers and costs
The average number of persons employed by the Group (including Executive Directors) during the year, analysed by category, was as follows:
Number of employees
2017 2016
redT 45 24
Camco 15 19
60 43
The aggregate payroll costs of continuing operations were as follows:
2017 2016
EUR'000 EUR'000
Wages and salaries 5,249 3,674
Share-based payments
(see Note 6) 1,030 408
Social security costs 424 381
Contributions to defined
contribution plans (Note
7) 121 48
6,824 4,511
Wages and salaries shown above include salaries paid in the year and bonuses relating to the year. These costs are charged within administration expenses.
6. Share-based payments
The Group operated share-based incentive plans called the Long-Term Incentive Plan (the "LTIP"), the Camco 2006 Executive Share Plan, and the 2015 redT Employee Share Plan. The expense recognised in respect to the plans is set out below.
2017 2016
EUR'000 EUR'000
2015 redT Employee Share Plan 1,030 345
NIC on exercised options - Camco
2006 Executive Share Plan - 63
1,030 408
Long-Term Incentive Plan (the "LTIP")
The Board has historically approved the LTIP under which Directors and employees were entitled to equity-settled payment following annual vesting dates from 31 December 2008 up to 31 December 2012, upon certain market and non-market performance conditions being met in the years preceding the vesting dates.
The purpose of the LTIP was to incentivise Directors and employees to meet profit and share price performance targets over the years ending on the vesting dates. The LTIP aligned Director's objectives with those of the shareholders.
The Board now considers the LTIP closed and accordingly no further awards were made during the year. As at the beginning and end of the year, there were 750,000 options, vested and exercisable, at EUR0.01 per share. Whilst in employment there is no defined time-lapse period, however post-employment termination, there is a 12-month exercise period.
Camco 2006 Executive Share Plan (the "Plan")
On 27 July 2012, the Company resolved at general meeting to amend the terms of the Plan such that awards could be made under the Plan for a period of 10 years from 27 July 2012 over up to 10 per cent of the ordinary shares in issue as 27 July 2012 plus any shares subsequently issued.
Under the Plan the Company can make awards of share options or conditional rights to receive shares ("awards") to selected Directors and employees.
The purpose of the Plan was to incentivise Directors and employees to meet market (share price) and non-market (operational) performance targets over the vesting period.
The Board now considers the Plan closed and accordingly no further awards were made during the year. As at the beginning and end of the year there were 3,406,358 options, vested and exercisable, at EUR0.01 per share held by Scott McGregor. Awards held by Scott McGregor have a time-lapse period of 10 years from the date of grant (30 July 2023) or 12 months post-employment termination if earlier.
2015 redT Employee Share Plan (the "2015 Plan")
On 30 November 2015, the Company resolved at a general meeting to approve the 2015 Plan, which allowed for awards to be made up to 10% of the issued share capital of the Company.
Under the 2015 Plan the Company can make awards of share options or conditional rights to receive shares ("awards") to selected Directors and employees.
The purpose of the 2015 Plan was to incentivise Directors and employees to meet market (share price) and non-market (operational) performance targets over the vesting period.
-- 7 December 2015 the Company awarded several employees (no Directors at the time) the option to acquire an allotted number of ordinary shares of up to EUR0.01 each in the capital of the Company at an Exercise Price of 5.6p/EUR0.07786 per share (11,535,321 shares) and an Exercise Price of EUR0.01179 (13,898,307 shares). 6,949,153 of allotted options exercisable at 5.6p/EUR0.07786 were forfeited in 2016 and a further 416,886 in 2017.
-- 30 June 2016 the Company awarded an employee (not a Director) the option to acquire an allotted number of ordinary shares of up to EUR0.01 each in the capital of the Company at an Exercise Price of 5.6p/EUR0.06762 per share (2,779,661 shares).
Exercise criteria for 7 December 2017 and 30 June 2016 awards
20,847,250 granted options: 25% of options will vest after the expiry of 2 years from date of grant, a further 25% of options will vest after the expiry of 3 years from date of grant, a further 25% of options will vest after the expiry of 4 years from date of grant (in all cases rounded down where necessary) and the remainder will vest after the expiry of 5 years from date of grant. The option period will survive after the vesting conditions are satisfied for up to 36 months if the Company remains quoted. The fair value of the options at the date of grant were: 7 December 2015 EUR0.01179 options: 7.710p/EUR0.08677; 7 December 2015 5.6p/EUR0.07786 options: 5.844p/EUR0.06577; 30 June 2016 options: 5.260p/EUR.05920.
