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Novera Energy Ltd (NVE)

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Wednesday 15 March, 2006

Novera Energy Ltd

Final Results

Novera Energy Ltd
14 March 2006



Novera Energy Limited
ABN 60 084 084 515



Appendix 4E



ASX Preliminary final report-31 December 2005



Lodged with the ASX under Listing Rule 4.3A









Contents




Results for announcement to the market                                                       2-4
Preliminary consolidated income statement                                                     5
Preliminary consolidated balance sheet                                                        6
Preliminary statement of changes in equity                                                    7
Preliminary consolidated cash flow statement                                                  8
Other Appendix 4E Information                                                               9-14




This preliminary final report does not include all the notes of the type normally included in an annual financial
report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December
2005 and any public announcements made by Novera Energy Limited during the interim reporting period in accordance with
the continuous disclosure requirements of the Corporations Act 2001.


                                                           Novera Energy Limited
                                                     Year ended 31 December 2005
                                                 (Previous corresponding period:
                                                    Year ended 31 December 2004)



Results for Announcement to the Market



The Directors of the Company have adopted the Great British Pound ('GBP') as its
presentation currency as they believe it is the most relevant currency which
reflects the risk and returns associated with the operations of the consolidated
group as the significant operations of the group are either UK based or
controlled from the UK.



Comparative information has been restated to reflect the change in presentation
currency from the Australian Dollar ('AUD') to GBP.


                                                                                                      £'000

Revenue from continuing operations                  Down                         62%   to             3,808


Loss from continuing operations after income tax    Up                           69%   to           (2,448)
attributable to members


Net loss for the period attributable to members     Up                          265%   to           (2,448)





Explanation of revenue



Novera Energy derived revenue for the year of £3.8 million (2004: £9.9 million)



On 16 December 2004, the Company disposed of its share in Novera Europe Energy
Limited ('NEEL'), which owned a 33MW landfill gas ('LFG') business to the Novera
Macquarie Renewable Energy Limited ('NMRE'), in which the Company owns a 50%
direct interest. Accordingly, the gross LFG business revenues ceased to be
recognised by the Company and were from the date of disposal derived by NMRE and
only the Company's 50% share of the result from NMRE is recognised in the 2005
financial information. This treatment also applies to the revenue recognised by
NMRE from the acquisition in 2004 of a 75MW renewable energy portfolio from
United Utilities.



Revenue
                                                                                           2005        2004



1      Revenue from continuing operations                                                £ Millions  £ Millions

1.1    Biomass                                                                                  1.8         1.7

                                                                                                            
       The Group's Biomass contract services operations derived revenues of £1.8
       million.
1.2    Advisory fees                                                                            0.7         0.2

                                                                                                            
       Novera's UK based development business derived advisory fees, comprised:

       1.       Fees from the acquisition of wind farms of £0.2m; and

       2.       Development fees associated with the East London waste project of
       £0.5m.
       LFG Business Revenues                                                                      

1.3    * Refer explanation of revenue above. The LFG income for 2005 earned by NMRE               *         8.1
       was £12.5 million.


                                                                                                            


1.4    Interest income                                                                          0.1           -

                                                                                                              
                                                                                                2.6        10.0



2      Other Income
2.1    Deferred revenue                                                                         

       Deferred revenue is recognised on an instalment basis from the sale in 2004 of           0.3           -
       NEEL shares to NMRE and the release of discounted revenue from the sale in 2004
       of NEEL's Arpley landfill gas facility.



                                                                                                              
2.2    Sale of Mynydd Clogau                                                                    

       Profit on sale of the Novera developed Mynydd Clogau wind farm to NMRE.                  0.9           -

                                                                                                              
                                                                                                1.2           -

                                                                                                              
       Total revenue from continuing operations and other income                                3.8        10.0   

                                                                                                           


Cash and Cash Equivalent Analysis                                                        £ Millions



Cash balance at start of year                                                                   1.2
Net cash outflow from operating activities            Operational (Development)               (1.3)
                                                      Operational                             (0.8)
Joint Venture (NMRE) distribution **                                                            1.2
Joint Venture (NMRE) capital injection                                                        (3.1)
Capital raising from share issue                                                                6.6
Other                                                                                           0.1
Cash balance at end of year                                                                     3.9




** The Joint Venture cash distribution from NMRE of £1.2 million was received
only for the first half of 2005 and was in line with expectations with the
second distribution expected to be paid in the first half of 2006.



