7th Dec 2006 07:01
Pursuit Dynamics PLC07 December 2006 Embargoed: for release at 0700h,7 December 2006 Pursuit Dynamics plc ("Pursuit Dynamics" or "the Company") Preliminary Results for the Year to 30 September 2006 Pursuit Dynamics plc (AIM: PDX), the developer and licenser of the innovativeand patented PDX(R) platform technology with applications across a broad rangeof industries, announces preliminary results for the year to 30 September 2006. Highlights • Rapid build-up of revenues from the food manufacturing and beverage sectors - £1.5 million in the year (2005: £90,000), including contribution from our acquisition of the business of Brooklands Process Technology (Skerman) Limited • Strong cash and short term receivables position at the year end - £6.1 million (2005: £1.36 million) • Management significantly strengthened with appointment of high quality, experienced senior team • Pursuit Processing Equipment division established and resourced to sell processing equipment directly to the food manufacturing, beverage and brewing sectors • Brewing, fire suppression and decontamination applications nearing commercialisation • Additional applications maturing in the R&D pipeline include oil and gas and bio-ethanol John Heathcote, Chief Executive of Pursuit Dynamics, commented: "During the yearunder review, we put in place the elements necessary to take the Company to itsnext stage of growth - funding, people and facilities. The current financialyear to September 2007 will mark a watershed for Pursuit Dynamics. If all goesas planned, we expect to be cash flow positive by the end of this financial yearand the Directors believe we have sufficient funding to get us to that pointcomfortably. Three new revenue streams - brewing, fire suppression anddecontamination - are expected to move into commercialisation this year. Inaddition, the Company has a pipeline of applications, which will be progressedtowards revenue generation." Enquiries:John Heathcote, Chief Executive Simon HudsonGary Pyle, Chief Financial Officer Paul DulieuPursuit Dynamics plc Tavistock CommunicationsTel: +44 (0)1480 422 050 Tel: +44 (0)20 7920 3150 www.pursuitdynamics.com Statement by the Chairman, Andrew Quinn I am pleased to be able to report a year of great progress in thecommercialisation of our PDX(R) technology and the development of our businessinfrastructure, which will enable us to deliver long term value to shareholders.We now have four applications of our technology at or near commercialisation:food and beverage, brewing, fire suppression and decontamination. Results Turnover in the year to 30 September 2006 for Pursuit Dynamics plc grewsignificantly to £1,496,022 (2005: £90,190), including £978,574 (2005: nil)arising from of our acquisition of the business of Brooklands Process Technology(Skerman) Limited in March 2006, which has become the cornerstone of PursuitProcessing Equipment ("PPE"). This has allowed us to capture one hundred percent of the revenues from system sales and margin from this segment of ourbusiness. The acceleration of revenues has been marked: some £50,000 in thesecond half of 2005, almost £500,000 in the first half of 2006 and just under £1million for the most recent half year period. This performance was achieved inthe face of a well-publicised slowdown in capital equipment spending by foodmanufacturers resulting from sustained pressure on margins from their owncustomers, the supermarkets and higher commodity and energy prices. It is worthreminding shareholders that our progress has been achieved in only therelatively short period since the launch of our first commercial products in2005. We have invested heavily during this past year and have positioned the businessfor its next phase of growth. Losses attributable to ordinary shareholdersincreased to £3,684,638 (2005: £2,710,464), after excluding the resultsattributable to minority interests from our 80% owned subsidiary, PursuitResources Limited, established to exploit our technology in the oil and gasindustry, and deducting amortisation of intellectual property and depreciationof £658,026 (2005: £631,705). Loss per share was 7.38p (2005: loss of 5.99p). Aslast year, the Board is not recommending a dividend at this stage in theCompany's development. At 30 September 2006 our cash balances and short-term receivables were£6,104,183 (2005: £1,355,629). In December 2005 we issued 5,333,338 new ordinaryshares at 150p to raise £7.5 million net of expenses. Shareholders' funds at theyear end which reflect the fundraising, offset by the increased loss for theyear, were £8,313,104 (2005: £4,427,241), This fundraising has enabled theCompany to move to much needed new premises in Huntingdon, to recruit additionalhigh quality senior management resources with the experience necessary toprosecute our growth plans, and to strengthen the balance sheet. Our strongerbalance sheet means that we can demonstrate to customers that, as a unique,single source of supply, we are financially robust. Board and Management The management of Pursuit Dynamics plc was significantly strengthened around theend of the financial year by a number of appointments to the senior team. JensThorup and Andrew Neal have both joined in group-wide roles - Jens as TechnicalDirector, responsible for all engineering and R&D activities and Andrew as SalesDirector, with an initial focus on driving sales at Pursuit Process Equipment,our business unit dedicated to direct sales of capital equipment to the food andbeverage process industries and, in due course, the brewing industry. Twofurther appointments have been made to PPE: Stephen Davies was appointedManaging Director and Stephan von