REG - Cindrigo Hldgs Ltd - Interim Results and Loan Note Issue
30/09/2022 10:15
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RNS Number : 3485B Cindrigo Holdings Limited 30 September 2022
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, WITHIN,
INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.
30 September 2022
Cindrigo Holdings Limited
('Cindrigo' or the 'Company')
Interim Results and Loan Note Issue
Cindrigo Holdings Limited (LSE: CINH) announces its interim results for the
six months ended 30 June 2022. The Company is also pleased to announce that
it has exchanged a Loan Note Subscription Agreement with BK Fortuna AS, a
Norwegian company, in respect of a subscription of £4,000,000 unlisted,
convertible loan notes. The first tranche of the subscription, £1,000,000, is
due by the end of October 2022 with the balance due by the end of November
2022. The term of notes is 24 months with an interest rate payable of 10% per
annum and a conversion right at a 15% discount to a 30-day Volume Weighted
Average Share Price with a minimum conversion price of £1.25 per share. The
use of the proceeds will primarily be used for development expenses in Croatia
,expansion projects, and repaying the Danir loan which is referred to in the
Interim Report of the CEO set out below.
Interim Management Report
The ongoing energy crisis is creating rising demand for secure, stable sources
of power, particularly from environmentally sustainable sources as the world
races to deliver on net zero targets; geothermal energy provides such a
solution. As a 'Green Energy' source, geothermal energy commands premium power
prices due to its decarbonising impacts and is preferred by governments and
grid operators given it provides 'baseload energy', providing stable power to
the grid, in contrast to fluctuating solar and wind power.
As a clean baseload power developer, Cindrigo is focussed on becoming a
significant geothermal energy provider to support this rising market demand
and build shareholder value. The Company has identified significant growth
opportunities in Europe and is aiming to secure 200MW in contractual licences
in 2023, up to 450MW in 2025 and 1000MW by 2030. The financing for each
power plant project will primarily be sought on a project-finance basis at the
level of the special purpose vehicle utilised for that project.
In March 2022, pursuant to an option granted in November 2021, Cindrigo
acquired the entire issued share capital of Energy Co-invest Global Corp
('ECG'), an established international energy developer with interests in a
broad base of projects within the renewable energy sector, particularly the
geothermal energy sector. This acquisition propelled Cindrigo's position in
the geothermal energy sector, giving a strong and established platform, which
will be central to the development of the Company's geothermal opportunities,
primarily in Central Europe. ECG is the largest shareholder of GEG ehf., a
geothermal Engineering, Procurement and Construction (EPC) contractor and
project owner with an established portfolio of assets.
More recently in June 2022, Cindrigo entered into a Share Purchase Agreement
(the "SPA") to acquire 90% of the issued share capital of EES Dravacel
energetika d.o.o.('Dravacel'), a Croatian incorporated company, which holds a
geothermal exploration licence in respect of 57.9km(2) in Slatina, northern
Croatia ('CCP Slatina'), The licence was initially the subject of a term
sheet issued to ECG, but this Share Purchase Agreement supersedes that term
sheet.
CCP Slatina offers a prime development opportunity and once operational is
anticipated to annually produce an EBITDA of £12 million, with potential
dividend streams to Cindrigo. The vendor under the SPA retains a 10%
interest in the project, with Cindrigo holding the controlling majority of the
Dravacel management board. Dravacelreceived a Location Permit for the project
from the Republic of Croatia Ministry of Spatial Planning, Construction and
from the State Property and Administration for Spatial Planning and Permits of
State Importance. This allows a research drilling rig for geothermal water
at an exploration well in CCPSlatina.
Cindrigo retains an interest in a proposed waste to energy project in Kiev,
the capital city of Ukraine. As a result of ongoing war in Ukraine, the
Company has suspended its projects in that country. Cindrigo will continue
to monitor the situation in Ukraine.