Novera's net cash increased from £1.2 million to £3.9 million in 2005 as a
result of:



•          Raising £6.6 million of capital in a share placement and from listing
on the Alternative Investment Market ('AIM');

•          The first half distribution of £1.2 million from NMRE (in line with
expectations);

•          Total cash spend of £2.1 million on operations;

•          Novera's 50% equity contribution of £3.1 million for two NMRE
investments comprised of £1.2 million in two German wind farms and £1.9 million
in UK LFG assets.



Explanation of loss from continuing operations after income tax



Novera Energy incurred an operating loss of £2.4 million from continuing
operations after income tax. A break down of the loss is as follows:
                                                                                                        £ Millions


1.        Operating loss before share of joint venture result and income tax expenses                        (1.0)
1.1       Biomass Contract Services Division gross margin                                                      0.2
1.2       Advisory fees                                                                                        0.7
          The UK operations advisory fees


1.3       Project Development                                                                                (1.5)
          In enhancing the value of Novera's pipeline of assets, the Group incurred and expensed
          £1.5 million. There are no project development expenses carried on the balance sheet.
          The expenditure comprises:

          •          Wind Project Development of £0.9 million; and,

          •          East London Sustainable Energy Facility of £0.6 million.


1.4       Cost of migration of operations to the United Kingdom                                              (0.2)


1.5       Costs of listing on AIM                                                                            (0.2)


1.6       Operational expenses                                                                               (0.4)

1.7       Australian operations                                                                                0.4
          Novera's Australian operations include the management of investments, regulatory
          compliance, statutory reporting, administration and the release of deferred revenue
          associated with the vending of NEEL and Mynydd Clogau.






                                                                                                        £ Millions


2.        Share of net losses of NMRE joint venture (equity accounted)                                     (1.4)

          Net loss for the year                                                                            (2.4)

Application of equity accounting for Novera's investment in NMRE resulted in a
50% share of the joint venture's loss being recognised in the consolidated
accounts.



NMRE's result, is recognised under the equity method in accordance with
Australian Accounting Standards and is shown as a one line item 'share of net
losses of associates and joint venture' in the preliminary consolidated income
statement, and has not been recognised by way of proportional consolidation.


NMRE                                                                        Novera's                    NMRE
Income Statement                                                           50% share                     100%

                                                                               2005                     2005
                                                                              £'000                    £'000
Revenue from continuing operations                                           12,469                   24,938
                                                                            

Cost of sales from continuing operations                                    (6,405)                 (12,809)
Employee benefits expense                                                   (1,248)                  (2,497)
Depreciation and amortisation expenses                                      (3,469)                  (6,939)
Finance costs-net                                                           (2,287)                  (4,575)
Restructuring cost of business acquisition                                    (410)                    (819)
Share of net losses of associates and joint ventures accounted for             (23)                     (45)
using the equity method
Loss before income tax expense                                              (1,373)                  (2,746)
Income tax expense                                                                -                        -
Loss from continuing operations                                             (1,373)                  (2,746)





During the year NMRE has been continuing its expansion into the renewable energy
area with acquisitions of wind farms in Germany and the acquisition and
expansion of LFG sites. 2005 comprised the first full year results of the
combined operations of NEEL and UUGE.



Explanation of net loss



The Novera group achieved a net loss for 2005 of £2.4 million.  The major
contributors are explained above. The table below provides a summary of net loss
after tax contributions:


                                                                                                      £ Millions
Operational results       Novera 100% owned operations                                                     (1.0)

                          Novera 50% owned joint venture (NMRE)                                            (1.4)
                                                                                                           (2.4)



Explanation of dividends



There were no dividends for the period and none was declared.



Audit


This report is based on accounts which are in the process of being audited.








