31st Mar 2008 07:00
Oxford Catalysts Group PLC31 March 2008 31st March 2008 OXFORD CATALYSTS GROUP PLC ("Oxford Catalysts" or "the Company" or "the Group") Preliminary Results for the Year Ended 31 December 2007 Oxford Catalysts Group PLC, the leading catalyst innovator for clean fuels,announces today its preliminary results for the year ended 31 December 2007. Highlights • Development revenues of £163,000, 156% ahead of 2006 - split across Europe, the USA and Asia• First license deal signed with Novus Energy for second generation waste-to-fuels • Potential to deliver royalty income of $750,000 p.a. per average full-scale plant • Novus Energy plans to roll out dozens of full-scale facilities over a period of 5 years• Memorandum of understanding with FMCG giant to commercialise Instant Steam technology• Dedicated business development function in place - appointment of two senior executives• Proventec steam cleaning prototype development successfully concluded• Completed second and third of five milestones in Carbon Trust grant funded project on or ahead of technical targets• Pilot plant testing of catalysts expected in 2008• In response to ongoing growth and development needs: appointment of full-time Group CFO; doubling of office and laboratory space and investment in additional state-of-the art equipment• £15.6 million in cash and short term deposits at year end, including £4.0 million raised from major institutional investor, Pioneer Investments Dr Pierre Jungels, CBE, Chairman of Oxford Catalysts, said: "Oxford Catalysts is in better shape than ever. We've assembled a world-classteam and have made huge strides in commercialising our technology. The breadthand depth of engagement with partners and potential customers achieved in 2007is very encouraging. "We are where we hoped we would be at this stage of our development, yet with astronger balance sheet, which is proving to be a particularly valuable asset inthe current market environment. We foresee significant progress ahead andmultiple opportunities to create value for our shareholders." For further information, please contact: Roy Lipski, CEO, Oxford Catalysts 01235 841 700Jonathan Marren / Oliver Stratton, KBC Peel Hunt (Nomad and Broker) 020 7418 8990Billy Clegg / Alex Beagley, Financial Dynamics 020 7831 3113 Notes to Editors Oxford Catalysts designs and develops specialty catalysts for the generation ofclean fuels from both conventional fossil fuels and certain renewable sources.The Company has two key platform technologies resulting from almost 20 years ofresearch at the University of Oxford's prestigious Wolfson Catalysis Centre. Thefirst platform is for a novel class of catalysts incorporating metal carbides,which can match or exceed the benefits of traditional precious metal catalysts,at a lower cost, for several key processes used in the petroleum andpetrochemical industries. The second relates to a series of unique chemicalreactions which can be used to generate either steam or hydrogen gas,instantaneously, starting from room temperature, using a cheap and liquid fuelalongside the Company's patented catalysts. Such unprecedented Instant Steam hasexciting potential applications in a broad range of markets, from cleaning anddisinfecting, to backup power and propulsion. Oxford Catalysts Group PLC is listed on London's AIM market (coding symbol OCG).Oxford Catalysts operates a wholly owned subsidiary in the UK (Oxford CatalystsLimited ("OCL")). CHAIRMAN'S STATEMENTDr Pierre Jungels, CBE This is my second full year report to shareholders as Chairman of OxfordCatalysts Group PLC, and I am pleased to report on significant progress. Oxford Catalysts is commercialising cutting-edge technology that has thepotential to reduce the cost of catalysts used in, and enhance the performanceof, key processes in both the conventional and alternative energy markets, aswell as provide a unique means of producing portable steam instantly. The advances that the Company has made during the period are very encouraging,as is management's continued success in delivering against strategy. As weapproach the second anniversary of our IPO, Oxford Catalysts is looking less andless like a university start-up, and more and more like an establishedcommercial organisation. The Company has instilled efficient business processes, procedures anddisciplines, which together with the first-rate team we have assembled, leaveOxford Catalysts well placed to keep company with some of the world's topbusinesses. I believe that we have solid foundations from which to manage our rapid growth. During the period, the Board was strengthened with the appointment of JeremyScudamore as a Non-executive Director. Jeremy led the £1.3 billion buyout ofZeneca Specialities from AstraZeneca in what was, at the time, the largest everbuyout in Europe. Jeremy currently enjoys a number of other public companyNon-executive Directorships in the technology industry, including ARM HoldingsPLC - regarded by many as a textbook example of