New Funding
The Company agreed with its principal shareholder, Danir AB ("Danir"), a loan
facility in an amount of 18,000,000SEK (c. £1,450,000) in September 2022
and the loan has been used to repay loans in ECG and to provide working
capital for project development in Dravacel a Croatian company of which the
Company has acquired a 90% interest. Dravacel is undertaking the Company's
first geothermal project in Croatia.
The Company has entered into a Loan Note Subscription agreement with BK
Fortuna AS, a Norwegian company, in respect of £4,000,000 secured 10% coupon
convertible loan notes. The Company expects to receive the first tranche of
these funds by the end of October 2022 with the balance due by the end of
November 2022. A portion of these funds will be used to repay the loan made by
Danir.
Readmission to Trading
The Company continues to prepare a prospectus to allow an application for the
readmission its issued share capital to the Official List and to trading on
the Main Market of the London Stock Exchange ('LSE') with a Standard Listing.
Financial Overview
The half year results report a loss of £289k (2021 six-month loss was £46k),
which includes legal, regulatory and public company costs for the company of
£161k and professional fees of £71k
The financial position at 30 June 2022 includes borrowings of £3,275k related
to three convertible notes recognised within equity, which have been settled
in July 2021 by the issue of 194,950 new ordinary shares and £1,700,000 of
new convertible loan notes after the completion of the acquisition of Cindrigo
Limited. Trade and other payables of £322k include regular trade payables
of £65k, other creditors of £100k and other short-term accruals of £157k.
Outlook
The geothermal energy market is an exciting and high growth clean baseload
energy resource, which is forecasted to play an increasingly prominent role as
a green baseload power source. With a global shift to renewable energy and
spiralling energy price environment, the demand for secure and reliable green
energy sources is critical. We have identified Croatia
as a country with extensive geothermal potential and thanks to our strategic
acquisitions of ECG and Dravacel we are well placed to capitalise on the
opportunities available.
The focus for the remainder of the year will be on progressing CCP Slatina and
expanding our geothermal portfolio as we aim to secure 200MW in contractual
licences by the end of 2023. In support of this strategic growth
opportunities have been identified in Euopre and the US. We are also working
hard to achieve the readmission of our shares to trading on the LSE. We look
forward to sharing further updates on our progress in due course.
Finally, I would like to take this opportunity to thank our stakeholders for
their continued support.
Lars Guldstrand
Chief Executive Officer
29 September 2022
FINANCIAL STATEMENTS
Condensed Consolidated Statement of Comprehensive Income
The condensed consolidated statement of comprehensive income of the Group for
the six month period from 1 January 2022 to 30 June 2022 is set out below.
Period ended Period ended
30 June 30 June
2022 2021
(unaudited) (unaudited)
Note £'000 £'000
Administrative expenses (289) (46)
Operating loss / profit on ordinary activities before taxation (289) (46)
Finance costs - (86)
Loss / Profit before income taxes (289) (132)
Income tax expense - -
Loss / Profit after taxation (289) (132)
Loss / Profit for the period (289) (132)
Total comprehensive loss / profit attributable to owners of the parent (289) (132)
Loss / Profit per share:
Basic & diluted 8 (0.002) (0.0847)
Condensed Consolidated Statement of Financial Position
The condensed consolidated statement of financial position as at 30 June 2022
is set out below:
As at 30 June As at 31 December
2022 2021
unaudited unaudited
Note £'000 £'000
Assets
Current assets
Cash and cash equivalents 23 27
Trade and other receivables 1,782 1,890
Short-Term investments 14,037 14,037
Total current assets 15,843 15,954
Total assets 15,843 15,954
Equity and liabilities
Capital and reserves
Share capital account 5 22,493 22,493
Equity component of convertible instruments 3,275 3,275
Accumulated deficit -10,867 -10,578