-- 13 March 2017 the Company awarded to several employees, including Directors, the option to acquire an allotted number of ordinary shares of up to EUR0.01 each in the capital of the Company at an Exercise Price of 8p/EUR0.09168 per share (20,225,000 shares).
Exercise criteria for 13 March 2017 awards
Awards without performance criteria
10,225,000 of granted options: 25% of options will vest after the expiry of 2 years from date of grant, a further 25% of options will vest after the expiry of 3 years from date of grant, a further 25% of options will vest after the expiry of 4 years from date of grant (in all cases rounded down where necessary) and the remainder will vest after the expiry of 5 years from date of grant. The option period will survive after the vesting conditions are satisfied for up to 36 months if the Company remains quoted. The fair value of the options at the date of grant was 6.828p/EUR0.07684.
3,500,000 of granted options: 100% of these options vested on 31 December 2017. The fair value of the options at the date of grant was 4.293p/EUR0.04832.
The fair value of these options is measured at the grant date using the Black-Scholes option pricing model taking into account the terms and conditions upon which the instruments were granted combined with an assumption that 75% of the members associated with the scheme will be retained.
Awards with performance criteria
3,250,000 of granted options will vest based upon a non-market performance condition. These options will vest upon the achievement of specific and measurable operational targets set by the Board. The fair value at the date of grant was 5.313p/EUR0.05979.
The fair value of these options is measured at the grant date using the Black-Scholes option pricing model taking into account the terms and conditions upon which the instruments were granted combined with an estimate of the extent to which the operational targets will be satisfied.
3,250,000 of granted options will vest based upon a market-based performance condition. These options will vest upon the Company's 90-day volume weighted average share price reaching the level of 15p. The fair value at the date of grant was 4.662p/EUR0.05247.
The fair value of these share options is estimated as at the date of grant using a Monte-Carlo model, taking into account the terms and conditions upon which the options were granted.
In respect of all the awards above, fair value at the grant date is recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.
2017 2017 2016 2016
Average Number Average Number
exercise of options exercise of options
price price
per option per option
(EUR) (EUR)
Outstanding and not fully
vested options at the
beginning of the year 0.03334 21,264,136 0.02818 18,484,475
Options granted during
the year 0.09168 20,225,000 0.03334 2,779,661
Options forfeited during
the year 0.07786 (416,886) - -
Options fully vested during
the year 0.04475 (8,016,897) - -
Outstanding and not fully
vested options at the
end of the year 0.06589 33,055,353 0.03334 21,264,136
Options exercisable at
the end of the year 0.04475 8,016,897 - -
7. Retirement obligations
Defined contribution plans
In the UK the Group operates a defined contribution, retirement benefit plan for qualifying employees. The assets of this plan are held separately from those of the Group. The only obligation of the Group is to make the contributions.
The total expense recognised in the income statement is EUR121,076 (2016: EUR48,000), which represents the contributions paid to the plan. There were no outstanding payments due to the plan at the balance sheet date.
8. Net finance income
2017 2016
EUR'000 EUR'000
Finance income
Interest on bank deposits 1 11
Interest on loan note - 27
1 38
Foreign exchange movements (288) (168)
Net finance expense (287) (130)
9. Taxation
Recognised in the income statement
2017 2016
EUR'000 EUR'000
Current tax (credit) / expense:
Foreign tax (20) (95)
Deferred tax expense:
Movement in deferred tax asset in
current year 75 (59)
Total income tax in the income statement 55 (154)
The tax charge for the period is higher (2016: lower) than the 0% rate of corporation tax in Jersey and the differences are explained below:
Reconciliation of effective tax rate
2017 2016
EUR'000 EUR'000
Loss before tax (8,173) (5,791)
Loss before tax at 0% rate of corporation - -
tax in Jersey (2016: 0%)
Effects of:
Effect of different tax rates of
subsidiaries operating in other
jurisdictions (1,045) (1,088)
Non-deductible expenses (6) (54)
Origination and reversal of timing
differences 34 (67)
Unutilised losses carried forward
and not recognised 1,072 1,055
Total income tax charge/(credit)
in the income statement 55 (154)
The Company is liable to Jersey income tax at 0%. The Company will apply for and expects to be granted Jersey tax status for future years.