Jena was appointed Vice President, Sales,North America - based in Pursuit Dynamics' US office in Norwalk, Connecticut. Recently, our Chief Financial Officer, Gary Pyle, indicated his desire torelinquish his executive responsibilities to enable him to develop his otherbusiness interests. Gary's replacement has been recruited and joins the Companyin March 2007. The Board is extremely grateful to Gary for the tremendouscontribution he has made to the Company over the past four years and has invitedhim to remain on the board as a non-executive director. He has accepted theBoards invitation. We wish him the best of luck with his new venture and lookforward to working with him as a non-executive director. As we announced earlierthis year, our Commercial Director, Christopher (Kester) Scrope, left thecompany during the year and we wish him well in his new career. Outlook PPE is now resourced to drive the business forward both in Europe and NorthAmerica. The division is on track to deliver its sales order budget for thecurrent quarter, the value of revenue recognised in the short period since ouryear end, together with the value of orders on hand to be recognised as they aredelivered, exceeds £860,000. We anticipate that the addition of brewing productsto its portfolio following the conclusion of full-scale production trials withone of the world's largest brewers in March 2007 will further enhance growthprospects. In fire suppression, our exclusive global licensee Tyco, the world leader infire suppression, is meeting all of the milestones set out in the agreementsigned in December 2005. The PDX FireMist technology promises to provide a stepchange in performance of water-based fire suppression systems while minimisingwater damage following a fire. We anticipate first revenues to flow from thislicense agreement during the first half of calendar 2007. In decontamination,the Company is engaged with a number of global defence contractors, activelyexploring the optimum routes to market for our PDX Basilisk system. We areexpecting the first commercial revenues during 2007. 2007 will be another year of significant progress as we continue to grow ourbroadening revenue base. I look forward to updating shareholders on our firstquarter performance, and prospects for the year as a whole, at the time of theAnnual General Meeting in March. Andrew Quinn,Chairman6 December 2006 Review of Operations by the Chief Executive, John Heathcote Three events stand out during the year under review as milestones in thedevelopment of Pursuit Dynamics. The first was the fundraising, which wascompleted in December 2005 and which has enabled us to invest aggressively inour business. The second was the progress made by the food and beverage business- now consolidated and resourced under the Pursuit Processing Equipment division("PPE"), which is generating increasing revenues for the Company. The thirdmilestone was the arrival at the end of the year of the new members of thesenior management team. Management PPE's presence and traction in its markets has been significantly enhanced bythe new appointments made to run and grow the division. It is led by StephenDavies as Managing Director, appointed in October. Steve was previously withInvensys APV where he was most recently Vice President Global Engineering &Technology. In this role he managed a team of around 430 project executionengineers in 28 locations, in addition to 80 R&D staff. He was responsible forall proposals and engineering execution on a global projects business with aturnover of £200 million. Prior to this Steve was Managing Director of APV UK,Ireland and Southern Africa. He is a chemical engineering graduate from theUniversity of Surrey, a Chartered Engineer and a holder of the ManagementDiploma from Henley. In addition, Andrew Neal was appointed as our Global Sales Director in October.Prior to joining Pursuit Dynamics, Andrew was Sales Director of Invensys APV forthe UK, Ireland and Benelux. In this role, he successfully managed a significantgrowth in sales and was closely involved in the transformation of that businessfrom an engineering-led operation to a customer focussed model. Andrew has spenthis career to date in the capital equipment sector, specialising in food andbeverages. In July, Jens Thorup was appointed as our new group Technical Directorresponsible for all engineering and R&D activities, as well as all technicalissues relating to the commercial applications of our technology. Jens has astrong capital and process equipment background, having served as both managingdirector and R&D director with a subsidiary of Glunz & Jensen Group, listed onthe Copenhagen Stock Exchange. Prior to this, he spent eight years in similarroles in the food processing industry, including working at Wolfking A/S, aleading manufacturer of food processing equipment. Jens is a Danish citizen, hasan MSc in Mechanical Engineering from the University of Aalborg, speaks a numberof European languages and has several patents to his name. Our ability to attract such high quality people to the senior team represents aringing endorsement of Pursuit Dynamics and the PDX technology. I am delightedto have them on board. Pursuit Process Equipment - Food & Beverage and Brewing The new team is already making a positive contribution to the traction we havedeveloped in the food and beverage industries. The acquisition of the businessof our former distributor Brooklands Process Technology (Skerman) Limited inMarch provided us with the ability to supply complete, integrated systems tocustomers as well as giving us an extensive contact base and a deep industryknowledge. We are taking full