Total equity attributable to equity holders 14,901 15,190
Current liabilities
Borrowings 9 620 620
Trade and other payables 322 145
Total current liabilities 942 765
Total equity and liabilities 15,843 15,954
Condensed Consolidated Statement of Changes in Equity
The unaudited condensed consolidated statement of changes in equity of the
Group for the period from 1 January 2021 to 30 June 2021 is set out below:
Share Equity component of convertible instruments Retained earnings Total
Capital account
£'000 £'000 £'000 £'000
As at 1 January 2021 8,394 106 -10,909 -2,409
Profit for the year
Total comprehensive loss for the year - -133 -133
Transaction with owners
Issue of shares 30 - - 30
Equity component convertible notes:
Release on settlement of convertible - - - -
loans
Capital contribution of funding by Cindrigo Limited - - - -
Total 30 - - 30
As at 30 June 2021 8,424 106 -11,042 -2,513
The unaudited condensed consolidated statement of changes in equity of the
Group from 1 January 2022 to 30 June 2022 is set out below:
Share Equity component of convertible instruments Retained earnings Total
Capital account
£'000 £'000 £'000 £'000
As at 1 January 2022 22,493 3275 -10,578 15,190
Total comprehensive loss for the year -289 -289
Transaction with owners
Issue of shares - - - -
Conversion of loan notes to equity instruments - - - -
Other movements - - - -
Total - - -289 -289
As at 30 June 2022 22,493 3,275 -10,867 14,901
Share capital comprises the Ordinary Shares issued by the Company.
Retained earnings represent the aggregate retained losses of the Company since
incorporation.
Equity component of convertible instruments represents the equity element of
instruments with a convertible element.
Condensed Consolidated Statement of Cash Flows
The condensed consolidated cash flow statement of the Group from 1 January
2022 to 30 June 2022 is set out below:
Period ended Period ended
30 June 30 June
2022 2021
Unaudited Unaudited
£'000 £'000
Net cash used in operating activities
Profit / Loss for the period before taxation (289) (132)
Interest - 86
Operating cash flows before movements in working capital (289) (46)
(Increase)/Decrease in receivables 108 (1)
Increase/(Decrease) in accounts payable and accrued liabilities 178 32
Net cash used in operating activities -4 (15)
Investment in available for sale financial asset - -
Net cash outflow from investing activities - -
Issue of ordinary shares net of issue costs - -
Issue of convertible instruments - -
Funding received from Cindrigo Limited - 20
Net cash inflow from financing activities - 20
Net increase (decrease) in cash and cash equivalents 4 5
Cash and cash equivalent at beginning of period 27 5
Cash and cash equivalent at end of period 23 10
Notes to the Condensed Consolidated Interim Report
1. General information
The Company was incorporated under section II of the Companies (Guernsey) Law
2008 on 24 November 2014, it is limited by shares and has registration number
59383.
The Company had an investment of US$3m in New York Wheel Investor LLC, a
company that was set up to fund the equity component for the project to build
a New York Wheel which includes an approximate 630 foot high observation wheel
with 36 capsules, a 68,000 square foot terminal and retail building, and a 950
space parking garage. This investment was fully impaired as a result of the
termination of the project and litigation between New York Wheel Investor LLC
and one of the primary contractors. One share with a nominal value of US$1m
was given to the former Starneth owners to pay the debt resulting from the
second tranche of the purchase contract. The Company entered into an
investment into the Dallas Wheel project. The investment was sold in 2019 for
consideration of US$300k of which US$275k was received however no further sums
have been received since. Given the uncertainty as to whether the project will
ultimately proceed the fair value of the Dallas wheel investment was fully
impaired as at year end.
On the 30 July 2021, the Company completed its reverse takeover of Cindrigo
Limited and Cindrigo Energy Limited, which are part of a group of companies
that were pursuing renewable energy projects in the Ukraine and Central
Europe.