Novera Energy Limited
Preliminary consolidated income statement
For the year ended 31 December 2005


                                                                                              2005            2004
                                                                                             £'000           £'000

Revenue from continuing operations                                                           2,587           9,968
Other income                                                                                 1,221               -
                                                                                             3,808           9,968

Cost of sales from continuing operations                                                   (1,386)         (3,668)
Employee benefits expense                                                                    (567)         (3,258)
UK migration costs                                                                           (247)               -
AIM related costs                                                                            (210)               -
Depreciation and amortisation expenses                                                        (29)         (1,528)
Development costs                                                                          (1,513)           (180)
Finance costs-net                                                                                -           (837)
Foreign exchange gains/(losses)                                                              (116)           (269)
Other expenses from ordinary activities                                                      (815)         (1,347)

Loss before share of joint venture result and income tax expense                           (1,075)         (1,119)

Share of net losses of associates and joint ventures accounted for using                   (1,373)           (191)
the equity method

Loss before income tax expense                                                             (2,448)         (1,310)

Income tax expense                                                                               -           (143)

Loss from continuing operations                                                            (2,448)         (1,453)

Profit from discontinued operations                                                              -           1,549

(Loss)/profit for the year                                                                 (2,448)              96

(Loss)/profit attributable to members of Novera Energy Limited                             (2,448)              96

                                                                                           


The above consolidated income statement should be read in conjunction with the accompanying notes.

Novera Energy Limited
Preliminary consolidated balance sheet
As at 31 December 2005


                                                                                           2005              2004
                                                                                          £'000             £'000
ASSETS
Non-current assets
Property, plant & equipment                                                                  87                51
Investments accounted for using the equity method                                        16,607            16,087
Receivables                                                                                 861               976
Total non-current assets                                                                 17,555            17,114

Current assets
Cash and cash equivalents                                                                 3,865             1,156
Receivables                                                                               1,022               736
Other                                                                                        34                20
Total current assets                                                                      4,921             1,912

Total assets                                                                             22,476            19,026

LIABILITIES
Current liabilities
Payables                                                                                  1,068               833
Deferred revenue                                                                            154               937
Provisions                                                                                   22                33
Other                                                                                       303               173
Total current liabilities                                                                 1,547             1,976

Non-current liabilities
Deferred revenue                                                                          2,776             3,091
Total non-current liabilities                                                             2,776             3,091

Total liabilities                                                                         4,323             5,067

Net assets                                                                               18,153            13,959

EQUITY
Contributed equity                                                                       32,211            25,583
Reserve                                                                                      14                 -
Retained losses                                                                        (14,072)          (11,624)

Total equity                                                                             18,153            13,959






The above consolidated balance sheet should be read in conjunction with the accompanying notes.

Novera Energy Limited
Preliminary statement of changes in equity
For the year ended 31 December 2005


                                                                                            2005            2004
                                                                                           £'000           £'000

Total equity at the beginning of the financial year                                       13,959          13,701

Adjustments on adoption of AIFRS to:                                                           
Retained earnings                                                                              -            (25)
Employee share options                                                                        14               -

Net income recognised directly in equity                                                      14            (25)

(Loss)/profit for the year                                                               (2,448)              96
Total recognised income and expense for the year                                         (2,434)              71


Transactions with equity holders in their capacity as equity holders:
Contributions of equity, net of transaction costs-cash                                     6,628             187
                                                                                                 

                                                                                           6,628             187
Total equity at the end of the financial year                                             18,153          13,959
                                                                                         

Total recognised income and expenses for the year is attributable to:
Members of Novera Energy Limited                                                         (2,434)              71
                                                                                         




The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes













Novera Energy Limited
Preliminary consolidated cash flow statement
For the year ended 31 December 2005


                                                                                2005            2004
                                                                               £'000           £'000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)                  2,096          12,258
Payments to suppliers and employees (inclusive of goods and services         (3,020)        (11,564)
tax)
                                                                               (924)             694
Interest received                                                                127               9
Borrowing costs                                                                    -           (676)
Development costs                                                            (1,331)           (180)
                                                                                               

Net cash outflow from operating activities                                   (2,128)           (153)