advantage of this new capability. Revenues generated during the year increased substantially despite the marginpressure experienced by food and beverage manufacturers which has resulted inreduced or frozen capital expenditure budgets. However, this pressure has notdiminished interest in our products, which can offer step changes in efficiencyas well as significant energy savings. The pipeline of new orders for the PDXSonic system continues to grow. We are on budget for this quarter of the newfinancial year for both orders and sales. The commercialisation of our technology for applications in the brewing industryhas made rapid progress. The PDX wort boiling technology was successfullycommissioned at the very end of the year in full-scale production trials - thelargest we have ever undertaken - at a UK site of one of the world's largestbrewers. I am very pleased to be able to report that the trials have gone wellto date with the equipment working to expectations and confirming the energysavings of in excess of 30%, which were consistently demonstrated in earlier,smaller scale trials. We are currently finalising the brewing value proposition, which includessignificant gains in operational efficiency as well as the energy savings, andfinalising plans for the commercial roll out of the system in 2007. We are nowin discussion with a number of brewers about the adoption of our technology. Weintend to develop a range of PDX products for the brewing industry and to usethe PPE infrastructure to secure direct sales of equipment. We anticipate thefirst significant revenues from brewing in 2007. Fire Suppression - the PDX(R) FireMist The PDX FireMist technology has shown in live fire trials that it has thepotential to revolutionise the water-based fire suppression market. Tyco, ourglobal exclusive licensee, is meeting all of the milestones contained in ouragreement with them. Tyco is currently undertaking regulatory approval for theFireMist system and we anticipate first revenues arising from sales by Tyco inthe first half of calendar 2007. Decontamination - the PDX(R) Basilisk As previously disclosed, we successfully concluded the first phase of a USDepartment of Defense programme earlier this year. We are actively reviewing theoptimum routes to market of our PDX Basilisk decontamination system with anumber of global defence contractors and are hoping to conclude agreements,which would lead to the first meaningful revenues from this area in 2007. Research and Development Our technical team continues to bring forward industrial applications for ourtechnology. We have a number of programmes currently underway, including; themanufacture of drilling muds and various oil separation applications within theoil and gas industry; research into the applications of the PDX reactor systemin the production of bio-ethanol, and the development of additional defenceapplications. We are currently building a bio-fuels pilot plant capable of fullyassessing our PDX technology in areas such as processing corn andligno-cellulosic material to ethanol. We believe that this pilot plant will beone of the first of its kind in this country and, while its formal commissioningis scheduled for May 2007, we are already conducting preliminary trials. Prospects The current financial year to September 2007 will mark a watershed for PursuitDynamics. If all goes as planned, we expect to be cash flow positive by the endof this financial year and the Directors believe we have sufficient funding toget us to that point comfortably. Three new revenue streams - brewing, firesuppression and decontamination - are expected to move into commercialisationthis year. In addition, the Company has a pipeline of applications, which willbe progressed towards revenue generation. The confidence with which we face the future is due in no small measure to thecommitted and talented team of people who are Pursuit Dynamics. On behalf of theBoard I thank all members of the team for their hard work and wish them a MerryChristmas. John HeathcoteChief Executive6 December 2006 Consolidated profit and loss accountfor the year ended 30 September 2006 Year ended Year ended Year ended Year ended 30 September 30 September 30 September 30 September 2006 2006 2005 2005 Note Unaudited Unaudited Audited Audited------------------------------------------------------------------------------------------ £ £ £ £------------------------------------------------------------------------------------------Turnover-continuing 517,448 90,190-acquisitions 978,574 ------------------------------------------------------------------------------------------- 1,496,022 90,190------------------------------------------------------------------------------------------Net operating expenses 3 (5,509,714) (3,036,287)------------------------------------------------------------------------------------------Operating profit/ (loss)-continuing (4,029,002) (2,946,097)-acquisitions 15,310 ------------------------------------------------------------------------------------------- (4,013,692) (2,946,097)------------------------------------------------------------------------------------------Interest receivable 243,325 90,772Interest payable (3,844) -------------------------------------------------------------------------------------------Loss on ordinary activities before taxation (3,774,211) (2,855,325)Tax credit on loss on ordinaryactivities 91,715 128,442------------------------------------------------------------------------------------------Loss on ordinary activities after taxation (3,682,496) (2,726,883)Minority interest (2,142) 16,419------------------------------------------------------------------------------------------Loss