11th Nov 2005 15:41
Pursuit Dynamics PLC11 November 2005 11 November 2005 Pursuit Dynamics plc Preliminary Results for the Year to 30 September 2005 Pursuit Dynamics plc ("Pursuit"), the developer and licensor of the innovativeand patented PDX(R) technology, which has applications across a broad range ofindustries, announces preliminary results for the year to 30 September 2005. Highlights Commercialisation of the first application of the PDX platformtechnology in food and beverage, PDX Sonic, launched. Licensees now include some of the world's largest food manufacturingand beverage companies. Distribution network in place to provide sales platform for globalmarkets. First orders received from the UK, United States, ContinentalEurope and Mexico. Firm orders received totalling approximately £405,000 as at today. Good progress in the development of PDX FireMist. Progress made towards commercialisation of the PDX technology for usein the global brewing industry. PDX Basilisk decontamination system under evaluation by the DefenseAdvanced Research Projects Agency (DARPA). Successful bitumen separation trials conducted on oil sands by PursuitResources. Additional funding secured, subject to shareholder approval, withPlacing to raise £7.4 million net of expenses, announced today. Commenting, John Heathcote, Chief Executive, said, "The past year has seen anincreasing awareness in a number of industries that our PDX technology has the potential to provide significant speed and cost advantages over conventionalequipment. In the food industry, this has translated into an accelerating flowof orders for the PDX Sonic processing system and we are delighted with theinterest generated by our October launch of this product range in the US. Ofequal note is the progress made in the development of our technology in a numberof other industries, notably brewing, decontamination and fire suppression. Withadditional funding in place, we look forward to accelerating thecommercialisation of these, and other, areas. Enquiries:John Heathcote, Chief Executive Simon Hudson, Richard Sunderland,Gary Pyle, Chief Financial Officer Rachel DrysdalePursuit Dynamics plc Tavistock CommunicationsTel: +44 (0)1763 250592 Tel: +44 (0)20 7920 3150 www.pursuitdynamics.com Unaudited Preliminary Results for the year ended 30 September 2005 Statement by the Chairman, Andrew QuinnThis is my second statement to shareholders as Chairman of Pursuit Dynamics andI am very pleased to report that in the year to 30 September 2005, the Board andmanagement of the Company successfully progressed the commercialisation of ourexciting technology. At a time of high oil prices, we have been assisted in thisprocess by the ability of the PDX technology to deliver significant energysavings. During the year we achieved a number of important milestones, whichincluded the launch of our first commercial products, the PDX(R) Sonic range andthe creation of a worldwide distribution network to bring the product to market.Whilst we continue to research and develop new applications across multiplesectors, we are now moving towards a sustainable business based on thefood-manufacturing sector alone. Our focus for the current year is to increasepenetration of the food industry internationally and to progress thecommercialisation of the other applications we have developed. ResultsLicensees of the PDX Sonic fluid processing units now include some of theworld's largest food manufacturing and beverage companies including PremierFoods, Coca-Cola Enterprises Limited, Campbells Grocery Products Limited andGeest Foods Limited. Confirmed sales and trial contracts, including two PDX(R)FireMist trials, are in line with our initial expectations with deliveries andfirm orders received totalling approximately £405,000 at the date of thisreport. However, because of the lag between grant of licence and delivery, onlya proportion of these revenues were recognised in the accounting period underreview. The sales process begins with the grant of a license to the customer on receiptof their order. The unit is then built by our sub-contracted manufacturer overthe following 12 to 16 weeks and then delivered and installed at the customer'ssite. Of the total of eight licences granted and orders received for Sonic andFireMist units during the period, only five units were delivered, installed andthus recognised as revenue by 30 September 2005. The remaining three ordersreceived prior to 30 September, together with the three most recent ordersreceived post the year end, representing revenue of some £315,000, will bedelivered and recognised as revenue during the first half of the currentfinancial year. As a result, turnover in the year to 30 September 2005 was£90,190 (2004: £150,012). Reflecting the increased level of activity surrounding the commercial launch ofour first products, losses attributable to ordinary shareholders increased to£2,710,464 (2004: £1,893,411), after excluding costs of £16,419 (2004: nil)attributable to minority interests from our 80% owned subsidiary, PursuitResources Limited, established to exploit our technology in the oil and