Tersus Energy PLC
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Press Releases: Update on Trading and Financing

In advance of announcing audited results for the year to 31 December 2006 Tersus Energy Plc today provides an update on trading and financing.

Financial Highlights
(Results for 2006 are un-audited)

  • Revenue of £4.5 million consisting of: Navitas £2.4 million; Envinta £0.3 million; Advisory Services £1.8 million. (31 December 2005 £2.7 million consisting of: Navitas £1.5 million; Advisory Services £1.2 million)
  • Pre tax loss of £0.7 million (31 December 2005 £0.9 million*)
  • This result includes a profit of £0.6 million (US$1.1 million) on the disposal of Tersus’ holding in Dynamotive Energy Systems Corporation.
  • Net assets of £5.0 million (31 December 2005 £5.5million)

* Restated to reflect the adoption of FRS 20.

Tersus Energy Controls

  • Navitas Technologies Inc (‘Navitas’), which is 100 per cent owned and was acquired in April 2005, made a profit in the year to 31 December 2006 before interest, tax, depreciation and amortisation (‘EBITDA’) of Canadian $292,000 and is budgeting for improved performance in 2007. (The 2005 EBITDA in the post acquisition period was Canadian $133,000).
  • Envinta Corporation Inc (‘Envinta’), which is 100 per cent owned and was acquired in May 2006, did not achieve expected levels of turnover in the year to 31 December 2006 and made an EBITDA loss for the period from acquisition of US $266,000. Envinta is now trading at breakeven and is budgeted to operate profitably in 2007.
  • Tersus has decided to offer Navitas for sale in order to realise value from the investment and to focus on its Asian Renewables and BioEnergy businesses. The sale could include Envinta, if appropriate, and should benefit from Tersus’ research and analysis into suitable acquisition targets for a consolidation of Energy Controls companies in North America. Initial discussions are underway with a number of interested parties.

Tersus Asian Renewables

  • Tersus’ 50 per cent interest in Jasfour Power Private Ltd (‘Jasfour’) has been formalised creating a vehicle through which Tersus is developing its interest in wind power in India. Jasfour is seeking financing for the acquisition of its first wind farm, which has 15mw of generating capacity and which has been in operation for just over a year, and project finance for a related development, which is expected to be operational early in 2009 with a capacity of 50mw. A pipeline of further developments is under review and negotiation by Jasfour.
  • Tersus is a 50 per cent co-developer under a Joint Development Agreement with First Philippines Wind Corporation of a 168mw onshore wind farm project in the Philippines. The land lease for the first site ( for 42mw ) is expected to be granted within weeks, following which further progress can be made in negotiating off -take contracts, transmission, equipment supply, and other aspects of project development.
  • Hahn Renewable Energy LLC (‘HAHN’) has signed MOUs for a 500mw wind project and for two 10mw solar projects in South Korea in which Tersus expects to participate 50:50 under a Joint Development Agreement.
  • ZhongHong (Baoding) Huiteng Wind Power Equipment Company Ltd (‘HT Blade’), a leading Chinese wind blade manufacturer in which Tersus has an indirect interest of 3 per cent, is trading well, made an (unaudited) after tax profit in excess of US$11 million in the year to 31 December 2006, and is budgeting for a significantly increased level of profit in 2007.

Tersus BioEnergy

  • Tersus’ BioEnergy project pipeline is primarily focused on anaerobic digestion opportunities using the proprietary thermophilic anaerobic digestion technology developed by Enviro-Control Limited (‘ECL’) into which Tersus invested in May 2006. ECL Developments Limited (‘ECLD’) is the 50:50 joint development company established by Tersus and ECL to exploit such project opportunities.
  • Tersus is working on a pipeline of more than 10 waste-to-energy projects in the US and Europe. These projects are driven a) by environmental compliance requirements for animal waste streams and b) by a desire to mitigate ethanol commodity project risk via anaerobic digestion of whole stillage and wet and dry distillers grain. ECLD has two MOUs for animal waste projects in Belgium and is in active negotiations with a US developer of corn-based ethanol production plants.

Tersus Advisory

Tersus continues to provide advisory services on existing assignments including the Bens Run salt dome gas storage facility where a potential purchaser is nearing completion of detailed due diligence. The sale of the project would give rise to a significant fee payable to Tersus.

Future Direction and Financing

  • Tersus’ strategy is to sell its Energy Controls interests and to focus its activities and its resources on its BioEnergy and Asian Renewable businesses. These offer opportunities for substantial project investment on which Tersus would expect to earn significant developer fees and/or carried equity.
  • Tersus will require additional finance in the coming six months in order to achieve this objective. Such additional finance may come from the sale of the Energy Controls businesses, from the sale of other Tersus interests, or from one of a number of financing relationships which Tersus has been and is discussing.
  • Tersus has taken measures to reduce the running costs of the business. This includes the deferral of senior management salaries with effect from 1 January 2007.
  • The Board intends to issue to management and staff options over up to three million new ordinary shares with an exercise price to be set at the closing middle market price on the day following this announcement.

Conclusion

  • The Board considers that Tersus’ principal investments in Dynamotive (now realised), Navitas, and HT Blade have been successful. It has taken longer than anticipated for Envinta to achieve break-even, but indications are that this has now been achieved.
  • The market for BioEnergy opportunities remains active and Tersus has numerous opportunities to capitalise on the intellectual property of Enviro-Control Limited, in which it has a minority investment, and the experience and expertise of its management.
  • The market for Asian Renewables remains exciting and Tersus believes it is well positioned to participate in projects available to developers and operators in that market.
  • The successful development of the BioEnergy and Asian Renewable Businesses is dependent on making additional development capital available from the sale of Navitas, other Tersus’ assets, or from new financing.


For further information please contact:

Tersus Energy plc
Steve Levine, Chief Executive Officer
Tel: +1 978 635 0997

David Wilson, Finance Director
Tel: +44 (0)20 7408 5416/+44 (0)7831 818121

KBC Peel Hunt Ltd
Tel: +44 (0)20 7418 8900
Jonathan Marren
David Anderson

M:Communications
Partick d’Ancona
Tel: +44 (0)20 7153 1540

Harriet Totty
Tel: +44 (0)20 7153 1590

 
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