23rd Nov 2007 11:31
Nviro Cleantech plc23 November 2007 Press Release 23 November 2007 Nviro Cleantech plc ("Nviro" or "the Group") Revised Preliminary Results The following announcement replaces the Company's preliminary resultsannouncement (number 3615I) released 23 November 2007. The revisions relate tothe financial review commentary, the notes to the preliminary announcement andnon-material adjustments to the unaudited consolidated statement of changes inequity. Nviro Cleantech plc (AIM:NVR), which commercialises "clean technologies", ispleased to announce its maiden preliminary results for the twelve months ended30 September 2007. Highlights • Admittance to AIM on 6 August 2007, raising £7.5 million (before expenses) through the placing of 11.9 million new shares • Joint venture established in China for the commercialisation of Nviro's clean combustion technology, Vertus, including a commitment for two reductive thermal units (RTPs) • Memorandum of Understanding ("MOU") signed with CLP Power India Private Ltd to develop Vertus biomass and coal treatment applications in India • Identified a further source of early potential revenues for Vertus RTP in the selling of carbon emission credits derived from biomass units • Microrelease technology for recycling of medium density fibreboard (MDF) confirmed via an extensive, independent testing programme • Laseair and Organotect programmes on schedule with prototype assembly at an advanced stage • Two significant US-based appointments: Andrew Cosentino (Group Board) and Dr Ken Hughes (promotion to President of Vertus subsidiary) • In the USA negotiations continue with a number of prospective clients in both the Power generation and the industrial sectors and are expected to bear fruit in commitments in 2008 • Pre-revenue company with a loss before tax of £4.195 million Chris Every, CEO of Nviro Cleantech Plc, said: "Nviro has experienced anextremely busy and productive period since the successful AIM flotation inAugust. We have concentrated on operational and technical developments acrossour portfolio companies, laying the foundations for strong future growth. Ourprimary focus has been to establish key working partnerships in coal and biomassapplications for our lead subsidiary Vertus and we are delighted to have securedan MOU with CLP India while negotiations continue in other key territories. Intesting, our second portfolio technology Microrelease, continues to performwell, while prototyping for both Laseair and Organotect is on schedule.Furthermore, the strengthening of our senior team will also be fundamental indelivering on the exciting growth strategy stated in our AIM Admission document." For further information: Nviro Cleantech Pplc Chris Every, Chief Executive Officer Tel: +44 (0) 20 7451 [email protected] www.nvirocleantech.com Grant Thornton Corporate Finance - Nominated Adviser Fiona Owen / Troy MacDonald Tel: +44 (0) 20 7383 [email protected] [email protected] Fairfax I.S. PLC Broker Ewan Leggat Tel: +44 (0) 20 7598 [email protected] www.fairfaxplc.com Media Enquiries: Abchurch Justin Heath / Georgina Bonham Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com Chairman's and Chief Executive's review It gives us great pleasure to present Nviro Cleantech's plc's maiden preliminaryresults for the twelve month period to 30 September 2007, and report on theGroup's progress to date. These results reflect the transition from a privatecompany to an AIM quoted public company. Strategy Nviro focuses on commercialising clean technologies such as renewable energy,waste recycling, emissions control, and air quality monitoring, to benefit theglobal environment. It applies a business model that is common to each project,and the chosen technologies have all achieved laboratory proof of principle orare at a more advanced stage. Each project must demonstrate the potential togenerate substantial incremental value through commercialisation to form thefoundation of a business within a maximum of 36 months from the initialinvestment. Projects must offer significant global market opportunity. Nviro'sultimate objective is to develop each project into a self-sustaining businessand select the most appropriate exit route. The Group is concentrating most ofits resources on its primary technology, Vertus RTP. Review of Businesses Vertus RTP - The Group's RTP simultaneously eliminates many environmentalproblems associated with the burning of coal through removal of hazardous airpollutants (HAP's) and improves fuel energy efficiency so reducing the emissionof carbon dioxide. This pre-combustion technology separates carbon rich fuelfrom the volatile components of coal and biomass through a reductive thermalprocess involving exposure to an environment of indirect elevated temperatureand low oxygen. Vertus RTP technology is also an