a successful IP licensingbusiness. July saw us welcome Pioneer Investments to the share register, along with theplacing of 3,225,807 new shares which raised £4.0 million net of expenses forthe Company. Pioneer Investments, which has assets under management of over €200billion, is the fund management arm of the UniCredit Group, one of the largestbanking and financial services organisations in Europe. The continued achievements of the business are largely down to the people wehave. The Board is grateful to the whole of the Oxford Catalysts team for theirdedication and for their hard, as well as smart work during the year. Outlook We are confident that 2007's strong performance will continue. Oxford Catalystsis well positioned to capitalise on its achievements in the development andcommercialisation of its technology, whilst continuing to focus on theprotection and enhancement of its IP. This is an exciting period for OxfordCatalysts. We are forging good relationships with global players in our key markets. Ourcutting-edge technologies continue to attract the attention and advances of ourpeers. We are enthusiastic about the coming year, and anticipate continuedgrowth and development building on our solid foundations. CHIEF EXECUTIVE'S REPORTRoy Lipski I am happy to report on the major operational and strategic advances made by theGroup during 2007. We have a highly motivated, world-class team that hasextended the breadth of engagement we have with potential customers the worldover. Commercialisation The Group's commercialisation program is gaining traction, with the pace ofprogress continuing to accelerate. We have signed our first license deal through a strategic alliance with NovusEnergy LLC to develop and deploy technology for the production ofsecond-generation fuel-grade alcohols from organic waste materials. This has thepotential to deliver royalty income of $750,000 p.a. per average full-scaleplant; Novus Energy has announced plans to roll out dozens of on-site facilitiesin the US over a period of 5 years, and a similar number in Europe. We areworking well with our new partner; the pilot plant for demonstrating thetechnology is targeted to be operational in the first half of the year, with thefirst commercial unit expected in 2009/10. To date, Oxford Catalysts has secured 80 non-disclosure and / or materialtransfer agreements - double the number at the same time last year (40).Furthermore, we signed our first three letters of intent / memoranda ofunderstanding (MoU), including an MoU for the commercialisation of our InstantSteam technology with a global Fast Moving Consumer Goods (FMCG) giant. Thisagreement has the potential to propel the Group's catalyst innovations to amultitude of consumers worldwide. We have continued our engagement with oil Majors for the potential deployment ofour catalysts in large scale Fischer-Tropsch (FT) applications; encouragingly,those companies that have tested our catalyst have continued to come back forfurther samples. In addition, testing of our most recently developedhydro-desulphurisation (HDS) catalyst is timetabled for 2008 with large oilcompanies and refiners in Europe, the US, Asia and the Middle East. Oxford Catalysts is successfully supplementing its activities with oil Majors byengaging with specialists in the area of small scale FT. On a small scale, theeconomics of gas-to-liquid conversion are more challenging, and hence the roleof highly active and cost-effective catalysts - a defining strength of theGroup's catalysts - is becoming central to the commercial viability of theprocess. A key attraction of these opportunities is that they offer thepotential to generate revenues for the Group sooner than large scale applications of FT, whilst at the same time validating our credentials on acommercial platform. We are seeing particularly strong interest in this area andare expecting to progress to long duration, as well as pilot scale testing withseveral parties in 2008. As pilot unit testing is the penultimate stage beforecommercial demonstration, this is an encouraging development for ourshareholders. During 2007, we successfully completed the Instant Steam prototype developmentfor Proventec, and are currently exploring licensing opportunities for thetechnology developed. Other potential partners have expressed real interest inour steam technology for uses such as cleaning and disinfecting, powergeneration and propulsion. The Oxford Catalysts brand is increasingly recognised in its markets. Ourinnovations have received high profile media attention during the period,including coverage on BBC News and feature articles in Petroleum TechnologyQuarterly, Chemical & Engineering News, Chemistry & Industry, Eureka magazine,The Chemical Engineer and Chemistry Today. Technical Development Considerable progress has been made in FT catalyst development, including thedemonstration of highly active and cost-effective catalysts, particularly forsmall scale FT applications such as biomass-to-liquid and