13th Jun 2006 07:01
Pursuit Dynamics PLC13 June 2006 13 June 2006 Pursuit Dynamics plc ("Pursuit Dynamics" or "the Company") Interim Results for the Six Months to 31 March 2006 Pursuit Dynamics plc (AIM:PDX), the developer and licenser of the innovative andpatented PDX(R) platform technology with applications across a broad range ofindustries, announces interim results for the six months to 31 March 2006. Highlights • Twelve fold increase in turnover to £494,370 (2005: £39,612), despite the worst decline in activity in the food equipment manufacturing sector for many years. • Sales pipeline of firm orders and outstanding customer-requested quotes currently stands at a multiple of first half turnover, confirming continued growth in line with expectations. • Acquisition of a UK based PDX(R) Sonic distributor at the end of the period. • Successful placing in December 2005 raised £7.5 million net of expenses from institutional investors. • Move to new headquarters completed, test facilities commissioned. • Successful brewing trials completed, full-scale installation to take place in the second half. • Global exclusive licensing agreement for PDX FireMist(R), our fire suppression technology, with a subsidiary of Tyco International Ltd., the worldwide market leader in water based fire suppression systems. Since then good progress towards commercialisation has been achieved. • Successful Basilisk decontamination trials completed with third parties. • Positive progress in oil applications via Pursuit Resources Ltd. • R&D pipeline expanded - positive feasibility study received on biofuel production. John Heathcote, Chief Executive of Pursuit Dynamics, said: "This has been a period of solid advancement for Pursuit Dynamics. We have madegreat strides in all of our key industry areas, and this is now beginning to bereflected both in our sales numbers and the quality of our industry partners.The food industry has been under much publicised pressure during the period butthis has, to a large extent, been offset by better than expected progress in ourother key areas." Enquiries:John Heathcote, Chief Executive Simon Hudson, Rachel Drysdale,Gary 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 The first half of our current financial year has been a period of rapidacceleration of the commercialisation of the PDX(R) technology in our keyapplication areas scheduled for 2006. In my statement in the 2005 Annual Report,I said that our focus for this year was to increase penetration of the foodindustry internationally and to progress the commercialisation of the otherapplications we have developed. We have made tremendous progress towardsachieving these objectives and I expand on this below. Results Revenue for the period under review totalled £494,370 (2005: £39,612), atwelve-fold increase on last year's first half. The sales pipeline of firmorders and outstanding customer-requested quotes already substantially exceedsthe turnover for the period under review. Operating costs increased to £2,142,795 (2005: £1,429,349) reflecting the growthof our commercial resource and the move to our new site in Huntingdon, which hasbeen fitted out with a range of R&D and testing facilities dedicated to a variety of the different industries that are of commercial interest to us. I ampleased to report that since the fundraising in December 2005, we have been ableto establish the sales and management structure around our newly formed PursuitProcessing Equipment division ("PPE") and this is already delivering tangiblebenefits. Loss before tax increased to £1,536,599 (2005: £1,332,468) after interestreceivable of £111,826 (2005: £57,269) and amortisation of intellectual propertyand depreciation of £319,687 (2005: £314,157). The loss attributable to ordinaryshareholders increased to £1,469,762 (2005: £1,278,468), after a tax credit of£64,000 (2005: £54,000) and credit attributable to minority interests of £2,837(2005: £16,419). Basic and fully diluted loss per share was 3.02p (2005: 2.82p). Cash balances and short-term receivables at the period end were £7,257,615(2005: £2,372,276). This uplift principally reflects the £7,499,699 (net ofexpenses) received in December 2005 as a result of the fundraising withinstitutional investors. Review Food and Beverage As has been regularly reported in the media, the food processing industrycontinues to be subject to unrelenting downward price pressure from the majorfood retailers, who aggressively strive to improve their respective margins andmarket shares. At the same time, the input costs of food raw materials and energyhave risen sharply. This has placed many food processors in an extremelydifficult position. Inevitably, capital equipment investment has been squeezed.In spite of this pressure, we have continued to make excellent progress inpenetrating the industry with our PDX Sonic product range in both Europe and theUSA, emphasising the enormous productivity gains and reduction in energyconsumption that can result from the Sonic's adoption. Amongst milestones achieved in this sector during the period, we: • implemented and resourced the Pursuit Processing Equipment divisional structure • won our first repeat order from an existing licensee • received both European and US food industry hygiene accreditation • acquired one of our distributors, BPT (Skerman) Ltd • saw the first US test kitchen successfully commissioned by Anderson and Dahlen in Minnesota The formation of Pursuit Processing Equipment, which handles our direct anddistributor-led