The Company entered into an agreement with Cindrigo Energy Limited in respect
of a achieving the acquisition of Cindrigo Energy Limited and its wholly owned
subsidiary Cindrigo Limited. The Acquisition proceeded pursuant to a new Plan
of Arrangement under the British Columbia Business Corporations Act. Under the
arrangement the Company acquired each share in the issued share capital of
Cindrigo Energy Limited in exchange for 0.875 new shares issued by the
Company. As a result of the exchange the former shareholders of Cindrigo
Energy Limited acquired 96.5% of the enlarged issued share capital of the
Company on a fully diluted basis if all consideration loan notes had been
converted.
The Acquisition constituted a reverse takeover for the Company.
The Company is proposing to make application for its enlarged ordinary share
capital to be readmitted to the standard segment of the Official List of the
FCA and to trading on the Main Market of the London Stock Exchange.
The Company's registered office is located at PO Box 186, Royal Chambers, St
Julian's Avenue, St. Peter Port, Guernsey GY1 4HP, Channel Islands.
The company has not prepared individual financial statements in accordance
with section 244 of the Companies (Guernsey) Law 2008.
2. BASIS OF PREPARATION
The interim condensed unaudited financial statements for the period ended 30
June 2022 have been prepared in accordance with IAS 34 Interim Financial
Reporting. They do not include all the information required for a complete
set of IFRS financial statements. However, selected explanatory notes are
included to explain events and transactions that are significant to an
understanding of the changes in the group's financial position and performance
since the last annual consolidated financial statements as at the year ended
31 December 2021. The results for the period ended 30 June 2022 are
unaudited.
The condensed unaudited consolidated financial statements for the period ended
30 June 2022 have adopted accounting policies consistent with those followed
in the preparation of the Group's annual consolidated financial statements for
the year ended 31 December 2021.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of accounting
estimates which, by definition, will seldom equal the actual results.
Management also needs to exercise judgement in applying the group's accounting
policies.
This note provides an overview of the areas that involved a higher degree of
judgement or complexity, and of items which are more likely to be materially
adjusted due to estimates and assumptions turning out to be wrong. Detailed
information about each of these estimates and judgements is included together
with information about the basis of calculation for each affected line item in
the financial statements.
Going Concern
At 30 June 2022 the Company had net assets of £864k excluding the value of
its investment in the Cindrigo Group. The financial statements have been
prepared on the assumption that the Company will continue as a going concern.
Under the going concern assumption, an entity is ordinarily viewed as
continuing in business for the foreseeable future with neither the intention
nor the necessity of liquidation, ceasing trading or seeking protection from
creditors pursuant to laws or regulations. In assessing whether the going
concern assumption is appropriate, the Directors take into account all
available information for the foreseeable future, in particular for the twelve
months from the date of approval of the financial information.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future
As at date of issue of the financial statements the Company and the
noteholders have settled their former, interest bearing loan notes, principal
and accrued but unpaid interest, by the issue of new 10-year, zero coupon,
convertible loan notes which the Company will be able to convert as soon as it
is readmitted to listing. Therefore, on admission, the liability causing the
material uncertainty as to Cindrigo Holdings Limited's ability to continue as
a going concern, will be converted to equity.
The Directors' objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders. At the date of this
financial information, the Company had been financed from equity and
convertible notes. In the future, the capital structure of the Company is
expected to consist of convertible notes and equity attributable to equity
holders of the Company, comprising issued share capital and reserves.
4. Business Segments
For the purpose of IFRS8, the Chief Operating Decision Maker "CODM" takes the
form of the board of directors. The Directors are of the opinion that the
Company comprised a single activity being the Geothermal energy sector.
5. SHARE CAPITAL
Issued and fully paid Number of shares Share capital account
£'000
At 31 December 2021 142,202,746 22,458
Issue of shares - -
At 30 June 2022 142,202,746 22,458
The company undertook a share consolidation on 28th September 2020. Every
266.7609 of Existing Ordinary Shares of £0.01 were consolidated into one New
Ordinary Share of £2.667609 each.
During the reverse takeover the Company issued 140,449,800 shares to acquire
the Cindrigo Group. Loan notes with a principal value of £52,000 converted
automatically on completion of the acquisition and an additional 194,931 new
ordinary shares were issued on such conversion.