on ordinary activities after minority interest (being the loss for the year) (3,684,638) (2,710,464)------------------------------------------------------------------------------------------Loss per 1p share- Basic and fully diluted 2 7.38p 5.99p========================================================================================== There are no recognised gains and losses other than those reported above. Noseparate statement of total recognised gains and losses has therefore beenpresented. Consolidated balance sheetat 30 September 2006 Group Group 2006 2005 Unaudited Audited £ £----------------------------------------------------------------------------------Fixed assetsIntangible fixed assets 2,487,837 2,990,381Tangible fixed assets 691,440 301,028---------------------------------------------------------------------------------- 3,179,277 3,291,409 Current assetsStocks 161,569 121,390Debtors: amounts falling due within one year 1,032,520 310,319Cash at bank and in hand 5,071,663 1,045,310---------------------------------------------------------------------------------- 6,265,752 1,477,079Creditors: amounts falling due within one year (1,093,699) (357,586)----------------------------------------------------------------------------------Net current assets 5,172,053 1,119,433----------------------------------------------------------------------------------Creditors: amounts falling due after one year (52,483) -----------------------------------------------------------------------------------Net assets 8,298,847 4,410,842================================================================================== Capital and reservesCalled up share capital 508,545 453,764Share premium account 16,581,100 9,065,380Merger reserve 4,061,185 4,061,185Profit and loss account (12,837,726) (9,153,088)----------------------------------------------------------------------------------Total shareholders' funds 8,313,104 4,427,241Minority interest (14,257) (16,399)==================================================================================Capital employed 8,298,847 4,410,842================================================================================== Consolidated cash flow statementfor the year ended 30 September 2006 Year ended Year ended 30 September 30 September 2006 2005 Unaudited Audited Note £ £Net cash outflow from operating activities 5 (3,373,289) (2,340,806)--------------------------------------------------------------------------------Returns on investment and servicing of financeInterest received 243,325 90,772Interest element of finance lease payments (3,844) ---------------------------------------------------------------------------------Net cash inflow from returns on investment and servicing of finance 239,481 90,772--------------------------------------------------------------------------------TaxationUnited Kingdom corporation tax - research and development tax credit received 108,663 130,479--------------------------------------------------------------------------------Net cash inflow from taxation 108,663 130,479--------------------------------------------------------------------------------Capital expenditure and financial investmentPayments to acquire tangible fixed assets (394,401) (193,533)Receipts from sale of short term investments - 24,712--------------------------------------------------------------------------------Net cash outflow for capital expenditure andfinancial investment (394,401) (168,821)--------------------------------------------------------------------------------Acquisitions Payments to acquire business assets (5,875) -Costs of acquisition (16,332) -Net overdraft acquired (74,826) ---------------------------------------------------------------------------------Net cash outflow for capital expenditure and financial investment (97,033) ---------------------------------------------------------------------------------Net cash outflow before management of liquidresources and financing (3,516,579) (2,288,376)--------------------------------------------------------------------------------Management of liquid resourcesDecrease in short term deposits with banks - 2,950,000--------------------------------------------------------------------------------Net cash inflow from management of liquid resources - 2,950,000-------------------------------------------------------------------------------- FinancingProceeds of ordinary share issue 8,000,007 -Proceeds received for minority interest share in subsidiary - 20Issuance costs of shares (500,308) -Proceeds of options exercised 70,802 123,740Capital element of finance lease payments (25,846) -(Decrease)/increase in loan (1,723) 73,736--------------------------------------------------------------------------------Net cash inflow from financing 7,542,932 197,496--------------------------------------------------------------------------------Increase in cash in the year 7 4,026,353 859,120 ================================================================================ Notes to the financial statements 1. Preparation of the financial statements The unaudited results for the year ended 30 September 2006 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 2005. The financial information for the year ended 30 September 2006 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 2005, and the balance sheet at 30 September 2005 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 2005 was unqualified anddid not contain a statement under either section 237(2) or section 237(3) of theCompanies Act 1985. 