RNS Number:0128T
Ocean Power Technologies Inc
09 December 2003
For Immediate Release 9 December 2003
OCEAN POWER TECHNOLOGIES ANNOUNCES INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
OCTOBER 2003
Ocean Power Technologies, Inc ("OPT", or the "Company") (AIM:OPT), a leading
renewable energy technology company that is commercialising "intelligent" and
scaleable off-shore wave-powered electrical generation systems, is pleased to
announce its interim results for the six months ended 31 October 2003 (exchange
rate of #1=$1.70).
HIGHLIGHTS
* Successful flotation and $38 million (#22.4 million) fund raising on
AIM in October 2003.
* Contract revenues of $2.4 million, (#1.4 million) up 121% from the
corresponding prior period.
* Realised gross profit of $308,000 (#181,000) on contract revenues,
compared to a gross loss of $133,000 (#78,200) in the corresponding
prior period.
* Operating losses significantly reduced to $125,000 (#73,500) from
$624,000 (#367,000) in the corresponding prior period.
* Continuing progress on contract with US Navy for Hawaii wave power
station.
* Attainment of full Permit, including favorable Environmental
Assessment, for Hawaii project.
* Post the interim period, awarding of power system contract from the
New Jersey Board of Public Utilities Office
Commenting on the interim results Dr George Taylor, CEO of OPT, said:
"These are OPT's first results since listing on AIM and we remain on target to
deliver what we set out to achieve at the time of the IPO on AIM. We are also
delighted to have signed a contract with the State of New Jersey for delivery of
a PowerBuoy. In view of the progress being made on our existing contracts, and
the advanced stage of discussions we are having with potential customers for
OPT's power generating systems, we remain very confident in OPT's exciting
future".
For further information:
Dr. George W. Taylor, Charles F. Dunleavy,
Chief Executive Officer Chief Financial Officer
Telephone: (609) 730-0400 Telephone: (609) 730-0400
E-mail: gtaylor@oceanpowertech.com E-mail: cdunleavy@oceanpowertech.com
Michael Brennan, Timothy Redfern,
Evolution Beeson Gregory Evolution Beeson Gregory
Telephone: +44 207 071 4310 Telephone: +44 207 071 4312
Bobby Morse, Buchanan Communications Isabel Petre, Buchanan Communications
Telephone: +44 207 466 5000 Telephone: +44 207 466 5000
INTERIM RESULTS STATEMENT
Consolidated Results
Contract revenues for the six month period ended 31 October 2003 were
$2,442,412, compared with $1,104,189 in the six month period ended 31 October
2002, an increase of 121%. The increase in revenues over the same period in
2002 is attributable primarily to OPT's contract for installation of
PowerBuoys(TM) at a US Marine Corps base in Hawaii, as well as to a separate
development contract for improvements in PowerBuoy efficiency. Gross profit
from contracts revenues was $308,046 in the six months ended 31 October 2003,
compared to a gross loss of $133,106 in the six month period ended 31 October
2002.
Company-funded product development costs were nil in the six month period ended
31 October 2003, versus a total of $176,838 in the same period in 2002. The
Company made the decision in early 2003 to concentrate its resources during the
six month period ended 31 October 2003 on performance under its profitable
contracts, and on increasing its commitment to marketing efforts. Selling,
general and administrative costs increased to $433,003 in the six month period
ended 31 October 2003, compared to $313,694 in the same period in 2002. This
increase resulted primarily from expanded marketing effort, plus increases in
certain administrative costs reflecting growth in the Company's operations.
OPT's net loss in the six month period ended 31 October 2003 was $3,608,022,
compared to a net loss of $597,483 in the six month period ended 31 October
2002. Results for the six-month period ended 31 October 2003 included a
one-time charge for payment of $3.5 million to Tyco Electronics Corporation ("
Tyco"), which was part of the planned use of proceeds from the Company's IPO.
Expense recognised for this non-recurring item is included in Other Expense for
the six months ended 31 October 2003. Payment of the $3.5 million is part of a
1999 agreement for the buy-back of $5.5 million of OPT preferred stock and
convertible debt held by Tyco, plus release of liens held by Tyco on all the
assets of OPT. The 1999 agreement provided for this payment in the event of
certain specified transactions such as an IPO.
Overall, the results for the six months ended 31 October 2003 reflect the
Company's emphasis on cost controls and expansion of marketing effort, net of
the provision for the payment to Tyco. The loss per share was $0.12 in the
current period, compared to a loss per share of $0.02 in the six month period
ended 31 October 2002.