sales, enables us to scale up rapidly as we grow sales of ourPDX Sonic product range, whilst remaining viable even in the current weakmarkets. The increasing investment in demonstration rigs and test facilitiesbeing made by our distributors both in Europe and the US and the interest beingshown by new distributors in both market areas confirms our confidence that wehave a technically superior value proposition to offer customers. In March 2006, we acquired the business of BPT (Skerman) Limited, one of ourdistributors. This acquisition provides Pursuit Dynamics with control of aprincipal route to market in Europe as well as a means to benefit from therevenue (and margin) of components other than the PDX Sonic system supplied tofood and beverage customers. The acquisition also provides us with anexperienced management team, valuable market intelligence and the ability tosupply complete solutions to the market. Equally important is the fact that theacquisition allows us a higher degree of control of our pricing model in thefood equipment market as we progress. Brewing The development of our first brewing product has seen technical challengesovercome and progress towards commercialisation of this application continuesapace. The trials completed to date in the wort boiling process have continuedto show that the PDX technology consistently delivers direct energy cost savingsof around 30%. Full-scale commercial trials are anticipated to commence in thesecond half of our financial year, somewhat later than originally planned.However, our work with our international brewing partner continues to supportour confidence that commercialisation of the PDX based brewing system will startin the second half of calendar 2006. Significant interest in the technology isalready being shown by other major global brewing companies. Fire Suppression In December 2005, we announced that we had successfully concluded a globalexclusive licensing agreement for our PDX FireMist fire suppression technologywith a subsidiary of Tyco International Ltd., the US based worldwide marketleader in such systems. Last week, a director of Engineered Systems at Tyco Fire & Building Productssummarised its approach to the commercialisation of the FireMist technology: "We have established a product development team to commercialize the FireMisttechnology. Because of the unique nature of this new technology, this team hasbeen addressing the development of both the hardware necessary to meet thestringent requirements typical of fire suppression systems, but also theengineering methods necessary to design these suppression systems for variousapplications. This activity will be supported in part by a US$4 millionexpansion of the Tyco Fire & Building Products Research and Development Campuslocated in Cranston, Rhode Island. This state-of-the-art facility will include anew full scale fire testing laboratory and training center. "Currently the product commercialization team is developing the quantitativemodels relating key input parameters such as flowrates, pressures and dischargelocation to fire suppression performance outputs. We are excited about thepotential of this revolutionary new technology as part of our overall EngineeredSystems program as well as the business relationship with Pursuit Dynamics." We are delighted with Tyco's progress to date with the FireMist system. This isa challenging programme and Tyco remain on the agreed schedule, which should seefirst sales in 2007. Pursuit Dynamics continues to provide all necessarytechnical support to the programme. Decontamination Progress towards commercialisation of the PDX Basilisk decontamination systemhas been accelerated by a successful conclusion to the DARPA evaluation contractawarded in July 2005, which has led to further opportunities with variousgovernment agencies and defence contractors. The nature of our work on thedecontamination applications of our technology precludes us from sharingdetailed developments with our shareholders until contracts are to hand. We lookforward to being able to report such contracts in the near future. Other Pursuit Resources Limited, our 80% owned oil and gas joint venture, continues tomake progress in attracting interest from major oil and gas businesses invarious applications within the industry. We are now engaged with a number ofthese companies and several series of tests are scheduled to commence during thesecond half of the year, with partners ranging from leading oilfield servicescompanies to major integrated oil producers. The focus of interest includesseparation, mixing and solids handling - areas that are central to hydrocarbonproduction. Outlook The applications for the PDX technology extend widely beyond the fields of foodand beverages. Whilst we are making great strides with our brewing applications,other areas have advanced much more quickly to the point that they are veryclose to commercialisation. This has been most clearly demonstrated in the development of the basic PDXplatform technology over the past eighteen months to the point where we believethat we have developed the world's best water mist fire suppression system andhave teamed up with the global industry leader to bring it to market. Leading on from this, we have now developed what we believe may become thestate-of-the-art decontamination system, the PDX Basilisk, with both large andsmall-scale military and civilian applications as the target markets. Basiliskstands alone today among decontamination systems in its