effective treatment forbiomass fuels. In particular, the separation of volatiles and solid fuel incertain biomass fuels, such as rice husk, can improve the energy efficiency offuels that are otherwise difficult to combust effectively, or prone to produceemissions when used in open or traditional boiler combustion. We have been actively marketing the Vertus RTP system in the three major coalterritories of the globe, namely, the USA, India and China, where fuel resourcesand the recognised growing demand for more energy ensure the future use of coalas a power generating fuel. In addition, each of those territories is, to avarying degree, actively driving the application of biomass in order to reduceemissions from fossil fuels. Our marketing efforts have been fruitful in Indiawith the CLP Power India biomass and lignite coal project, while in Chinanegotiations are ongoing with both potential biomass and coal clients and in theUSA negotiations with potential coal clients from both power generatingcompanies and industrial users generating electricity for their own purposes arecontinuing. The Directors believe that the financial benefit of the time spent in primingthese markets will be shown in the next fiscal year. There has also been anencouraging verification of the Vertus RTP business model from prospectiveclients in each territory. In addition strong relationships are being developedwith companies that will build the Vertus systems under contract for the targetterritories. The experience from our own marketing efforts and knowledge from systemmanufacturers in the biomass area have also influenced our direction with theproposed carbon burner technology in our project portfolio. The Vertuscapability to produce high grade carbon fuel from biomass, and a drive forsmaller distributed power generation units, especially in the Asian market, haveled us to link the two projects more closely for future benefit. We have decided to merge the future direction of the Carbon Burner technologywith that of the clean coal technology due to the technical proximity of thetwo processes. To date, tests have confirmed the technical feasibility ofigniting a 100% stream of carbon powder in a laser-based ignition system. Inorder to further our aims with a pure carbon burner and meet market demands,Nviro is entering into a partnership with the University of Nottingham'sCombustion Unit. Microrelease - This technology processes MDF and particle board, breaking themdown into their constituent fibres for reuse in a variety of markets. Over thepast few months the fundamental principle of separating wood fibre from MDFboard (both virgin and laminated) by microwave processing, has been proven by anextensive testing programme carried out by C-Tech Innovation Ltd, an outsidecontractor which specialises in microwave technology. They were able todemonstrate that more than 90% of wood fibres can be recovered by thistechnique, at an operational cost level for the process that is economicallyviable. These pleasing results have provided a firm foundation to initiate a programmeto design a Microrelease demonstration unit. This unit will use known andaccepted technology, for each module of the process (i.e. preparation, microwaveexposure, water addition, water removal, fibre separation, drying, waterrecycling), which, when combined, will form an economically viable, continuousprocess line. Measurable progress has already been made in the area of materialpreparation, water extraction, and drying. Work is in progress on the otherareas listed above. Another highlight for Microrelease was the award of a contract by the Waste andResources Action Programme (WRAP), through Nviro's partner, the FurnitureIndustry Research Association ("FIRA"), to demonstrate the viability of MDFrecycling in the UK. This development is of significant importance with regardto market penetration. Laseair - involves the development of a laser technology that utilises alow-energy source to significantly improve the cleaning and decontamination ofair at a lower cost than existing passive filtration methodologies. Theprogramme is advancing on-schedule and the first prototypes will be ready fortesting in Q1 2008. Once performance is proven, the Laseair system has a widerange of application opportunities, particularly in industrial air cleaningsystems and clean rooms. Organotect Lab-on-a-chip - More stringent legislation, environmental andsecurity concerns are driving the need to sample the air in order to detectpollutants and bio-hazards. Organotect effectively transitions high-quality gasspectrometry technology into field applications, via fixed and portableplatforms. This project is running to plan and the first prototype units arebeing assembled, ahead of being sent out on field trials with a leading Europeancosmetics company and one of