Business Review
The Company's major contract now in progress is for delivery of PowerBuoy
systems at a US Marine Corps base off the island of Oahu, in Hawaii. With the
active participation of the US Navy, the project is focused on survivability,
deployment and operation of multiple PowerBuoys.
A significant milestone for the Hawaii project which OPT has completed is the
full permitting of the project, including a very thorough Environmental
Assessment performed by an independent engineering firm. This resulted in a "
Finding of No Significant Impact". The Finding concluded that the project is in
"compliance with the US National Environmental Policy Act", and that it will not
significantly impact human health or the environment. The importance of this
development reaches beyond its benefit to the Hawaii project. The thorough
Environmental Assessment, and the Government's Finding based on it, serve to
bolster the Company's marketing efforts, and create an important benchmark in an
area of the world that strongly safeguards its environment and natural
resources.
The undersea cable has been installed at the Hawaii site and brought to shore;
sea bed assessments and rock bolt tests have been completed; land-based cabling
and equipment control bunker work is complete; testing has been performed on key
sub-systems; the anchor for the first PowerBuoy has been deployed at the ocean
site; and fabrication of the initial PowerBuoy to be installed is due to be
completed in January 2004. We anticipate that it will be deployed and connected
to its anchor early in 2004. Under the advice of the Navy, the PowerBuoy
deployment will be conducted in phases. This will enable the Company to isolate
the performance parameters that will be sequentially monitored and analysed.
OPT and the Navy are presently planning the next phases of the project, to
include the deployment of additional PowerBuoys.
Funding
In October 2003, the Company's shares were admitted to the Alternative
Investment Market of the London Stock Exchange ("AIM"). OPT is now the world's
only quoted wave power company. The Company received a total of approximately
US $38.0 million of capital, after deducting expenses of the offering. At
substantially the same time, OPT effected a 1.5-for-1 stock split, and was
admitted to trading on the AIM under the symbol "OPT".
The Board of Directors of OPT is confident that the funds raised by the IPO will
enable the Company to grow and move toward full commercialisation of its
technology. In addition to providing for certain working capital needs of the
Company, including the Tyco payment, key elements of the expected use of the IPO
proceeds include the following:
* Recruitment of key personnel, including senior management, engineering,
sales and marketing, and support staff.
* Expansion of OPT's sales, marketing and distribution capability, including
the establishment of an operating unit based in the UK. This UK unit
is expected to lead OPT's penetration of the UK and European marketplace,
and will have development and engineering capability.
* Building a demonstration power plant in the UK. This OPT wave power plant
is expected to have a capacity of up to 10 megawatts. The plant will be
utilized for marketing purposes, will serve as a platform for testing OPT's
operations and maintenance procedures, and will earn revenues for OPT from
the expected sale of energy generated by the plant.
* Expansion of OPT's assembly and test facilities. These facilities will
support production and quality control testing of the high value-added "
smart" part of the PowerBuoy units: the computer-based electronics and
electrical control system and the generator.
* Systems development, production applications engineering and expansion of
the Company's patent base.
Corporate Governance
In the course of preparing for the IPO, OPT strengthened its Board in line with
good corporate governance through the following appointments:
* Seymour S. Preston III joined the Board of Directors, having previously
served on OPT's Advisory Board for four years. He joins Sir Eric Ash
as the Company's second non-executive director. Mr. Preston brings to OPT
a tremendous breadth of senior management experience in both public and
private companies. His career has included serving in various positions at
Pennwalt Corporation (NYSE), including President, Chief Operating Officer
and Director. He served as President and Chief Executive Officer of Elf
Atochem North America, Inc., and CEO of AAC Engineered Systems, a
privately-held manufacturing company. He is presently a director of
Albermarle Corporation and Tufco Technologies, Inc., both public companies,
and has previously served as a director of CoreStates Financial
Corporation.
* Sir Eric Ash was named Chairman of the Board of Directors.
* The Board of Directors established Audit and Nomination Committees, in
addition to the previously formed Compensation Committee. Only
non-executive directors serve on these three Committees.
CURRENT OUTLOOK AND TRADING
The IPO provides the Company with the necessary capital structure and funding
for its products to reach full commercialisation. OPT is focused on project
management and deployment of its systems, and is undertaking new initiatives in
sales and business development. The second half of our fiscal year ended 30
April 2004 is well under way, and we look forward to reporting progress in a
number of areas, as investments are made in staff and operating capabilities as
provided under the expected use of IPO proceeds. We are confident of completing
new commercial relationships in the near term that will result in further growth
of the Company.