The Company's subsidiaries carry on business in other tax regimes where the corporation tax rate is not zero. At 31 December 2017, the Group had UK tax losses carried forward within certain UK subsidiaries for utilisation in future periods for continuing operations amounting to EUR12,643,000 (2016: EUR8,467,000). Due to the uncertainty as to the timing and extent of future profits within these UK subsidiaries, no deferred tax assets have been recognised in respect of these tax losses.
A deferred tax asset has been recognised in respect of certain share options and accelerated capital allowance charges as set out below:
Deferred tax
Deferred tax assets, liabilities and movements in the period are shown as follows:
2017 1 January Current Foreign 31 December
year charge exchange
movement
EUR'000 EUR'000 EUR'000 EUR'000
Share options 180 (39) (5) 136
Accelerated capital
allowances (5) (36) 1 (40)
175 (75) (4) 96
2016 1 January Current Foreign 31 December
year credit exchange
/(charge) movement
EUR'000 EUR'000 EUR'000 EUR'000
Share options 119 77 (16) 180
Accelerated capital
allowances 13 (18) 0 (5)
132 59 (16) 175
10. Loss per share
Loss per share attributable to equity holders of the Company is calculated as follows:
2017 2016
EUR cents EUR cents
per share per share
Basic loss per share (1.28) (1.23)
Diluted loss per share (1.28) (1.23)
Loss used in calculation of basic
and diluted loss per share EUR'000 EUR'000
From continuing operations (8,173) (5,637)
Weighted average number of shares
used in calculation
Basic 637,107,480 459,941,919
Diluted 637,107,480 459,941,919
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the period.
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares. Where the inclusion of potentially issuable shares decreases the loss per share (anti-dilutive), the potentially issuable shares have not been included. This was the situation for both the 2017 and 2016 calculations. The weighted average number of shares not included in the diluted share calculation because they were anti-dilutive was 41,294,430 (2016: 23,632,816).
Weighted average number of shares used in calculation
- basic and diluted
2017 2016
Number Number
Number in issue at 1 January 467,928,894 409,833,227
Effect of share options exercised - 3,923,709
Effect of shares issued in the year 169,178,586 46,184,983
Weighted average number of basic
shares at 31 December 637,107,480 459,941,919
Effect of share options granted - -
not yet exercised which are not
anti-dilutive
Weighted average number of diluted
shares at 31 December 637,107,480 459,941,919
11. Directors' share interests
2017 2016
Number Number
Executive Directors
Scott McGregor 11,973,126 11,973,126
Non-executive Directors
Jonathan Marren 7,743,815 7,743,815
Jeffrey Kenna 2,162,325 2,162,325
Neil O'Brien 625,000 -
Michael Farrow 86,230 86,230
The beneficial interests of the Directors in the ordinary share capital of the Company are shown above. In addition, the executive Directors have conditional rights to acquire shares arising from awards granted under the Share Based Incentive Plan. These awards are detailed in the Report of the Remuneration Committee on pages 15 to 18.
12. Property, plant and equipment
Computer Leasehold Property
and office improvement plant
equipment & equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost at 1 January 2017 312 79 - 391
Additions 305 189 25 519
Disposals (6) - - (6)
Effect of movements in
foreign exchange (15) (5) - (20)
Cost at 31 December 2017 596 263 25 884
Accumulated depreciation
at 1 January 2017 (254) (34) - (288)
Charge for the year (84) (42) (4) (130)
Disposals 6 - - 6
Effect of movements in
foreign exchange 8 2 - 10
Accumulated depreciation
at 31 December 2017 (324) (74) (4) (402)
Net book value at 31 December
2017 272 189 21 482
Net book value at 31 December
2016 58 45 - 103
13. Intangible & goodwill
Goodwill - Subsidiary acquisition (REDH)
2017 2016
EUR'000 EUR'000
Cost at 1 January and 31 December 8,167 8,167
Intangible assets - R&D (REDH)
2017 2016
EUR'000 EUR'000
Cost at 1 January and 31 December 6,822 6,822
Total Goodwill & Intangible Assets
2017 2016
EUR'000 EUR'000
Cost at 1 January and 31 December 14,989 14,989
Amortisation
Amortisation of the intangible assets will begin once the redT energy storage system becomes fully commercialised, with the recognition of revenue in the Statement of Comprehensive Income for the sale of a commercial system; for the year ended 31 December 2017 this criterion had not been achieved. A review will be undertaken in 2018 to confirm the amortisation status of the intangible asset, as well as to determine the effective useful life.