Europe's largest chemical companies. We believeour technology offers greater sensitivity than our competitors, and has thesignificant advantage of being capable of being employed as a "mobile platform". Financial Review The initial start-up investment for Nviro was bolstered by an external fundinground in November 2006, with further funds raised in April 2007. This resultedin a total investment of approximately £12.36 million since the Group'sinception including net proceeds of £6.53 million with its fundraising andadmission to AIM in August 2007. Over the twelve months ended 30 September 2007, Nviro recorded a pre-tax loss of£4.195m, which is line with the Director's expectations. Cash outflow fromoperations was £4.365m, reflecting the loss for the period. Our cash positionremains strong, and at 30 September 2007 was £5.7m, slightly ahead ofexpectations, reflecting tight cost control. We continue to make good use ofour cash resources and we remain firmly committed to our budget. Summary and Prospects Nviro's management team has created significant value over the past twelvemonths and has recorded several important milestones, particularly in the recentachievement of commercialisation of our lead technology Vertus. With theCleantech industry at an inflection point owing to the convergence of severaltrends, including demand from consumers for new technology to reduceenvironmental harm and tighter government regulation driving innovation andspending, Nviro is well positioned to benefit from these macro-economic factors.We are confident that next year will see the Group install a number ofindustrial-scale Vertus units that will drive us into a revenue-generatingposition. James SD Leach Chris EveryNon-Executive Chairman Chief Executive Officer CONSOLIDATED UNAUDITED INCOME STATEMENT Year ended 30 September 2007 Note 2007 2006 £'000 £'000 Unaudited Unaudited Research expenses (2,124) (50) Administrative expenses (2,111) (807) Operating loss (4,235) (857) Investment income 40 - Finance costs - - Loss before tax 2 (4,195) (857) Income Tax Expense 9 - - Loss for the financial year (4,195) (857) Basic and diluted loss per share 5 (12.44)p (2.69)p No minority interest in the losses has been recognised within these financial statements as the minority doesnot have a binding obligation to make additional investment to cover the losses. UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 30 September 2007 Share Share Merger Share based payment Translation Retained Total capital premium reserve reserve reserve Losses Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 28 October 2005 - - - - - - -Loss for the year - - - - - (857) (857)Acquisition of subsidiary 21 15,490 (15,490) - - - 21Share based payment charge - - - 14 - - 14Foreign currency translation - - - - 19 - 19 At 1 October 2006 21 15,490 (15,490) 14 19 (857) (803)Loss for the year - - - - - (4,195) (4,195)Foreign currency translation - - - - (19) - (19)Issue of share capital, (net of 23 6,582 - - - - 6,605issue expenses)Acquisition of subsidiary - 4,585 - - - - 4,585 Share based payment charge - - - 272 - - 272 At 30 September 2007 44 26,657 (15,490) 286 - (5,052) 6,445 UNAUDITED CONSOLIDATED BALANCE SHEET 30 September 2007 Note 2007 2006 £'000 £'000 Unaudited UnauditedNon-current assetsLicence fees 1,028Property, plant and equipment 35 - Total non-current assets 1,063 - Current assetsTrade and other receivables 585 -Cash and cash equivalents 7 5,762 - Total current assets 6,347 - Total assets 7,410 - Current liabilitiesTrade and other payables (935) (803)Bank overdrafts and loans (30) -Current tax liabilities - - Total current liabilities (965) (803) Non-current liabilitiesOther - - Total non-current liabilities - - Total liabilities (965) (803) Net assets / (liabilities) 6,445 (803) EquityShare capital 44 21Share premium account 26,657 15,490Merger Reserve (15,490) (15,490)Translation reserve - 19Share based payment reserve 286 14Retained losses (5,052) (857) Total Equity 6,445 (803) UNAUDITED CONSOLIDATED CASH FLOW STATEMENT Year Ended 30 September 2007 Note 2007 2006 £'000 £'000 Unaudited Unaudited Operating activitiesNet cash outflow from operations 6 (4,365) -Interest paid - -Tax paid - -Net cash outflow fused in operating activities (4,365) - Investing activitiesInterest received 40 -Purchase of intangible assets (1,054)Purchase of property, plant and equipment (36) - Net cash inflow from investing activities (1,050) - Financing activitiesProceeds on issue of shares 12,362 -Costs on issue of shares (1,215) - Net cash inflow from financing activities 11,147 - Net increase in cash and cash equivalents in theyear 5,732 -Cash and cash equivalents at beginning of year - - Cash and cash equivalents at end of year 7 5,732 - NOTES TO THE PRELIMINARY ANNOUNCEMENT Year ended 30 September 2007 1. BASIS OF PREPARATION