Sir Eric A. Ash Dr. George W. Taylor
Chairman Chief Executive Officer
OCEAN POWER TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
6 months 6 months
ended ended Year ended
31-Oct 31-Oct 30-Apr
2003 2002 2003
USD USD USD
CONTRACT REVENUES 2,442,412 1,104,189 2,548,294
COST OF REVENUES 2,134,366 1,237,295 2,555,267
Gross profit /(loss) 308,046 (133,106) (6,973)
PRODUCT DEVELOPMENT COSTS - 176,838 180,403
SELLING, GENERAL AND
ADMINISTRATIVE COSTS 433,003 313,694 818,596
Operating loss (124,957) (623,638) (1,005,972)
INTEREST INCOME 16,988 25,761 38,441
OTHER INCOME/ (EXPENSE) (1) (3,500,053) 394 147,326
NET LOSS (3,608,022) (597,483) (820,205)
LOSS PER SHARE (0.12) (0.02) (0.03)
(1) See Note 2 to Interim Consolidated Financial Statements
OCEAN POWER TECHNOLOGIES, INC AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
31-Oct 31-Oct 30-Apr
2003 2002 2003
USD USD USD
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,125,214 2,360,917 1,536,175
Certificates of deposit 710,000 - 710,000
Accounts receivable 4,515 - -
Unbilled receivables 896,286 184,617 343,078
Stock subscription receivable 42,500,000 - -
Other current assets 43,541 44,190 51,698
Total current assets 45,279,556 2,589,724 2,640,951
EQUIPMENT,
Net of accumulated depreciation 42,493 78,815 57,512
PATENTS,
Net of accumulated amortization 176,994 158,730 167,137
OTHER ASSETS 13,347 - 13,347
TOTAL ASSETS 45,512,390 2,827,269 2,878,947
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 691,166 74,716 258,676
Accrued expenses 9,012,926 1,166,676 1,062,872
Amounts due to related parties 141,614 141,614 141,614
Total current liabilities 9,845,706 1,383,006 1,463,162
LONG-TERM DEBT 250,000 250,000 250,000
DEFERRED CREDITS 675,000 675,000 675,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value
5,000,000 shares authorized; no
shares issued and outstanding - - -
Common stock, $.001 par value
105,000,000 authorized shares;
50,274,204; 30,162,927;
and 30,231,913 shares issued and
outstanding as of 31 October 2003 and
2002, and 30 April 2003, respectively 50,274 30,163 30,232
Additional paid-in capital 56,607,668 18,566,812 18,769,984
Accumulated deficit (21,915,025) (18,084,282) (18,307,004)
Accumulated other comprehensive
gain/ (loss) (1,233) 6,570 (2,427)
Total stockholders' equity 34,741,684 519,263 490,785
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 45,512,390 2,827,269 2,878,947
OCEAN POWER TECHNOLOGIES, INC AND SUBSIDIARY
UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months Year ended
31-Oct 31-Oct 30-Apr
2003 2002 2003
USD USD USD
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (3,608,022) (597,483) (820,205)
Adjustments to reconcile net loss to the
net cash used in operating activities:
Depreciation and amortization 21,810 30,354 52,815
Compensation expense related to
stock option grants and common stock
issuance 80,188 1,000 154,240
Changes in working capital:
Accounts receivable (4,515) 105,768 105,768
Unbilled receivables (553,208) (10,979) (169,440)
Other current assets 8,158 32,930 12,075
Other assets - (13,347) (13,347)
Accounts payable 432,490 (44,846) 139,114
Accrued expenses 3,227,592 (455,779) (559,583)
Deferred credits - 75,000 75,000
Net cash used in operating
activities (395,507) (877,382) (1,023,563)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificates of deposit - - (710,000)
Maturities of certificates of deposit - 1,115,000 1,115,000
Purchase of equipment and
patent costs (16,648) (28,401) (37,966)
Net cash provided by (used in)
investing activities (16,648) 1,086,599 367,034
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock, net of
issuance costs - - 50,000
Net cash provided by financing
activities - - 50,000
EFFECTS OF EXCHANGE RATES 1,194 11,462 2,466
NET DECREASE IN CASH AND
CASH EQUIVALENTS (410,961) 220,679 (604,063)
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE YEAR 1,536,175 2,140,238 2,140,238
CASH AND CASH EQUIVALENTS,
END OF THE YEAR 1,125,214 2,360,917 1,536,175
SUPPLEMENTAL DISCLOSURE OF
NONCASH TRANSACTIONS:
Stock subscription receivable 37,777,538
OCEAN POWER TECHNOLOGIES, INC AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the interim 6 month
period ended 31 October 2003 are not necessarily indicative of results that may
be expected for the year ending 30 April 2004. The financial information
contained in this interim report does not constitute statutory accounts for the
Company for the relevant periods.