6. CASH AND CASH EQUIVALENTS
Period ended 30 June 2022 Period ended 31 December 2021
(unaudited) (audited)
£'000 £'000
Cash at bank and in hand 23 27
Total cash and cash equivalents 23 27
7. TRADE AND OTHER RECEIVABLES
Period ended 30 June 2022 Period ended 31 December 2021
(unaudited) (audited)
£'000 £'000
Prepayments - 6
Other receivables - 7
Amounts due from group companies 1,042 1,265
Other debtors 740 612
Total trade and other receivables 1,782 1,890
8. INVESTMENTS
Short-term
Investments
£'000
Fair value
At 31 December 2020 and 30 June 2022 14,044
The Company holds one equity unit investment in the New York Wheel Investor
LLC, which is fully written off and the Company has transferred one of the
equity units to a loan note holder as part of the settlement of certain loan
notes, and also an investment in the Dallas Wheel Project, which is shown
under short-term investments.
In the 2018 the Company invested USD 300k into the Dallas Wheel project. This
financing was in the form of a convertible loan. On 31 December 2018 the
Company signed a contract to change the repayment terms for its investment in
the Dallas wheel. The Company received in 2019 USD 275k however has received
no further sums since. Given the uncertainty as to whether the project will
ultimately proceed the fair value of the Dallas wheel investment was fully
impaired as at year end.
The equity units in New York Wheel Investor LLC are not quoted, in the prior
year the Directors had regard to recent transactions in equity units of the
New York Wheel and therefore assessed the value as a level 3 valuation. As the
project has been stopped and the probability of the project restarting is very
low, the investment in the New York Wheel was written off in full.
In July 2021 the Company issued 140,449,800 new ordinary shares to acquire the
Cindrigo Group and complete the reverse takeover. In accordance with IFRS this
is recognised as an investment within the accounts of Cindrigo Holdings
Limited.
9. Borrowings
Period ended 30 June 2022 Period ended 31 December 2021
(unaudited) (audited)
Current £'000 £'000
Convertible notes 620 612
Deferred cash consideration - -
Note 1 Note 2 Note 3 Note 4 Note 5
£'000 £'000 £'000 £'000 £'000
Balance at 31 December 2020 (liability) 1,091 808 - 50 -
Balance at 31 December 2020 (equity) 106 - - - -
Finance Charge 97 72 - 4
Conversion of loan to equity instrument -1,000 -700 - - -
Conversion of loan note 4 - - - -54 -
Issue of Note 5 - - - - 1,575
Other movements -188 -180 - - -
Balance at 31 December 2021 (liability) - - - - -
Balance at 31 December 2021(equity) 1,000 700 - - 1,575
Accrued interest 8
Balance at 31 December 2021 (liability) - - - - -
Balance at 31 December 2021(equity) 1,000 700 - - 1,583
Note 1
On 29 January 2016, the Company issued further £1 million of secured
convertible notes. The notes were unlisted, secured, transferable and
convertible. Maturity date was 30 June 2019. The Secured Convertible Notes
were secured by one common unit of New York Wheel Investor LLC, representing a
total value US$1 million. Interest accrued at 8% per annum and was payable
quarterly. One eighth of the interest can be settled in cash or shares at the
Company's discretion. Seven eighths of the interest is settled in new
convertible notes with the same terms. The notes are convertible in cash or
shares at the option of the holder and can be converted into Ordinary Shares
at a fixed conversion price of £0.80 per Ordinary Share. The Company can
redeem the notes at a 10% premium anytime. As per the nature of this
convertible instrument, £106k has been recognised as an equity component in
of convertible instruments in statement of changes of equity, using a discount
rate of 12%.
In August 2021 the loan notes, including all accumulated but unpaid interest,
were settled by new 10-year zero coupon loan notes with a principal value of
£1m which have been reclassified as an equity instrument under IFRS.