The financial information set out above does not constitute the company'sstatutory accounts within the meaning of section 240 of the Companies Act 1985. The 2007 figures are based on unaudited accounts for the year ended 30 September2007. The statutory accounts will be finalised on the basis of the financialinformation presented by the directors in the preliminary announcement and whichwill be delivered to the Registrar of Companies following the company's AnnualGeneral Meeting. Included within the 2007 results is an amount of £222k that actually relates toresearch and administrative costs incurred in the prior year. The Company doesnot believe that this would influence the economic decisions of users and doesnot believe it is material to treat as a prior year adjustment and have expensedit within the 2007 results. This preliminary announcement was approved by the Board of directors on 22November 2007. Copies of this announcement and the prospectus are available from the company'sregistered office at Burleigh Manor, Peel Road, Douglas, Isle of Man, IM1 5EP.The Annual Report and Accounts will be sent to shareholders shortly. 2. ACCOUNTING POLICIES Basis of accounting The group financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS) and interpretations adoptedby the European Union and as applied in accordance with the provisions of theCompanies Act 1985 and using accounting policies that are consistent with thoseas stated in the prospectus dated 26th July 2007. Therefore the group financialstatements comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared on the historical cost basis. Theprincipal accounting policies adopted are set out below. Standards issued but not yet effective At the date of authorisation of these financial statements the followingStandards and Interpretations which have not been applied in these financialstatements were in issue but not yet effective: IFRS 8 Operating SegmentsIFRIC 11 IFRS 2 - Group and Treasury Share TransactionsIFRIC 12 Service Concession ArrangementsIFRIC 13 Customer Loyalty ProgrammesIFRIC 14 IAS 19 - The limit on a Defined Benefit Asset Minimum Funding Requirements and their interaction The directors anticipate that the adoption of these Standards andInterpretations in future periods will have no material impact on the financialstatements of the Group when the relevant standards and interpretations comeinto effect. The principle accounting policies of the Group are as follows: Basis of consolidation The consolidated financial statements incorporate the financial statements ofNviro Cleantech plc and all its subsidiaries made up to 30 September each year. Control is achieved where the Company has the power to govern the financial andoperational policies of an entity so as to gain benefit from its activities. Minority interests in the net assets of consolidated subsidiaries are identifiedseparately from the group's equity therin. Minority interests consist of theamount of those interests at the date of the business combination and theminority's share of changes in equity since the date of the combination. Nominority interest in the losses has been recognised within these financialstatements as the minority does not have a binding obligation to make additionalinvestment to cover the losses. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Business Combinations The company's controlling interest in its directly held, wholly ownedsubsidiary, Nviro Cleantech Limited was acquired through a transaction undercommon control, as defined in IFRS3, Business Combinations. The directors notethat transactions under common control are outside the scope of IFRS 3 and thatthere is no guidance elsewhere in IFRS covering such transactions. IAS contain guidance where a transaction falls outside the scope of IFRS. Thisguidance is covered in Paragraphs 10-12 of IAS 8, Accounting policies, Changesin Accounting Estimates and Errors. This requires, inter alia, that where IFRSdoes not contain guidance on a particular issue, the Directors may also considerthe most recent pronouncements of other standard setting bodies that use asimilar conceptual framework to develop accounting standards. In this regard itis noted that the United States Financial Accounting Standards Board (FASB) hasissued an accounting standard covering Business Combinations (FAS 141), that issimilar in a number of respects to IFRS 3. Further there is currently a majorproject being run jointly by the IASB and the FASB to converge IFRS and US GAAP. In contrast to IFRS 3, FAS 141 does include, as an appendix, limited accountingguidance for transactions under common control, which as with IFRS 3, areoutside the scope of that accounting standard. The guidance contained in FAS 141indicates that a form of accounting that is similar to pooling of interestsaccounting, which was previously set out in Accounting Principles Board (APB)opinion 16, may be used when accounting for transactions under common control. Having considered the requirements of IAS 8 and the guidance included within FAS141, it is considered appropriate to use a form of accounting which is similarto pooling of interests when dealing with the transaction in which the groupacquired its controlling interest in Nviro Cleantech Limited. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciationand are depreciated over their estimated useful lives on the following annualbases: Plant and machinery 33.3% straight line Computer Equipment 33.3% straight line Licences Licences are stated at cost less accumulated depreciation and are depreciatedover their estimated useful lives on the following annual bases: Licences 10 years straight line At each balance sheet date, the group reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine theextent of the impairment loss (if any). Where the asset does not generate cashflows that are independent from other assets, the group estimates therecoverable amount of the cash-generating unit to which the asset belongs. Anintangible asset with an indefinite useful life is tested for impairmentannually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately, unless the relevant asset is carried ata revalued amount, in which case the impairment loss is treated as a revaluationdecrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset is carriedat a revalued amount, in which case the reversal of the impairment loss istreated as a revaluation increase. Cash and cash equivalents Cash and cash equivalents comprise cash balances and deposits held at call withbanks Borrowings All borrowing costs are recognised in the profit or loss in the period in whichthey incurred. Trade receivables Trade receivables are measured at initial recognition at fair value and aresubsequently measured at amortised cost using the effective interest ratemethod. Appropriate allowances for estimated irrecoverable amounts arerecognised in profit and loss when there is objective evidence that the asset isimpaired. Trade payables Trade payables are initially measured at fair value and are subsequentlymeasured at amortised cost using the effective interest rate method. Leases All leases are classified as operating leases. Rentals payable under operatingleases are charged to income on a straight line basis over the term of therelevant lease. Taxation A tax expense represents the sum of the tax currently payable and deferred tax. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Foreign currencies The individual financial statements of each group company are presented in thecurrency of the primary economic environment in which it operates, (itsfunctional currency). For the purpose of the consolidated financial statements,the results and financial position of each group company are expressed in poundssterling, which is the functional currency of the company and the presentationalcurrency for the consolidated financial statements. Transactions in currencies other than sterling are initially recorded at therates of exchange prevailing on the dates of the transactions. Monetary assetsand liabilities denominated in such currencies are retranslated at the ratesprevailing on the balance sheet date. Profits and losses arising onretranslation are included in the income statement. On consolidation, the assets and liabilities of the group's overseas operationsare translated into sterling at exchange rates prevailing on the balance sheetdate. Exchange differences arising, if any, are classified as equity andtransferred to the group's translation reserve. Such translation differences arerecognised as income or expenses in the period in which the operation isdisposed of. Income and expense items are translated at the average exchangerates for the period. Share Based Payment The group has applied the requirements of IFRS 2 Share based payment. The groupissues equity settled share based payments to certain employees and thirdparties. Equity settled share based payments are measured at fair value at thedate of the grant. The fair value determined at the grant date of the equitysettled share based payments is expensed on a straight line basis over thevesting period, based on the group's estimate of shares that will eventuallyvest and adjusted for the effect of non-market based vesting conditions. Fair value is measured by use of the Black Scholes model. The expected life usedin the model has been adjusted, based on management's best estimate, for theeffects on non-transferability, exercise restrictions and behaviouralconsiderations. 