Consolidation - During fiscal 2001, the Company established a wholly owned
subsidiary based in Australia. In July 2001, the Company sold 11.76% of the
subsidiary to a subsidiary of Woodside Petroleum, Ltd. The accompanying
consolidated financial statements include the accounts of the Company and its
subsidiary. All significant intercompany transactions have been eliminated.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Revenue Recognition - The Company recognizes revenue of government and
commercial contracts under the percentage of completion method. The percentage
of completion is determined by relating the costs incurred to date to the
estimated total costs. The cumulative effects resulting from revisions of
estimated total contract costs and revenues are recorded in the period in which
the facts requiring revision become known. When a loss is anticipated on a
contract, the full amount thereof is provided currently.
Unbilled receivables represent expenditures on contracts, plus profits or less
losses recorded thereon, not yet billed. Unbilled receivable are billed and
collected within one year.
Cash Equivalents - Cash equivalents consist of investment in short-term
financial instruments with maturities of three months or less from the date of
purchase.
Equipment - Equipment is stated at cost, less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives (three to seven years). Expenses for maintenance and repairs are
charged to operations as incurred.
Patents - External costs related to the filing of patents, including legal and
filing fees, are capitalized. Amortisation is calculated using the
straight-line method over the lives of the patents (17 years). Expenses for the
development of technology are charged to operations as incurred.
Concentration of Credit Risk - Financial instruments that potentially subject
the Company to concentration of credit risk consist principally of cash
balances, bank certificates of deposit and trade receivables. However, the
Company invests its excess cash in highly liquid investments (principally
short-term bank deposits). In the six month periods ended 31 October 2003 and
2002, the Company's customer base was principally comprised of agencies within
the U.S. Government. The Company does not require collateral from its customers.
Other Comprehensive Loss - The functional currency for the Company's non-US
operations is the applicable local currency. The translation from the
applicable foreign currencies to U.S. dollars is performed for balance sheet
accounts using the exchange rates in effect at the balance sheet date and for
revenue and expense accounts using an average exchange rate during the period.
The unrealized gains or losses resulting from such translation are included in
shareholders' equity.
Loss per Share - The basic loss per share has been calculated by dividing the
loss for the six month period by the weighted average number of common shares in
issue during the period. Diluted loss per share calculations are not shown, as
the inclusion of common stock equivalents would be anti-dilutive.
6 months 6 months Year
ended ended ended
31 October 31 October 31 October
2003 2002 2003
USD USD USD
Net loss (3,608,022) (597,483) (820,205)
Weighted average common shares
in issue 31,129,156 30,162,511 30,174,219
Loss per share (0.12) (0.02) (0.03)
2. OTHER INCOME (EXPENSE)
Other income (expense) for the six month period ended 31 October 2003 includes a
total of $3,500,000 expense related to a one-time charge for a payment due to
Tyco Electronics Corporation ("Tyco"). Payment of the $3.5 million is part of a
1999 agreement between OPT and Tyco for the buy-back of $5.5 million of OPT
preferred stock and convertible debt held by Tyco, plus release of liens held by
Tyco on all the assets of OPT. This payment was provided in the 1999 agreement,
in the event of certain specified transactions such as an IPO, and was
identified in the use of proceeds from OPT's IPO.
BACKGROUND INFORMATION
Ocean Power Technologies, Inc. is the world's first publicly listed wave power
company. It is commercialising its proprietary technology for the generation of
electrical power using the energy of ocean waves. OPT's wave energy systems are
based on modular, buoy-like structures, called PowerBuoys(TM), which are "
intelligent" systems capable of responding to differing wave conditions. The
Company's ocean-tested systems have the potential to provide low-cost, clean
electrical power on a large scale without the enhancements of tax credits or
subsidies. For further information, see the Company's website:
www.oceanpowertechnologies.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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