gas-to-liquid forassociated / flare gas monetisation. Through our work with external partners,under outsourcing agreements, we have demonstrated the manufacture of the FTcatalyst in half kilogram batches, and have now moved on to the multi-kilogramscale. The Group has made good progress in developing its suite of HDS catalysts. Weare now able to show high levels of desulphurisation capability in thelaboratory, even with the most difficult diesel feedstock blends, whilstrequiring lower metal loadings and less of the most expensive metal componentcommonly used. We have also successfully completed the second and third of five milestones inthe Carbon Trust grant funded project to develop catalysts for reforming naturalgas and LPG, for combined heat and power fuel cell applications. Our technicaltargets were consistently met or exceeded, and we remain on track to completethe project on time. The first half of 2008 is expected to see the testing of our technology in theNovus Energy pilot plant, following earlier completion of the catalyst selectionstage and the provision of front-end process engineering design. During the period, our trigger steam prototype was created - a cheap, simple andportable device with exciting avenues of potential. For example, the steam thatit generates could be used to deliver and enhance the performance of otheractive agents, such as detergents. The advances that Oxford Catalysts has madewere accelerated by our work with an FMCG giant, and have resulted in thedevelopment of other embodiments of the Instant Steam technology for differentapplications. There has also been solid progress made in the critical area of safety for ourportable steam technology. This includes the completion of a comprehensivehazard identification process using external consultants, and the successfulconclusion of thermal stability and flammability tests of our fuel mixture.These are essential to meet the relevant regulations; further work is underwaytowards obtaining full regulatory approval. During the fourth quarter of 2007, we announced the purchase of two new AmtecSpider16 high-throughput screening reactor systems for HDS and FT, at a cost of€750,000. Each Spider system enables the simultaneous testing of 16 catalysts.Since the development of catalysts requires a large number of test runs, theSpider systems will dramatically reduce the time required for the finaloptimisation of our catalysts. Such high-throughput resources are still scarcein our industry; their possession will help Oxford Catalysts cement its positionwithin the clean fuels market. The Group continues to benefit from its links with the University of Oxford,gaining access to cutting-edge analytical and characterisation equipment; thistype of equipment is rare and often unavailable to companies of our size. Finally, I am glad to report that our technical leadership is increasingly beingacknowledged within the international chemical industry, as evidenced by oursuccess in recent awards; the Company was a winner in the Kirkpatrick ChemicalEngineering Achievement Awards in 2007, a finalist in the innovation category ofthe annual Chemical Industry Association awards (alongside the world's twolargest chemical companies), as well as being finalists in innovation awardsfrom both the American Institute of Chemical Engineers and ICIS ChemicalBusiness magazine. Intellectual Property Oxford Catalysts has continued its sustained progress in protecting andenhancing its intellectual property with three new patents filed during theperiod; in the areas of Instant Steam and FT. Our first carbide-based catalyst patent has been granted in the USA, and allowedin Australia (previously granted in Europe); whilst our second key carbidepatent was recently granted in the USA (previously granted in South Africa). Resources We have been successful at attracting top talent and establishing a world-classteam. This is a testament to both the potential and credibility of ourtechnology, and to the attractiveness of our business model. Along with thestate-of-the-art resources and facilities that we have assembled, OxfordCatalysts is now better positioned than ever to compete as the catalystinnovator for clean fuels. In 2007, we created a dedicated business development function and recruited afirst-rate team from major industry players. David Wardle joined Oxford Catalysts in April to head business developmentprimarily for our Instant Steam technology. During his previous eighteen yearsworking for the BOC Group, Dave was responsible for developing a wide range oftechnology-based businesses; his most recent role was as Corporate BusinessDevelopment Manager, which positioned him as a key member of a selectentrepreneurial team charged with initiating step-change revenue growth for theBOC Group. Derek Atkinson, who joined us in July, is in charge of developing the businessfor our technology solutions in both the conventional and alternative energymarkets. Previously, Derek worked for seventeen years at