gasindustry. The loss for the year also included amortisation of intellectualproperty and depreciation of £631,705 (2004: £617,179). Loss per share was 5.99p(2004: loss of 4.39p). At this stage in the Company's development, the Board isnot recommending a dividend in respect of the year to 30 September 2005. Cashbalances and short-term receivables at the year-end were £1,355,629 (2004:£3,545,386). There were no material issues of ordinary shares during the year. Board, Management and StaffThe Board of Pursuit Dynamics plc was strengthened during the year with theappointment last November of Christopher (Kester) Scrope as Commercial Director.Kester joined Pursuit as Head of New Business in May 2004, and bringssignificant commercial and business development experience gained fromconsulting and various senior management positions within the Mondi subsidiaryof Anglo-American plc. In May this year, I was delighted to accept the position of non-executiveChairman, following Ron Trenter's retirement. The Board would like to thank Ronfor his valuable contribution to the growth of Pursuit Dynamics during his timeas a director. Our people, particularly our scientists and engineers, are key to the futuregrowth of Pursuit Dynamics. Over the last year we have continued to invest inour research and development resource, as we have accelerated the commercialgrowth of the business. On behalf of the Board and shareholders, I thank allstaff in the UK and in the US for the commitment and enthusiasm they bring totheir tasks. OutlookHaving spent nearly five years researching and developing the PDX technology, weare now very firmly in the phase of commercialisation. Our business model isdesigned to be flexible enough to accommodate the most efficient and effectivemethod of securing entry to any target industry and market. In the case of thefood processing industry we have chosen to penetrate the market via worldwidedistributors, reducing the costs borne by Pursuit Dynamics but increasingopportunities to secure customers. Since the launch of the PDX Sonic range atthe beginning of the year, this has proved to be an effective model. Other markets we are currently addressing include oil and gas (via our agreementwith specialists in this area), fire suppression (where we intend to follow alicensing model), decontamination (also likely to be addressed via licensing)and brewing, where we have been running trials with a major brewery group sinceMay of this year. More detail of our plans for commercialising the PDXtechnology is contained in the Chief Executive's Review of Operations below. The Board is confident that the current financial year will see additionalmilestones achieved as we continue to develop and grow. I look forward toupdating shareholders on further progress at the time of the Annual GeneralMeeting in January. Unaudited Preliminary Results for the year ended 30 September 2005 Review of Operations by the Chief Executive, John HeathcoteThe process of creating value for our shareholders from the PDX technology canbe broken down into four stages: the identification of applications forparticular markets, proving these applications, developing effective solutionsand then commercialising by selling products or licensing. During the year to 30September 2005, we made considerable progress in each of these phases.Additionally, we have strengthened and expanded our intellectual propertyportfolio with several new patent filings, resulting from the research anddevelopment undertaken to support the process of commercialisation. In order tofocus our efforts productively and efficiently, we concentrate at any one timeon a relatively limited number of applications, which we believe have the bestpotential to generate significant and early revenues for the Company. I dealwith each of these below. Food Manufacturing, the PDX(R) SonicSince its launch in January this year, the PDX Sonic has established itself as anew technology that can offer a step change in manufacturing and energyefficiency in the liquid food processing industries. Our business in foodprocessing is moving towards a stand-alone, sustainable operation, which, in ashort space of time, has gained market traction. There have been a series ofmilestones achieved in the period under review beginning with the appointment ofa network of distributors, agents and system integrators around the world to actas channels to market. In November 2004, before the formal product launch in January 2005, we concludedour first sale in the soft drinks industry to Coca-Cola Enterprises Limited inthe UK. In May, Campbell Grocery Products Limited in the UK became the firstfood-processing licensee and in the summer, Geest Foods Limited and PremierFoods also took licences. Shortly after the appointment of a US distributor,giving us for the first time sales, manufacture, installation and support there,we gained our first customer in North America in September. The licensee was amajor US food manufacturer with global, multi-billion dollar revenues, whichwished us not to disclose its name for reasons of commercial sensitivity. During the period under