Goodwill is not amortised, but tested annually for impairment.
Impairment testing
Goodwill and intangible assets have been allocated to the RedT cash generating unit. The Group conducted a formal review to determine whether the carrying value of intangible assets, including goodwill, can be supported. The impairment review comprises a comparison of the carrying amount of the intangible assets (CGU) with the Net Present Value of future discounted cash flows, using a value in use calculation, for which the recoverable amount exceeds its carrying amount.
The Group prepared cash flow forecasts derived from the most recent financial results and 5-year budget projection approved by management and the Board, which on a discounted cash flow basis, is greater than the carrying value of the intangible assets held. The key assumptions for the Net Present Value calculation were; pre-tax discount rate 22.5% and growth rate beyond forecast period 2%.
An increase in the discount rate to 23.5% reduces, but does not eliminate, the excess of the recoverable amount over the carrying value. Similarly, a reduction in the growth rate beyond the forecast period from 2% to 1% reduces, but does not eliminate, the excess of the recoverable amount over the carrying value.
14. Inventory
2017 2016
EUR'000 EUR'000
Stock 334 -
Work in progress 114 -
Finished goods 171 -
619 -
The cost of inventory written down during the year was EURNil (2016: EURNil).
15. Prepayments and accrued income
2017 2016
EUR'000 EUR'000
Prepayments 965 409
Accrued income 100 100
1,065 509
16. Trade and other receivables
2017 2016
EUR'000 EUR'000
Trade receivables 1,560 573
Other receivables 661 202
2,221 775
17. Trade and other payables
2017 2016
EUR'000 EUR'000
Trade payables 298 1,782
Accruals 1,333 2,186
Other payables 44 4
1,675 3,972
18. Deferred income
2017 2016
EUR'000 EUR'000
Non-current liabilities
Deferred income 70 222
Current liabilities
Deferred income 2,013 480
19. Issued share capital and reserves
Number Number
2017 2017 2016 2016
EUR'000 EUR'000 EUR'000 EUR'000
Authorised
Ordinary shares of
EUR0.01 1,250,000 12,500 1,250,000 12,500
Issued and fully paid
All ordinary shares
of EUR0.01 (all classified
in shareholders' funds)
Issued on 1 January 467,929 4,679 409,833 4,098
Issued in the year 185,994 1,860 58,096 581
Issued at 31 December 653,923 6,539 467,929 4,679
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Share-based payment reserve
The share-based payment reserve comprises the equity component of the Company's share-based payments charges.
Translation reserve
The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations.
Other reserve
Other reserve comprises the portion of the consideration paid for REDH minority interests over the fair value of the shares purchased.
Non-controlling interest
Non-controlling interest comprises a 0.3% shareholding in REDH and a 15% shareholding in Camco Africa Ltd that are held outside of the Group.
20. Financial risk management
The Group Financial Risk Management framework addresses the following key risks:
Market risk
The carbon market is subject to political and regulatory risk on a national, regional and global basis. The consequence of the interaction of these frameworks and regulation is that the market price for carbon credits has been significantly affected by demand and supply considerations which have led to large fluctuations in market prices. The Group actively manages this risk by locking in a buy/sell price for all transactions.
Counterparty credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group's exposure to credit risk arises from the Group's operating activities, primarily its receivables from customers. The Group has implemented a credit scoring process for all new customers (and existing customers of a certain size) that highlights credit risk and aids the prevention of bad debt. Credit risk is analysed further in Note 21.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach is to maintain sufficient funds on call to meet these requirements as they fall due with the rest of cash on term deposit in the relevant currencies as set out below. Liquidity risk is analysed further in Note 21.
Foreign exchange risk
The Group is exposed to foreign exchange translation risk on receivables, payables and cash when balances held are denominated in a currency other than the functional currency of the Group which is the Euro. The Group operates a policy of not speculating on foreign exchange and aims to mitigate its overall foreign exchange risk by holding currency in line with regional operating expense, acting as a natural hedge against adverse foreign exchange movement.