2. Loss per share Basic and diluted loss per share is calculated by dividing the loss aftertaxation of £3,684,638 (2005: £2,710,464) by 49,896,361(2005: 45,287,597)shares, being the weighted average number of Ordinary shares in issue during theyear. Notes to the financial statements (continued) 3. Net operating expenses Year ended Year ended 30 September 30 September 2006 2005 Unaudited Audited £ £---------------------------------------------------------------------------------Continuing Operations---------------------------------------------------------------------------------Decrease/ (increase) in stocks of finished goods andwork in progress 40,941 (76,790)Raw materials and consumables 554,460 223,578Other external charges 114,562 15,905Staff costs:- commercial and business development 1,273,603 719,513- engineering, research and development 628,994 469,968Depreciation of tangible fixed assets- owned 84,495 74,646- held under finance leases 7,796 -Amortisation of intangible fixed assets 557,059 557,059Loss on disposal of fixed assets 71,043 -Other operating charges 895,668 1,001,982Operating leases - land & buildings 271,310 40,000- plant & machinery 46,519 10,426--------------------------------------------------------------------------------- 4,546,450 3,036,287---------------------------------------------------------------------------------Acquisitions=================================================================================Increase in stocks of finished goods and work in progress (32,500) -Raw materials and consumables 677,817 -Staff costs: - commercial and business development 105,453 - - engineering, research and development 116,533 -Depreciation of owned tangible fixed assets 5,807 -Amortisation of intangible fixed assets 2,869 -Other operating charges 34,314 -Operating leases - land & buildings 52,971 ---------------------------------------------------------------------------------- 963,264 ---------------------------------------------------------------------------------- 5,509,714 3,036,287================================================================================= 4. Acquisition On 17 March 2006 the Group acquired the assets and trade of Brooklands ProcessTechnology (Skerman) Limited. The table below shows the fair value of the assetsacquired and consideration paid. Provisional fair Book value value £ £--------------------------------------------------- Tangible fixed assets 42,331 42,331 Stock 48,620 48,620 Debtors 189,017 189,017 Creditors (240,319) (240,319) Bank Overdraft (75,000) (75,000) Cash 174 174 Net liabilities acquired (35,177) (35,177) Cost of acquisition Consideration 5,875Acquisition expenses 16,332---------------------------------------------------Goodwill 57,384=================================================== In its last financial year to 31 March 2005, the Brooklands Process Technologybusiness made a profit after tax of £181,722. For the period between that date and the date of acquisition, the Brooklands Process Technology business's unaudited management accounts show: £Turnover 1,181,887Operating loss and loss before tax (213,945)Tax nilLoss attributable to share holders (213,945) From the date of acquisition to 30 September 2006, the business generated£51,070 of the group's net operating cash flows, received £563 in respect ofinterest, and utilised £5,374 for capital expenditure. Notes to the financial statements (continued) 5. Reconciliation of operating loss to net cash outflow from operating activities 2006 2005 Unaudited Audited £ £----------------------------------------------------------------------------Operating loss (4,013,692) (2,946,097)Amortisation of intangible fixed assets 559,928 557,059Depreciation of tangible fixed assets 98,098 74,646Loss on disposal of fixed assets 71,043 -Decrease in value of marketable securities - 2,422Decrease/ (increase) in stocks 8,441 (76,790)(Increase)/ decrease in debtors (550,131) 69,706Increase/ (decrease) in creditors 453,024 (21,752)----------------------------------------------------------------------------Net cash outflow from operating activities (3,373,289) (2,340,806)============================================================================ 6. Reconciliation of net cash flow to movement in net funds 2006 2005 Unaudited Audited £ £----------------------------------------------------------------------------Increase in cash in year 4,026,353 859,120Cash outflow from short term deposits - (2,950,000)Cash inflow from sale of marketable securities - (24,712)Decrease/ (increase) in loans 1,723 (73,736)----------------------------------------------------------------------------Change in net funds from cash flows 4,028,076 (2,189,328)----------------------------------------------------------------------------Change in market value - (2,422)Increase in finance leases (96,974) -Net funds at start of year 971,574 3,163,324----------------------------------------------------------------------------Net funds at end of year (see note 7) 4,902,676 971,574============================================================================ 7. Analysis of movements in net funds At At 1 October Non-cash Cash 30 September 2005 movements flows 2006 £ £ £------------------------------------------------------------------------------------Cash at bank and in hand 1,045,310 - 4,026,353 5,071,663Finance leases - (122,820) 25,846 (96,974)Loans (73,736) - 1,723 (72,013)====================================================================================Net funds 971,574 (122,820) 4,053,922 4,902,676==================================================================================== 8. Copies of report Copies 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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