review over 100 days of demonstrations of the Sonicsystem have taken place at Pursuit's headquarters in Royston and there are nowseven Sonic demonstration systems globally, largely funded by the distributionnetwork, and these are in frequent demand. Customer enquiries are now beingreceived on a regular basis. Shortly after the year end, in October, we were pleased to announce a furtherthree milestones: the first repeat order from a customer, our first licensee incontinental Europe (Verstegen Spices and Sauces BV) and the formal US launch ofthe PDX Sonic at the Worldwide Food Expo in Chicago, held on 26 October. Following this launch, we received an order for the first PDX Sonic in Mexico. Our sales to date have provided us with a clear endorsement by the industry ofour technology. We currently have a number of units undergoing system trialswith manufacturers worldwide and are confident that a proportion of these willtranslate into further orders in due course. We believe that there is anoverwhelming case for general adoption by the food industry of the PDXtechnology as it can deliver significant efficiency and cost benefits. Fire Suppression, the PDX(R) FireMistThe second area of focus for the Company is fire suppression, where ourtechnology again offers a step change in performance compared to products on themarket today. During the year, we have further developed the FireMist applicationand have begun the process of commercialisation. This work has included firetrials in the UK and Sweden and successfully testing gas atomisation. In March,the US Department of Defense's Naval Research Laboratory in Washington invitedus to trial the FireMist system aboard ex-USS Shadwell in Mobile Bay, Alabama,during the summer of this year. However, the disruption caused by HurricaneKatrina has caused the trials to be deferred until 2006. The business model to commercialise FireMist is based on out-licensing thetechnology to a significant global partner with the reach and resource tofurther fund the development of the system and deliver it to worldwide markets.We have identified a number of such potential licensees and look forward toreporting progress in due course. BrewingWe believe that the PDX supersonic shockwave technology has the potential todeliver significant efficiency and cost benefits to the brewing industry atseveral stages in the brewing process. In May, Greene King Brewing Co Ltd becamethe first brewer to license our technology, when it installed a PDX-47 systemwithin the clean-in-place system at its Bury St Edmunds brewery. Greene Kingundertook an evaluation of the energy savings that accrue from the PDX systemover several weeks, which demonstrated energy savings in excess of 30 per cent.compared to its existing system. The evaluation work conducted by Greene King, and its subsequent adoption of thePDX system, demonstrated the energy saving benefits of our fluid processingtechnology in a simultaneous heating and pumping role, conducted with no movingparts. We also trialled the technology in a major global brewer for use inwort-boiling; initial results were encouraging and these trials continue.Further mashing-in trials are scheduled with a UK brewer in the near future. The business model to commercialise the PDX brewing applications is todevelop the PDX technology with an industry third party prior to licensing OEMs. Decontamination, the PDX(R) BasiliskAt the end of July, we announced that we had signed a contract with the DefenseAdvanced Research Projects Agency (DARPA). DARPA is an agency of the UnitedStates Department of Defense responsible for the development of new technologyfor use by the military. The contract covered the use of the Basilisk systemwithin the scope of Broad Agency Announcement (BAA) 04-40, which seeksinnovative concepts in systems and component technologies to address a varietyof chemical, biological, radiological threats, including threats to buildingsand urban environments. The contract will run for one year from the date ofsigning and is fully funded by DARPA. In addition, we have been trialling Basilisk with a major chemical manufacturerin a civilian capacity, using a variety of its proprietary chemicals. The systemcould be applied in the field of disinfection to protect against the spread ofanimal and human disease threats such as foot and mouth disease. Oil and GasResearch over the past two years has demonstrated that the PDX technology haspotential applications in a number of areas in oil production and refining,particularly in the field of oil sands. In order to pursue these applications,we formed a subsidiary in March, Pursuit Resources Limited. Our selectedpartners have a successful track record in the oil industry and own 20 per cent.of the subsidiary while we retain ownership of 80 per cent. Bitumen separationtrials on Canadian oil sands yielded separation levels in excess of 90 percent., achieved without the use of chemicals. Also, in September, PursuitResources completed a successful two-week trial sequence with a major oil wasteprocessor in Alberta, Canada, which demonstrated significant potential costsavings