Cash flows from investing activities
Payments for property, plant and equipment                                      (96)         (2,777)
Payments to increase the investment in NMRE                                  (3,136)        (16,660)
Proceeds from vending of NEEL and other activities                                 -          28,506
Proceeds from vending of assets                                                  181               2
Proceeds of dividend from joint venture                                        1,220              20
Transaction costs from vending of Mynydd Clogau                                (360)               -
Repayment of borrowings -related parties                                         204               -
                                                                                               

Net cash (outflow)/inflow from investing activities                          (1,987)           9,091



Cash flows from financing activities

Repayment of finance lease                                                         -         (9,102)
Proceeds from loans                                                                -             242
Proceeds from issues of shares and other equity securities                     6,628             266
Net cash inflow/(outflow) from financing activities                            6,628         (8,594)

                                                                               

Net increase  in cash and cash equivalents                                     2,513             344
Cash and cash equivalents at the beginning of the year                         1,156             687
Effects of exchange rate changes on cash and cash equivalent                     196             125
Cash and cash equivalents at the end of year                                   3,865           1,156

                                                                               


The above consolidated cash flow statement should be read in conjunction with the accompanying notes.






Novera Energy Limited
Notes to the preliminary consolidated financial statements
For the year ended 31 December 2005


1. Basis of preparation

The preliminary financial report has been prepared in accordance with the Australian equivalent to International
Financial Reporting Standards ('AIFRS')



2. Material factors affecting the consolidated income statement
The material items affecting the consolidated income statement were:



Development expenditure of £1.5 million relating to development activities including Novera Energy's development of wind
farms in Scotland and Northern England and the biomass project in East London.



The recognition of a joint venture £1.4 million loss, being Novera Energy's share of the operating result of the NMRE
joint venture.



3. Material factors affecting the consolidated balance sheet
The financial activities of Novera Energy during the past year have strengthened the current position of the Group, with
total assets at 31 December of £22.5 million, represented by cash of £3.9 million, an investment in NMRE of £16.6
million, receivables of £1.9 million and other of £0.1 million.



Total liabilities were £4.3 million giving a net asset position of £18.2 million. £2.9 million of total liabilities
represents deferred revenue associated with the vending of shares in NEEL and the sale of the Mynydd Clogau wind farm
into the NMRE joint venture. The deferred revenue will be released over the estimated life of the assets.



The increase in net assets of approximately £4.0 million reflects the increase in cash (which is analysed on page 3 of
this Preliminary Report), the movement in the investment in NMRE and the recognition of deferred revenue.



During the year Novera Energy consolidated its shares on a 1 for 5 basis and undertook two capital raisings which
increased the number of shares on issue post consolidation from 45.6 million to 54.8 million.



4. Material factors affecting the consolidated cash flows
Capital raisings during the year injected £6.6 million to fund current and future projects and a £1.2 million cash
distribution was received from NMRE.



Expenditure on investment activities for the reporting period was £3.1 million.



5. Changes in accounting policies

This report has been prepared in accordance with Australian equivalents to International Financial
Reporting Standards. Details of the Group's principal accounting policies are included in the Novera
Energy Limited's accounts for the half year ended 30 June 2005. In preparing the 2005 financial
statements, the Company has varied certain accounting, valuation and consolidation methods applied in
the GAAP financial statements to comply with AIFRS.



5.1 Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the
currency of the primary economic environment in which the entity operates ('the functional currency').
The functional currency for each of the Group's entities is GBP.



The Directors of the Company have adopted Pounds Sterling as its presentation currency as they believe
it is the most relevant currency which reflects the risk and returns associated with the operations of
the consolidated group as the significant operations of the group are either UK based or controlled
from the UK. Comparative information has been restated to reflect the change in presentation currency
from the Australian Dollar ('AUD') to GBP.