3. GOING CONCERN BASIS After making enquiries, the directors have formed a judgment, at the time ofapproving the financial statements, that there is a reasonable expectation thatthe group has access to secure adequate resources to continue in operationalexistence for the foreseeable future. The company intends to raise additionalfunds in 2008 from lease finance, research and development grants, economicdevelopment grants, debt, equity, or a combination of sources. For this reasonthe directors continue to adopt the going concern basis in preparing thefinancial statements 4. BUSINESS AND GEOGRAPHICAL SEGMENTS The group currently operates in several geographical markets, the UK, the UnitedStates of America and the Cayman Islands. It also has a number of differentbusiness segment, being the development of certain individual technologies.Business segments are the basis on which the group records its primary segmentalinformation. Unallocated operating expenses, assets and liabilities, relate tothe general management, financing and administration of the group. NOTES TO THE PRELIMINARY ANNOUNCEMENT Year ended 30 September 2007 2007 Vertus RTP Microrelease Laseair Still Organotect Unallocated Total Clear £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue - - - - - - - Segment result (522) (155) (209) (933) (262) (2,154) (4,235) Finance income 40Finance costs - Loss before tax (4,195)Tax - Loss for the financial year (4,195) Other informationCapital expenditure 1,004 50 33 - - 3 1,090Depreciation 21 5 0 - - - 27 Balance sheetSegment assets 983 71 56 157 - 6,143 7,410 Deferred tax asset - Total assets 7,410 Segment liabilities (75) (51) (98) (347) (16) (378) (965) Current tax liabilities -Deferred tax liabilities - Total liabilities (965) Total Net Assets 908 20 (42) (190) (16) 5765 6,445 NOTES TO THE PRELIMINARY ANNOUNCEMENT Year ended 30 September 2007 2006 Vertus RTP Microrelease Laseair Still Clear Organotect Unallocated Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue - - - - - - - Segment result - - - - - (857) (857) Finance income -Finance costs - Loss before tax (857)Tax - Loss for the financial year (857) Other informationCapital expenditure - - - - - - -Depreciation - - - - - - - Balance sheetSegment assets - - - - - - - Deferred tax asset - Total assets - Segment liabilities - - - - - (803) (803) Current tax liabilities -Deferred tax liabilities - Total liabilities (803) The secondary reporting format for the group is geographical segments. There areonly two geographical locations whose segment assets account for greater than10% of the group's total assets, the UK £6,143,000 (2006: £Nil) and the CaymanIslands £983,000, (2006: £Nil). NOTES TO THE PRELIMINARY ANNOUNCEMENT Year ended 30 September 2007 5. LOSS PER SHARE Basic loss per share of 12.44p (2006: 2.69p) is based on the loss for thefinancial year of £4,195,000 (2006: loss of £857,000) and on 33,712,067 ordinaryshares (2006: 31,918,199 ordinary shares) being the weighted average number ofshares in issue throughout the year. As there is a loss for the year, there isno difference between the basic and the diluted loss per share. 6. NOTES TO THE CASH FLOW STATEMENT 2007 2006 £'000 £'000 Unaudited Audited Loss from operations (4,235) (857) Adjustments for:Amortisation of licences 26 -Depreciation of property, plant and equipment 1 -Share based payment 286 35Effect of foreign exchange differences - 19 Other 17Operating cash flow before movements in working capital (3,905) (803) Increase in trading properties(Increase) in trade and other receivables (585) -Increase in trade and other payables 125 803 Net cash outflow from operations (4,365) - 7. CASH AND CASH EQUIVALENTS 2007 2006 £'000 £'000 Unaudited Unaudited Cash and cash equivalents per balance sheet 5,762 -Bank overdrafts (30) - Cash and cash equivalents per cash flow statement 5,732 - NOTES TO THE PRELIMINARY ANNOUNCEMENT Year ended 30 September 2007 8. MERGER On 3 July 2007, the group entered into a share swap agreement whereby theshareholding of Nviro Cleantech Limited agreed to swap their interest in theshares of Nviro Cleantech Limited for shares in Nviro Cleantech plc, a newlyincorporated company. The consideration for the share swap was the issue of31,916,199 ordinary shares of £0.001 each. This transaction has been accountedfor as a group reconstruction and consequently merger accounting has beenadopted. The difference of £15,490,000 between the fair value of the sharecapital issued of £20,100,000 and the share capital and share premium account ofNviro Cleantech Ltd was £4,617,000 has been taken to the merger reserve. 9. TAXATION There is no tax charge as there are no profits subject to taxation. Deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. As the availability of future profits against which to utilisea deferred tax asset is uncertain, no asset has been recognised in the period. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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