over existing technologies. Our technology is licensed to the subsidiaryfor a two-year period during which time our partners are obliged to fund theinitial development of Pursuit Resources' business up to £130,000 and Pursuit iscurrently engaged in efforts to commercialise this aspect of the technology. The FuturePursuit Dynamics is at an exciting stage of development. We have launched ourfirst commercial products and are building a solid and growing business aroundthem in the food and beverage industries. We are now poised to expand into thebrewing industry following positive initial industry feedback. In addition, wehave brought our fire suppression and decontamination applications to the pointof commercialisation and behind these, applications are being proven for theoil, paper and waste industries. We are confident that our business plan isrobust and that the exploitation of the platform PDX technology will producesignificant value for shareholders in the future and we look forward to thechallenges of the coming year. Unaudited preliminary results for the year ended 30 September 2005 Consolidated profit and loss account Unaudited Audited Year to Year to 30 Sep 30 Sep 2005 2004 £ £-----------------------------------------------------------------------Turnover 90,190 150,012Net operating expenses (3,036,287) (2,263,050)-----------------------------------------------------------------------Operating loss (2,946,097) (2,113,038)Interest receivable 90,772 83,227Interest payable and similar charges - (93)-----------------------------------------------------------------------Loss on ordinary activities before taxation (2,855,325) (2,029,904)Tax credit on loss on ordinary activities 128,442 136,493-----------------------------------------------------------------------Loss on ordinary activities after taxation (2,726,883) (1,893,411)Minority interest 16,419 ------------------------------------------------------------------------Loss on ordinary activities after minority interest (being the loss for the year) (2,710,464) (1,893,411)=======================================================================Loss per 1p share- basic and fully diluted 5.99p 4.39p======================================================================= There are no recognised gains and losses other than those reported above. Noseparate statement of total recognised gains and losses has therefore beenpresented. All activity related to continuing operations. Unaudited preliminary results for the year ended 30 September 2005 Consolidated and company balance sheets Unaudited Audited 30 Sep 30 Sep 2005 2005 £ £-----------------------------------------------------------Fixed assetsIntangible fixed assets 2,990,381 3,547,440Tangible fixed assets 301,028 182,141Investments - ------------------------------------------------------------ 3,291,409 3,729,581 Current assetsStocks 121,390 44,600Debtors: amounts falling due aftermore than one year - -Debtors: amounts falling due withinone year 310,319 382,062Short term investments - 2,977,134Cash at bank and in hand 1,045,310 186,190----------------------------------------------------------- 1,477,079 3,589,986Creditors: amounts falling duewithin one year (357,586) (305,602)-----------------------------------------------------------Net current assets 1,119,433 3,284,384-----------------------------------------------------------Net assets 4,410,842 7,013,965=========================================================== Capital and reservesCalled up share capital 453,764 451,544Share premium account 9,065,380 8,943,860Merger reserve 4,061,185 4,061,185Profit and loss account (9,153,088) (6,442,624)-----------------------------------------------------------Total shareholders' funds 4,427,241 7,013,965Minority interest (16,399) -===========================================================Capital employed 4,410,842 7,013,965=========================================================== Unaudited preliminary results for the year ended 30 September 2005 Consolidated cash flow statement Unaudited Audited Year to Year to 30 Sep 30 Sep 2005 2005 £ £-----------------------------------------------------------------------------Net cash outflow from operating activities 3 (2,340,806) (1,525,084)-----------------------------------------------------------------------------Returns on investment and servicing offinanceInterest received 90,772 83,227Interest paid - (93)-----------------------------------------------------------------------------Net cash inflow from returns on investment and servicing of finance 90,772 83,134-----------------------------------------------------------------------------TaxationUnited Kingdom corporation tax - research anddevelopment tax credit received 130,479 113,352-----------------------------------------------------------------------------Net cash inflow from taxation 130,479 113,352-----------------------------------------------------------------------------Capital expenditure and financial investmentPayments to acquire tangible fixed assets (193,533) (122,406)Receipts from sale of short term investments 24,712 