6. Segment information
6.1 Primary reporting format-business segments

2005                                NMRE*          Biomass      Development       Corporate           Total
                                Landfill Gas,     Services
                                Hydro, Wind &
                                 Industrial
                                    £'000           £'000          £'000            £'000             £'000
                                                                   

Segment revenue                         -           1,790            671              126             2,587

Other income                            -               -              -            1,221             1,221
Total segment revenue &                 -           1,790            671            1,347             3,808
other income
                             

Segment profit/                         -             190        (1,700)              435           (1,075)
(loss)
                                                             
                                               

Share of net loss of joint        (1,373)               -              -                -           (1,373)
venture entity
                                  
                                               

Total segment profit/(loss)       (1,373)             190        (1,700)              435           (2,448)
result


                                       
Income tax expense                     -                -              -                -                 -
Net (Loss)/Profit before         (1,373)              190        (1,700)              435           (2,448)
income tax


                                       
Investment in associates,              -                -              -           16,607            16,607
joint ventures and
partnership

                                                                             



*On 16 December 2004, the Company disposed of its shares in NEEL to NMRE, in
which the Company owns a 50% direct interest. Accordingly, the LFG business
revenues ceased to be derived by the Company and were from the date of disposal
derived by NMRE. Only the Company's net share of the profit from NMRE is
recognised in the 2005 accounts. This treatment also applies to the revenue
derived by NMRE from the acquisition in 2004 of a 75MW renewable energy
portfolio from United Utilities.




6.2 Secondary reporting-geographical segments
                                                                       Acquisitions of property, plant &
                                                                       equipment, Intangibles (including
               Segment revenues from sales       Segment assets        those acquired through controlled
               to external customers and                               entities and joint ventures) and
               other income                                            other non-current segment assets
                        2005          2004          2005          2004               2005             2004
                       £'000         £'000         £'000         £'000              £'000            £'000
United Kingdom         2,587         9,770        22,357        18,643              3,228            2,844
Australia              1,221           198           119           383                  4                7
Total                  3,808         9,968        22,476        19,026              3,232            2,851

                       




6.3 Segment Reporting -Joint venture                    2005


              Segment revenues from sales  Segment assets
              to external customers


                50%          100%            50%          100%
              £'000        £'000           £'000        £'000


Europe        12,469       24,938          74,157       148,313







6.4 Segment information 2004

                             Landfill Gas       Biomass      Business &           Corporate &            Total
                                               Services         Project           Significant
2004                                                        Development          Transactions
                                   £'000          £'000           £'000                 £'000            £'000          
                                           

Total segment revenue              8,093          1,678              188                    9            9,968
& other income


                                   
Segment profit/(loss)              1,248            102              188              (2,657)          (1,119)



                                   
                                      

Share of profit/(loss)                19               -                -                (210)            (191)
of associates and
joint venture entity



                                      
Total segment result               1,267            102              188              (2,867)           (1,310)

                                   
Income tax                         (143)               -                -                   -             (143)

                                   
Net Profit/(Loss)                  1,124            102              188              (2,867)           (1,453)
after  tax
                                   
Profit from                            -               -                -               1,549             1,549
discontinued
operations                            
Net Profit/                        1,124             102              188              (1,318)               96
(Loss) after tax


                                   

Investment in associates, joint ventures -               -                              16,087           16,087
and partnership





7. Events occurring after reporting date


Novera Energy has been granted approval to delist from the ASX with effect from 4 April 2006. The Company will remain
listed on the Alternative Investment Market.



8. Dividends



There were no dividends provided or paid during the year.





9. Retained Earnings



Adoption of AIFRS has been reflected in the comparatives for retained earnings
in 2004 and in the net loss figure for 2005.
                                                                                           2005          2004
                                                                                              £              £
Retained earnings/(losses) at the beginning of the financial year                       (11,624)       (9,807)


Adjustment resulting from change in accounting policy on adoption of AIFRS -                   -          (25)
retained earnings



Net (loss)/profit attributable to members of Novera Energy Limited                       (2,448)            96




Transfer from Foreign Currency Translation Reserve                                             -       (1,888)




Retained earnings/(losses) at the end of the financial year                             (14,072)      (11,624)







10. Equity securities issued/consolidated
                                                             2005            2004            2005          2004
                                                           shares          shares
                                                             '000            '000           £'000         £'000


Opening balance                                           210,438         207,635          25,583        25,396


Issues of ordinary shares during the year


Placement               28 April 2005                      17,620               -           2,173             -
                                                          228,058         207,635          27,756        25,396


Consolidation           1:5 basis                          45,612             n/a             n/a           n/a