Grace Davison, aleading supplier of catalysts, where he enjoyed global roles in both sales andmarketing. He was responsible for strategy for the product development, marketintroduction and subsequent sales of adsorbents, catalysts and catalyst carriersused in a variety of petrochemical applications. Derek was also the key driver,within Grace Davison, of the initiation and early development work on silica andalumina based supports for Fischer-Tropsch. As a result of continued growth and development, Oxford Catalysts transitionedfrom a part time FD to a full time CFO during the period. Susan Robertson becameChief Financial Officer in October following seventeen years at The BOC Group.From its inception in 2003 until 2006, Susan was Vice President and CFO of JapanAir Gases (JAG), then a £700 million turnover joint venture owned by The BOCGroup and Air Liquide. Following her successful integration of the two foundingJV companies, Susan presided over a significant rise in shareholder returnachieved through improved profitability, increased dividends and therestructuring of equity capital to debt financing. Momentum within the team is strong; other appointments include a seniortechnical manager with thirty years' scale-up experience gained in two of theworld's foremost catalyst companies. He is just one example of the high calibretechnical resources we are continuing to attract into the business. Following the official opening of our laboratory in March 2007, we havesubsequently extended the lease to double the floor space of the laboratory andoffice areas, which enabled us to continue to add equipment for the performancetesting and characterisation of catalysts, as well as the two high-throughputscreening reactors for HDS and FT. People in our industry are genuinely excited by the technologies that we haveand the business which we are building. The major progress in staffing andresourcing achieved during the year has allowed us to keep up with the highlevel of interest we are seeing in our technologies, and to meet visiblerequirements we have for the future. Financial Review This is the Group's first set of full financial statements under InternationalFinancial Reporting Standards (IFRS). The conversion to IFRS has had no impacton previously reported shareholder equity. Revenues in the full year to 31 December 2007 increased by 156% to £163,000(2006: £64,000), derived from development work with partners in Europe, the USAand Asia, as well as grant revenue from the Carbon Trust. The loss for the financial year of £1,744,000 (2006: £972,000) reflects OxfordCatalysts' accelerated growth over the past year, in line with the Company'sstated strategy. In accordance with accounting standards, the Group is required to recognise afair value charge for employee share options (IFRS2). This charge, however, hasno effect on the Group's net assets or cash as at 31 December 2007. The totalemployee share options charge to the income statement for the period is £199,000(31 December 2006: £558,000). Financial resources continue to be managed prudently. Cash reserves and shortterm investments at period-end were £15.6 million. Our current spend is in linewith expectations, and is forecast to increase as the Group enters the nextstage of its development. Thereafter, costs are anticipated to stabilise as theCompany attains the level of resourcing that the Directors envisage is necessaryfor its current technology licensing business model. CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 Note Restated 2007 2006 £'000 £'000Revenue 163 64Cost of sales (131) (37)Gross profit 32 27Development costs (773) (154)Other administrative costs (1,620) (725)Share based payments (IFRS2) (199) (558)Total administrative costs (2,592) (1,437)Operating loss (2,560) (1,410)Interest on bank deposits and similar income 791 438Finance costs (21) -Loss on ordinary activities before tax (1,790) (972)Tax on ordinary activities 46 -Loss for the financial year (1,744) (972)Loss per shareBasic and diluted (pence) 2 (4.49) (2.82) There are no recognised gains or losses in either period other than the lossesshown above. All amounts relate to continuing operations. There is no difference between theloss reported under UK GAAP and the loss reported under IFRS. 2006 figures for cost of sales and administrative expenses have beenreclassified to provide consistency with 2007 presentation. In the 2006financial statements the items now shown as Cost of sales, Development costs andOther administrative costs were all classified under the single heading ofAdministrative expenses - operational. Costs of sales consist of the directcosts attributable to the revenue earned. CONSOLIDATED BALANCE SHEETAT 31 DECEMBER 2007 Note 2007 2006 £'000 £'000Non-current assetsIntangible assets 205 180Property, plant and equipment 860 525 1,065 705Current assetsDebtors 444 256Short term investments - cash held on deposit 7,000 7,000Cash and cash equivalents 8,630 6,528 16,074 13,784Total assets 17,139 14,489Current