The currency exposure on balances held is set out below:
South
US Chinese African
Euro Sterling Dollar Yuan ZAR Total
31 December 2017 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cash and cash equivalents 1,037 5,345 883 144 22 7,431
Trade and other
receivables 400 1,215 600 - 6 2,221
Trade and other
payables (742) (827) (72) - (34) (1,675)
______ ______ ______ _______ ______ ______
Net exposure 695 5,733 1,411 144 (6) 7,977
______ ______ ______ _______ ______ ______
South
US Chinese African
Euro Sterling Dollar Yuan ZAR Total
31 December 2016 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cash and cash equivalents 409 1,092 1,025 181 46 2,753
Trade and other
receivables 80 321 367 - 7 775
Trade and other
payables (1,346) (2,290) (242) - (94) (3,972)
______ ______ ______ _______ ______ _______
Net exposure (857) (877) 1,150 181 (41) (444)
______ ______ ______ _______ ______ _______
A 5% weakening of the following currencies against the Euro at 31 December 2017 would have increased / (decreased) equity and profit and loss, via exchange differences on translation of foreign operations within the Income Statement, by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures at that date.
This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis is performed on the same basis for 31 December 2016.
2017 2016
EUR'000 EUR'000
Sterling (273) 42
US Dollar (67) (55)
Chinese Yuan (7) (9)
South African
ZAR - 2
______ _______
(347) (20)
______ _______
A 5% strengthening of the above currencies against the Euro at 31 December 2017 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Fair value of financial assets and liabilities
The Directors are of the view that there is no material difference between the carrying values and fair values of the Group's financial assets and liabilities.
Capital management
Given the Group's development stage, the Board has pursued an equity only funding model and thus currently the Group's capital is solely equity. The Board's policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to sustain future development of the business. To ensure this, the board regularly reviews the Group's cash requirements and future projections. From time to time the Group purchases its own shares on the market primarily to be used for issuing shares under the Group's share option programme. The Group does not have a defined share buy-back plan or dividend policy. The Group is not subject to any externally imposed capital adequacy maintenance requirements.
21. Financial instruments
Credit risk
The Directors consider that the carrying value of certain financial assets represents the maximum credit exposure. The maximum exposure to credit risk is as follows:
2017 2016
EUR'000 EUR'000
Trade and other receivables 2,221 775
Cash on deposit 7,431 2,753
9,652 3,528
The ageing of trade and other receivables at the balance sheet date was:
2017 2016
EUR'000 EUR'000
Current 1,730 420
Past due under 30 days 111 130
Past due between 31 and 120 days 380 225
2,221 775
As at 31 December 2017, trade receivables of EUR487,000 (2016: EUR354,000) were past due but not impaired. These relate to a number of customers for whom there is no recent history of default. EUR4,000 of trade receivables has been impaired with the expectation there will be no recoverability (2016: EUR1,000).
The creation and release of provision of impaired receivables has been included in administrative expenses in the Statement of Comprehensive Income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
Impairment losses
The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:
2017 2016
EUR'000 EUR'000
Balance at 1 January 1 -
Written off against provision (2) -
Increase in provision 6 1
Effects in movement of foreign exchange (1) -
Balance at 31 December 4 1
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The following are the contractual maturities of financial liabilities including estimated interest payments and excluding the impact netting agreements for both continuing and discontinued operations:
Non-derivative financial liabilities
1 year
2017 Carrying Contractual or less
EUR'000 EUR'000 EUR'000
Trade payables 298 298 298
Accruals 1,333 1,333 1,333
Other payables 44 44 44
1 year
2016 Carrying Contractual or less
EUR'000 EUR'000 EUR'000
Trade payables 1,782 1,782 1,782
Accruals 2,186 2,186 2,186
Other payables 4 4 4
There are no derivative financial instruments.
22. Financial commitments
At the end of the reporting period, the Group's future minimum lease payments under operating leases were as follows:
Operating lease commitments
2017 2016
EUR'000 EUR'000
Less than one year 332 211
Between 1 year and 5
years 350 499
682 710
The leases relate to rent for properties and company vehicles within the Group.
23. Related parties
The Group's related business partner is Consortia Secretaries Limited which is 100% owned by Consortia Partnership Limited ("Consortia") who have been appointed Company Secretary. Michael Farrow, a non-executive Director of the Company, is a Director of Consortia. The amounts charged to administration expenses in respect of these services are shown in the table below.
Income statement
2017 2016
EUR'000 EUR'000
Administrative expenses:
Consortia Partnership
Limited 40 38
Balance sheet
2017 2016
EUR'000 EUR'000
Trade and other payables:
Consortia Partnership - -
Limited
Key management personnel
The Group's key management personnel comprise the Board of Directors whose emoluments are detailed below.