Placement               10 June 2005                        9,189               -           5,330             -

Exercise of options under the Novera Energy
Australian Incentive Option Plan                                -           2,803               -           268
                                                                


Less cost of equity raising                                     -               -           (875)          (81)


Closing balance                                            54,801         210,438          32,211        25,583




11. Earnings per share                                                                     Consolidated
                                                                                       2005            2004
                                                                                          £               £
Basic earnings per share                                                             (0.05)            0.02


Diluted earnings per share                                                           (0.05)            0.02




                                                                                      2005*             2004
                                                                                     Number           Number
                                                                                       '000             '000
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in                49,414           210,321
calculating basic earnings per share

Weighted average number of ordinary shares and potential ordinary shares used        49,735           211,559
as the denominator in calculating diluted earnings per share reflecting the
impact of unexercised options


* On 16 May 2005 the shares in the Company were consolidated on a 1 for 5 basis.



The numerator for the above calculations is net profit/ (loss) from ordinary
activities after related income tax expense for the year. Since the release of
the Company's 2004 annual report 4,626,116 unexercised options have lapsed.


12. Net Tangible Asset Backing                                                             Consolidated

                                                                                             2005            2004
                                                                                                £               £
Net tangible asset backing per ordinary share                                                0.37            0.07


The weighted average number of ordinary shares was used as the denominator in
calculating net tangible assets per share                                                  49,414         210,321
                                                                                           



13. Material investment in Associates and Joint Venture Entities


Name of Entity                       Ownership           Aggregate share of        Contribution to net profit
                                     Interest             profits/(losses)
                                       2005    2004       2005         2004           2005            2004
                                        %        %        £000         £000           £000            £000
Joint Ventures
Novera Macquarie Renewable Energy      50      50       (1,373)       (210)         (1,373)           (191)
Joint Venture Limited *
                                                                      
Controlled Entities
Novera Ventures Limited               100      100      (1,700)         Nm          (1,700)            Nm
Novera Energy Services UK Limited     100      100        190           Nm            190              Nm



*The investment in the NMRE joint venture is accounted for under the equity
method.



Nm=not material



14. Investment in Novera Macquarie Renewable Energy Joint Venture Limited.



As NMRE is a significant asset to Novera Energy a breakdown of both Novera
Energy's 50 % holding and the financial position of NMRE are disclosed below:


NMRE                                                                                  Novera's              NMRE
Income Statement                                                                     50% share              100%
                                                                                          2005              2005
                                                                                         £'000             £'000
Revenue from continuing operations                                                      12,469            24,938

Cost of sales                                                                          (6,405)          (12,809)
Employee benefits expense                                                              (1,248)           (2,497)
Depreciation and amortisation expenses                                                 (3,469)           (6,939)



Finance costs-net                                                                      (2,287)           (4,575)
Restructuring cost of business acquisition                                               (410)             (819)
Share of net losses of associates and joint ventures accounted for                        (23)              (45)
using the equity method
                                                                                       

Loss before income tax expense                                                         (1,373)           (2,746)
Income tax expense                                                                           -                 -
                                                                                       
                                                                                       
Loss from continuing operations                                                        (1,373)           (2,746)





NMRE                                                                                   Novera's              NMRE
Balance Sheet                                                                         50% share              100%
                                                                                           2005              2005
                                                                                          £'000            £'0000
ASSETS
Non-current assets
Tangible assets                                                                          38,464            76,927
Intangible assets                                                                        22,956            45,912
Investments accounted for using the equity method                                           188               377
Total non-current assets                                                                 61,608           123,216


Current assets
Cash and cash equivalents                                                                 8,326            16,652
Receivables                                                                               4,223             8,445
Total current assets                                                                     12,549            25,097

Total assets                                                                             74,157           148,313

LIABILITIES
Current liabilities
Payables                                                                                  8,872            17,744
Total current liabilities                                                                 8,872            17,744

Non-current liabilities
Payables greater than 12 months                                                          47,343            94,687
Provisions                                                                                1,871             3,741
Total non-current liabilities                                                            49,214            98,428

Total liabilities                                                                        58,086           116,172

Net assets                                                                               16,071            32,141


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