liabilities (484) (310)Non-current liabilities (122) (101)Total liabilities (606) (411)Net assets 16,533 14,078EquityCalled up share capital 405 373Share premium account 17,865 13,897Merger reserve 369 369Retained earnings (2,106) (561)Total equity 4 16,533 14,078 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2007 Note 2007 2006 £'000 £'000Loss for the financial year (1,744) (972)Share based payments (IFRS2) 199 558New shares issued net of expenses 4,000 14,014Change in shareholders equity for the year 2,455 13,600Shareholders equity at start of year 14,078 478Shareholders equity at the end of the year 4 16,533 14,078 There is no difference between the equity reported under UK GAAP and equityreported under IFRS. CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 Note 2007 2006 £'000 £'000Net cash outflow from operating activities 3 (2,048) (739)Investing activitiesInterest received 666 354Purchase of intangible fixed assets (31) (31)Purchase of property, plant and equipment (485) (555)Investments/(cash placed on deposit) - (7,000)Net cash from/(used in) investing activities 150 (7,232)Financing activitiesProceeds of issue of shares 4,000 14,014Net cash from financing activities 4,000 14,014Increase in cash and cash equivalents 2,102 6,043Cash and cash equivalents at beginning of year 6,528 485Cash and cash equivalents at end of year 8,630 6,528 NOTES TO THE PRELIMINARY RESULTSFOR THE YEAR ENDED 31 DECEMBER 2007 1. PRINCIPAL ACCOUNTING POLICIES Basis of Preparation The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2007 or 2006, but is derivedfrom those accounts. Statutory accounts for 2007 will be delivered to theRegistrar of Companies following the Company's annual general meeting. TheAuditors have reported on these financial statements - their reports areunqualified and did not contain a statement under S237 (2) or (3) of theCompanies Act 1985. While the financial information included in this preliminary announcement hasbeen prepared in accordance with the recognition and measurement criteria ofInternational Financial Reporting Standards (IFRS), this announcement does notitself contain sufficient information to comply with IFRS. The accountingpolicies adopted are consistent with those of the previous financial periodsexcept for the fact that the Company and the Group previously prepared theirfinancial statements in accordance with UK Generally Accepted AccountingPractice (UK GAAP). For the full set of financial statements to 31 December2007, the Group has adopted International Financial Reporting Standards (IFRS)as adopted for use in the EU. There are no standards or interpretations whichhave not been applied which would have a material effect on the results orfinancial position of the Group. Under International Accounting Standard 7, CashFlow Statement, the definition of cash is extended to 'cash and cashequivalents' which includes short-term deposits. The presentation of the cashflow statement and balance sheet has therefore changed to include these cashequivalents. Other than this there is no impact as a result of the transition toIFRS. Basis of Accounting The financial statements have been prepared on the historical cost basis and arepresented in UK Sterling ('£') which is the functional currency of the Group. 2. LOSS PER SHARE 2007 2006 £'000 £'000Basic and diluted loss per share has been calculated on the loss of (1,744) (972)The weighted average number of shares in issue was 38,808,262 34,412,521 In accordance with International Accounting Standard 33, share options have notbeen included in the number of shares used for the purpose of calculatingdiluted loss per share since these would be anti-dilutive for the periodpresented. Other than share options, there are no other potentially dilutiveinstruments. 3. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS 2007 2006 £'000 £'000Operating loss (2,560) (1,410)Depreciation and amortisation 155 33Increase in debtors (15) (120)Increase in creditors 173 200Share based payments (IFRS2) 199 558Net cash outflow from operating activities (2,048) (739) 4. CHANGES IN SHARE CAPITAL AND RESERVES Called up share Share Merger Retained capital premium reserve earnings Total £'000 £'000 £'000 £'000 £'000At 31 December 2006 373 13,897 369 (561) 14,078Share issues (cash) 32 3,968 - - 4,000Loss for the financial year - - - (1,744) (1,744)Share based payments (IFRS2) - - - 199 199At 31 December 2007 405 17,865 369 (2,106) 16,533 5. STATUTORY INFORMATION Copies of the 2007 Annual Report will be posted to shareholders in April 2008,and may be obtained from the date of posting for one month free of charge fromthe registered office of the Company, 115e Milton Park, Oxford, OX14 4RZ, aswell as from the Company's web site www.oxfordcatalysts.com. 6. ANNUAL GENERAL MEETING The annual general meeting is to be held on 14th May 2008. Notice of the AGMwill be dispatched to shareholders with the Group's report and accounts. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
VLS.L