Metroelectric Plc : Final Results
Chairman's Statement for the year ended 30 June 2011
INTRODUCTION
The Board is pleased to present the results of Metroelectric plc ("the Company") for the year ended 30th June 2011. The Company was established by the Directors as a PLUS Markets Investment Vehicle initially seeking acquisition targets in the information sector. In 2009 the company purchased Powabyke EV Limited and the trading group is now a supplier and distributor of electric vehicles.
RESULTS
The Company made a loss for the year to 30 June 2011 of £1,277,427 (2010: £51,018)
The loss per ordinary share for the year was 0.342p (2010: 0.017p)
REVIEW
The year to 30th June 2011 was a difficult trading period for Powabyke EV, mainly due to problems with the supply chain and cost and quality issues with a former supplier. These problems resulted in a high level of returns and products which could not be resold resulting in stock having to be written off. These issues contributed to a significant decrease in margins, which have resulted in a negative gross margin and an operating loss before impairment charges of £648,861 (2010: £27,732).
Due to the underperformance of Powabyke EV Ltd the directors have reviewed the goodwill in the consolidated accounts which relates to the on-going value of its investment in its trading subsidiary. Although significant losses were incurred during the year the positive cash and profit projections of Powabyke for 2012 indicate that it still has a positive value. The directors have decided that the carrying value of goodwill should be written down to reflect the reduced value of its investment in Powabyke and this has resulted in a goodwill impairment charge of £432,696 in the annual accounts.
In August 2010 we successfully introduced the new Mk2 range of X-Byke's. The aesthetic and technical improvements of these bikes are significant as they offer both increased performance and greater reliability. In February 2011, we reintroduced the Powatryke (our electric tricycle) which has made significant inroads into the tricycle market. In July 2010 we announced a distribution agreement with Wonder EV to distribute its electric cars in the UK and Eire.
The Directors continue to believe that Powabyke provides the Company with a unique opportunity to build a major presence in the European electric bicycles and tricycles market. We continue to actively seek international partners to represent the Powabyke brand overseas.
POST BALANCE SHEET EVENTS
As a result of difficult market conditions and on-going supply issues during the period, the Company has taken significant steps to streamline its operations, including reducing both management and staff numbers, combining the warehouse into the office and renegotiating more favourable terms with suppliers. The financial benefits from our product development are not reflected in these figures but the Directors believe that the Company is now well positioned moving forward and we expect our gross margin to improve.
The Company's commitment to the emerging electric vehicle market remains strong and we are increasingly convinced that this is a growth sector for both leisure activities and commuting. As such, the Board continues to pursue a number of associated opportunities.
Since August 2011 the company has raised £230,000 and received the first payment from the EU grant (£85,000). From these proceeds the company repaid £200,000 of debt, including outstanding interest, and has agreement from the convertible term loan holders to extend the period of repayment.
In December 2011, the company announced that it had signed non binding heads of terms concerning a UK licence agreement with Eveport Limited, which would allow the Directors to concentrate on looking for new opportunities within the eco-friendly area and also develop the international Powabyke market. The company will receive a licence fee and ongoing royalty payments but will not incur any of the related selling or marketing costs, this will result in cost savings for the group and increased profitability.