27,643-----------------------------------------------------------------------------Net cash outflow for capital expenditure andfinancial investment (168,821) (94,763)-----------------------------------------------------------------------------Net cash outflow before management of liquid resources and financing (2,288,376) (1,423,361)-----------------------------------------------------------------------------Management of liquid resourcesDecrease /(increase) in short term depositswith banks 5 2,950,000 (1,948,805)-----------------------------------------------------------------------------Net cash inflow /(outflow) from management of liquid resources 2,950,000 (1,948,805)-----------------------------------------------------------------------------FinancingProceeds of ordinary share issue - 2,532,517Proceeds received for minority interest share in subsidiary 20 -Issuance costs of shares - (213,244)Proceeds of options exercised 123,740 1,178,524Increase in loan 73,736 ------------------------------------------------------------------------------Net cash inflow from financing 197,496 3,497,797-----------------------------------------------------------------------------Increase in cash in the year 4 859,120 125,631============================================================================= Notes 1. Preparation of the financial statementsThe unaudited results for the year ended 30 September 2005 have been prepared inaccordance with UK generally accepted accounting principles. The accounting policies applied are those set out in the Group's Annual Reportand Accounts for the year ended 30 September 2004. The financial information for the year ended 30 September 2005 is unaudited anddoes not constitute statutory accounts within the meaning of the Companies Act1985. The profit and loss account and cash flow statement for the year ended 30September 2004, and the balance sheet at 30 September 2004 are an abridgedstatement of the full Group financial statements for that year which have beendelivered to the Registrar of Companies. The report of the Auditors on the Groupfinancial statements for the year ended 30 September 2004 was unqualified anddid not contain a statement under either section 237(2) or section 237(3) of theCompanies Act 1985. The results have been prepared on a going concern basis, as the Company hastoday announced notice of an EGM to approve the issue of 5,333,338 shares toraise approximately £8.0 million. 2. Loss per shareBasic and diluted loss per share is calculated by dividing the loss attributableto ordinary shareholders of £2,710,464 (2004: £1,893,411) by 45,287,597 (2004:43,088,413) shares, being the weighted average number of Ordinary shares inissue during the year 3. Reconciliation of operating loss to net cash outflow from operatingactivities Unaudited Audited 2005 2004 £ £-----------------------------------------------------------------------------Operating loss (2,946,097) (2,113,038)Amortisation of intangible fixed assets 557,059 557,060Depreciation of tangible fixed assets 74,646 60,119Decrease in value of marketable securities 2,422 746Increase in stocks (76,790) (44,600)Decrease/(increase) in debtors 69,706 (179,658)(Decrease)/increase in creditors (21,752) 194,287-----------------------------------------------------------------------------Net cash outflow from operating activities (2,340,806) (1,525,084)============================================================================= 4. Reconciliation of net cash flow to movement on net funds Unaudited Audited 2005 2004 £ £-----------------------------------------------------------------------------Increase in cash in year 859,120 125,631Cash (inflow) /outflow from short term deposits (2,950,000) 1,948,805Cash inflow from sale of marketable securities (24,712) (27,643)Increase in loans (73,736) ------------------------------------------------------------------------------Change in net funds from cash flows (2,189,328) 2,046,793-----------------------------------------------------------------------------Change in market value (2,422) (746)Net funds at start of year 3,163,324 1,117,277-----------------------------------------------------------------------------Net funds at end of year (see note 5) 971,574 3,163,324============================================================================= 5. Analysis of movements in net funds Audited Change in Unaudited at 1 Oct market Cash at 30 Sept 2004 value flows 2005 £ £ £ £--------------------------------------------------------------------------------Cash at bank and in hand 186,190 - 859,120 1,045,310Short term deposits 2,950,000 - (2,950,000) -Marketable securities 27,134 (2,422) (24,712) -Loans - - (73,736) (73,736)================================================================================Net funds 3,163,324 (2,422) (2,189,328) 971,574================================================================================ 6. Copies of reportCopies of the financial statement will be sent to shareholders. Further copieswill be available from the Company Secretary. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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