Monday 27th November 2017
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Christchurch-based technology incubator Powerhouse Ventures has no plans to raise additional capital at the current depressed share price and will focus on its New Zealand operating strengths and expansion in Australia.
Powerhouse went public in an A$10.2 million initial public offering last year selling shares at A$1.07 apiece. It traded at 34 Australian cents on the ASX last week, hurt by an unsettled year for the management and governance of the company, including a new chair and chief executive as well as a full review of the investment portfolio and the failure of hydroelectric turbine designer Hydroworks, which was tipped into liquidation by Powerhouse and led to a $4.3 million impairment charge for the investment firm.
At the annual meeting in Sydney on Friday, chair Russell Yardley told shareholders that "Powerhouse does not want to ever again be in the weak position it found itself with Hydroworks" and that the decision to apply to appoint interim liquidators was "bitterly disappointing", while chief executive Paul Viney said the company was making sure the lessons from that failure become embedded in Powerhouse.
Viney said Friday that the company's funding position has improved post recent investment realisations and that it has embarked on a pathway to restoring shareholder value, which included restructuring and shrinking the executive team and reducing operating costs. The board was also reduced to five members from seven.
He also said that liquidity events and fair value uplifts will bolster stronger revenue in the second half and that there was "no intention to raise additional ordinary equity capital at current depressed share price," according to presentation slides accompanying his speech which were published on the ASX.
In August Powerhouse was asked by the ASX whether it had enough cash to fund its operations after the deterioration in its outlook. At the time, Powerhouse said it expected to be able to keep on top of its funding profile and while it didn't plan to raise capital it was reviewing several asset sales.
Within Powerhouse's investment portfolio, Invert Robotics is its biggest investment worth $4.1 million. Earlier this month it said it would not proceed with plans to sell a quarter of its Invert Robotics' holding for $1.3 million as one of the sale conditions has not been satisfied. However, it did confirm the sale of its Arcactive shares for A$1.9 million, a 26 percent uplift on current carrying value.
Powerhouse was established to help commercialise research generated by universities in New Zealand and Australia. It has a portfolio of 22 companies ranging from early stage to mature businesses in clean-tech and engineering, medical and healthcare, agritech and environmental, and ICT.
The biggest shareholder in Powerhouse is Christchurch City Council-owned Canterbury Development Corp with 22.5 percent.
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