Note 2
The last tranche of £400,000 of the £1 million funding facility announced by
the Company on 13 June 2017, was drawn on 18 January 2018 and subsequently the
Company issued convertible note for £400,000. The notes were unlisted,
unsecured, transferable and convertible. Maturity date was 8 June 2019. No
conversions could happen in the first 120 days. The maximum amount that could
be converted in any 30day period was 20% of the principal amount. The
conversion price was the lowest volume weighted average price over 10 days
prior to the conversion. Interest rate was 8% per annum and payable upon
conversion at the Company's option in cash or ordinary shares at the
conversion price. The Company could redeem in cash all or any part of the
outstanding convertible note with a 25% premium to the principal amount.
Despite reaching maturity this note was still outstanding and continued to
accrue interest in accordance with the interest terms stated.
On the 6 January 2020 the Company allotted 19,535,676 new ordinary shares of
£0.01 each to holders of the Unsecured Convertible Note, comprising
16,479,895 for the conversion of £25,000 of notes and a further 3,055,781 New
Ordinary Shares for accumulated interest.
In August 2021 the loan notes, including all accumulated but unpaid interest,
were settled by new 10- year zero coupon loan notes with a principal value of
£700,000 which have been reclassified as an equity instrument under IFRS.
Note 3
The Company received £40,800 (US $50,000) pursuant to the issue of an
unsecured convertible on 27 May 2020. The noteholder could convert all or
part of the principal amount of its notes into ordinary shares of the Company
('Ordinary Shares') at any time at a fixed conversion price of 0.1p per
Ordinary Share. The notes were unlisted, unsecured, transferable and must be
redeemed by the Company on 19 May 2021, at the Company's option in cash or in
Ordinary Shares at 0.1p per Ordinary Share. Interest accrued at 5% per annum
and payable quarterly, or upon conversion, at the Company's option in cash or
by issuing Ordinary Shares. At any time the Company could redeem in cash all
or any part of the outstanding notes from the holder at a 25% premium to the
principal amount of such notes.
The notes were redeemed in cash in September 2020.
Note 4
The Company issued £52,000 in unsecured convertible notes on 21 September
2020. The noteholder could convert all or part of the principal amount of
its notes into ordinary shares of the Company ('Ordinary Shares') at any time
at a fixed conversion price of 0.1p per Ordinary Share of £0.01
(pre-consolidation). The notes were unlisted, unsecured, transferable and
could be redeemed by the Company on 19 May 2021, at the Company's option in
cash or in Ordinary Shares at 0.1p per Ordinary Share. Interest accrued at 5%
per annum and payable quarterly, or upon conversion, at the Company's option
in cash or by issuing Ordinary Shares.
In August 2021 the loan notes converted automatically on the completion of the
acquisition of Cindrigo Energy Limited and 194,931 new ordinary shares were
issued in respect of such conversion.
Note 5
On 11 October 2021 the company created up to £1,575,000 Series 4 unlisted,
unsecured, zero-coupon, convertible and transferable loan notes 2031.
10. LOSS PER SHARE
The calculation for loss per share (basic and diluted) for the relevant period
is based on the loss after income tax attributable to equity holder for the
period from 1 January 2021 to 30 June 2022 and is as follows:
Period ended 30 June 2022 Period ended 30 June 2021
(unaudited) (unaudited)
Profit/Loss attributable to equity holders (£) (289,000) (132,000)
Weighted average number of shares 142,202,746 1,557,774
Profit/Loss per share basic (£) (0.002) (0.0847)
Basic loss per share is calculated by dividing the loss after tax attributable
to the equity holders of the group by the weighted average number of shares in
issue during the year.
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all potential dilutive
ordinary shares namely the conversion of the convertible loan note in issue.
The effect of these potential dilutive shares would be anti-dilutive and
therefore are not included in the above calculation of diluted earnings per
share.
11. SUBSEQUENT EVENTS
There are no subsequent events to report since 30 June 2022.
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