2017 2017 2017 2017 2017 2017
Salaries Benefits Short-term Long-term Pension Total
and fees in kind performance performance benefits
related related
remuneration remuneration
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Executive Directors
Scott McGregor 228 2 - - - 230
David Stewart 114 2 - - 4 120
Scott Laird 74 - - - - 74
Non-executive
Directors
Jeffrey
Kenna 69 - - - - 69
Michael
Farrow 34 - - - - 34
Zainul
Rahim bin
Mohd Zain 18 - - - - 18
Jonathan
Marren 40 - - - - 40
Neil O'Brien 30 - - - - 30
Total 607 4 - - 4 615
2016 2016 2016 2016 2016 2016
Salaries Benefits Short-term Long-term Pension Total
and fees in kind performance performance benefits*
related related
remuneration remuneration
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Executive Directors
Scott McGregor 244 2 102 - - 348
Jonathan
Marren 30 - - - - 30 Non-executive Directors Jeffrey Kenna 73 - - - - 73 Michael Farrow 40 - - - - 40 Zainul Rahim bin Mohd Zain 37 - - - - 37 Jonathan Marren 33 - - - - 33 Neil O'Brien 10 - - - - 10 Total 467 2 102 - - 571
* During 2016 each of executive Directors waived their contractual entitlement to pension contributions (5%) for the entire year.
Directors' interests in the shares of the Company are disclosed in Note 11.
In March 2017 the spouse of Scott McGregor invoiced and was paid GBP2,400 for Project work undertaken in 2016. Scott McGregor was not involved in the negotiations for the services which were carried out by the redT project manager and signed off by Chairman, Jeff Kenna.
24. Post balance sheet events
On 5 January 2018 the Group announced that, in line with its strategy of focusing on the continued development and commercialisation of its core redT energy storage solutions business, it ceased its Camco Carbon activity and has divested its interest in the Camco Africa investment advisory business. This move substantially completes redT's transition to a pure-play energy storage company.
The African continent remains a key market for redT's energy storage machines, and the Company's activity in the region remains unaffected by the divestment of the UK based Camco Africa investment advisory business.
The Camco Carbon activity, which is centred on ad hoc EU ETS Compliance Services, will cease effective from 10th January 2018, with no new carbon contracts taken on by the Group post this date. The Camco Carbon business produced revenue of EUR7.7m in the year to 31 December 2017 (2016: EUR6.8m), with a small positive profit from operating activities being achieved in both periods. As such the cessation of Camco Carbon activity will not have a material impact on the results from operating activities of the Group going forwards.
The divestment of the Camco Africa investment advisory business, Camco Africa Limited ("CAL") was achieved through a share purchase agreement whereby CAL will acquire the Group's entire holding of 850 ordinary shares (representing 85 per cent of CAL's issued share capital) for nominal consideration of EUR0.01 per share in cash (the "Share Buy-Back").
CAL generated revenue of EUR1.6m in the year to 31 December 2017 (2016: EUR2.1m). Whilst CAL has achieved a break-even result from operating activities in both 2017 and 2016, it is projected to have a negative cash impact in future periods. As a result, the divestment will not have an impact on the results from operations of the Group going forward.
Scott McGregor, who has a 5 per cent interest in the issued share capital of CAL, and Michael Farrow are directors of both CAL and redT energy plc. Consequently, the Share Buy-Back constitutes a related party transaction under the AIM Rules. The redT Directors (except for Scott McGregor and Michael Farrow) consider, having consulted with the Group's nominated adviser, that the terms of the Share Buy-Back are fair and reasonable in so far as the redT energy plc shareholders are concerned.
On 19 April 2018 the Group raised GBP3.85 million (before expenses) through a placing of 65,392,342 ordinary shares at 5.9p. The number of ordinary shares in issue and the total voting rights of redT energy plc following the placing is 719,315,766.
Following the cessation of the Carbon business in January 2018 the main operating currency of the Group ceased to be Euros and became Great British Pounds (GBP), the operational currency of the redT business. The Board has therefore decided to change the currency in which the Group reports its financial results to GBP with effect from 1 January 2018. The first set of financial statements which will be reported in GBP will be the 2018 Interim Financial Statements for the six months to 30 June 2018.
25. Posting of 2017 Annual Report and Accounts and availability on website
The 2017 Annual Report will be posted to shareholders on 17 May 2017 and will be available on the Company's website www.redtenergy.com shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DMGMKRVMGRZM
(END) Dow Jones Newswires
May 17, 2018 02:00 ET (06:00 GMT)
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