Greg Collier
Chairman
Metroelectric plc
31 December 2011
CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 June 2011
| 2011 £ | 2010 £ | ||
| Turnover | 613,127 | 404,778 | |
| Cost of sales | (630,937) | (197,117) | |
| Gross profit/(loss) | (17,810) | 207,661 | |
| EU grant income | 13,189 | 97,560 | |
| Distribution costs | - | (6,144) | |
| Administrative expenses | (644,240) | (324,034) | |
| Loss on disposal of fixed assets | - | (2,775) | |
| Impairment of goodwill | (432,396) | - | |
| Operating loss | (1,081,257) | (27,732) | |
| Interest payable and similar charges | (196,170) | (23,286) | |
| Loss on ordinary activities before taxation | (1,277,427) | (51,018) | |
| Tax on loss on ordinary activities | - | ||
| Loss for the year | (1,277,427) | (51,018) | |
| Earnings per share (pence) | |||
| (0.342)p | (0.017)p |
| The consolidated profit and loss account has been prepared on the basis that all operations are continuing operations. There are no recognised gains and losses other than those passing through the consolidated profit and loss account. The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Parent Company profit and loss account. The loss for the Parent Company for the period was £1,344,606 (2010: £79,372). |
CONSOLIDATED BALANCE SHEET as at 30 June 2011
| . | 2011 | 2010 | |||||||||
| £ | £ | ||||||||||
| Fixed assets | |||||||||||
| Goodwill | 443,917 | 887,313 | |||||||||
| Other intangible fixed assets | 16,264 | 6,700 | |||||||||
| Tangible assets | - | 6,230 | |||||||||
| 460,181 | 900,243 | ||||||||||
| Current assets | |||||||||||
| Stocks | 115,875 | 179,325 | |||||||||
| Debtors | 352,945 | 305,925 | |||||||||
| Cash at bank and in hand | 15,098 | 47,932 | |||||||||
| 483,918 | 533,182 | ||||||||||
| Creditors: Amounts falling due within one year | (733,409) | (209,170) | |||||||||
| Net current assets/(liabilities) | (249,491) | 324,012 | |||||||||
| Creditors greater than one year: | |||||||||||
| Convertible loan notes | (190,151) | (171,000) | |||||||||
| Net assets/(liabilities) | 20,539 | 1,053,255 | |||||||||
| Capital and reserves | |||||||||||
| Called up share capital | 379,511 | 369,100 | |||||||||
| Share premium | 1,010,586 | 930,997 | |||||||||
| Loan note holders reserve | 22,471 | - | |||||||||
| Share option reserve | 132,240 | - | |||||||||
| Profit and loss account | (1,524,269) | (246,842) | |||||||||
| Shareholders' funds/(deficit) | 20,539 | 1,053,255 | |||||||||
The financial statements were approved by the Board of Directors on 31 December 2011 and were signed on its behalf by:
P Rewrie
Director
Company registration number - 05840813 (England and Wales)
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2011
The Directors do not proposed to pay a dividend for the period.
The financial information contained in this announcement has been extracted from the Company's audited accounts
GOING CONCERN
The financial statements have been prepared on a going concern basis, notwithstanding the trading losses incurred since incorporation.
The Group meets its day to day financing through its cash reserves and shareholders' loans. As at 30 June 2011 the Group has a total of £15,098 in cash reserves. However, its Creditors less than one year are £733,409 and it has net current liabilities of £249,491. Since the year end, an additional £230,000 has been raised through a mixture of short term unsecured loans and additional equity. In addition, just over £200,000 of the short term funding including interest has been repaid since the year end and it has agreement from the convertible loan note holders to extend the period of repayment.
The Directors have prepared cash flow forecasts for the period to 31 December 2012 which assumes increased sales and no unnecessary costs or expenditure. On the basis of these forecasts and the additional funding detailed in the preceding paragraph the Group is expected to continue to operate within its available financial facilities for at least the next 12 months. The going concern basis is dependent upon the company meeting its forecasts for 2012 and if it does not meet these forecasts further finance will need to be raised which may not be forthcoming. The forecasts assume a certain level of trading which independent of the Eveport licence arrangement.
Whilst the Directors remain confident of continuing as a going concern, this is dependent on their ability to renew short term finance facilities and to operate with their budget and there can be no certainty in this respect. Nevertheless, after making due and careful enquiries and considering all uncertainties the Directors believe the company will continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the annual report and financial statements. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
--END-
The Directors of the Company accept responsibility for this announcement.
Enquiries:
Metroelectric Plc
Greg Collier
+44 78 30 182501
Rivington Street Corporate Finance Ltd
Eran Zucker
+44 20 7562 3373