ability to defeat bothsurface and airborne threat material. Beyond these areas, the PDX platform technology has applications across manyindustries and the task of management is to prioritise these and to focus ourresources on those with the highest probability of generating revenues forPursuit Dynamics at the earliest opportunity. I believe that we are successfullydelivering on that strategy and that the remainder of the current financial yearwill provide further proof of this success. We have increased our Research and Development resource during the period. As aresult of the December 2005 fundraising, we are now in a position to accommodatemultiple programmes simultaneously, thus accelerating our overall technicaladvancement. A case in point is the recent receipt of a positive feasibilitystudy on our applications in the production of biofuels, especially in theproduction of ethanol from starches contained in grain. In the second half of the current financial year, we will continue to focus onfood and beverage, brewing, decontamination and fire suppression. In the nextfinancial year we expect to see the first revenues from the Tyco licence forfire suppression and early stage commercialisation of the PDX application inbrewing, as well as solid growth in the PDX Sonic business for the food andbeverage industries and commercial developments in our oil applications. In summary, we have made, and continue to make, excellent progress in our keycommercial areas, despite the recent disappointing market for our foodmanufacturing equipment, and we are confident of a successful outcome for theyear. Andrew QuinnChairman12 June 2006 Consolidated profit and loss accountFor the six months ended 31 March 2006 Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Note Unaudited Audited Unaudited---------------------------------------------------------------------------------------------------- £ £ £----------------------------------------------------------------------------------------------------Turnover 4 494,370 90,190 39,612Net operating expenses 5 (2,142,795) (3,036,287) (1,429,349)----------------------------------------------------------------------------------------------------Operating loss 6 (1,648,425) (2,946,097) (1,389,737)Interest receivable 111,826 90,772 57,269----------------------------------------------------------------------------------------------------Loss on ordinary activities before taxation (1,536,599) (2,855,325) (1,332,468)Tax credit on loss on ordinary activities 64,000 128,442 54,000----------------------------------------------------------------------------------------------------Loss on ordinary activities after taxation (1,472,599) (2,726,883) (1,278,468)Minority Interest 2,837 16,419 -----------------------------------------------------------------------------------------------------Loss on ordinary activities after minority interest (being the loss for the period) (1,469,762) (2,710,464) (1,278,468)----------------------------------------------------------------------------------------------------Loss per 1p share - Basic and fully diluted 3.02p 5.99p 2.82p----------------------------------------------------------------------------------------------------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. Consolidated balance sheetFor the six months ended 31 March 2006 Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Note Unaudited Audited Unaudited---------------------------------------------------------------------------------------------------- £ £ £----------------------------------------------------------------------------------------------------Fixed assets Intangible fixed assets 2,791,825 2,990,381 3,268,912Tangible fixed assets 428,657 301,028 176,414---------------------------------------------------------------------------------------------------- 3,220,482 3,291,409 3,445,326Current assets Stocks 136,620 121,390 115,137Debtors 7 1,051,822 310,319 386,360Cash at bank and in hand 6,708,101 1,045,310 2,061,164---------------------------------------------------------------------------------------------------- 7,896,543 1,477,019 2,562,661Creditors: amounts falling due within one year 8 (638,928) (357,586) (190,385)----------------------------------------------------------------------------------------------------Net current assets 7,257,615 1,119,433 2,372,276----------------------------------------------------------------------------------------------------Net assets 10,478,097 4,410,842 5,817,602---------------------------------------------------------------------------------------------------- Capital and reserves Called up share capital 507,578 453,764 453,074Share premium account 16,551,420 9,065,380 9,024,435Merger reserve 4,061,185 4,061,185 4,061,185Profit and loss account (10,622,850) (9,153,088) (7,721,092)----------------------------------------------------------------------------------------------------Total shareholders' funds 10,497,333 4,427,241 5,817,602----------------------------------------------------------------------------------------------------Minority interest (19,236) (16,399) -----------------------------------------------------------------------------------------------------Total equity shareholders' funds 10,478,097 4,410,842 5,817,602---------------------------------------------------------------------------------------------------- Consolidated cash flow statementFor the six months ended 31 March 2006 Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Unaudited Audited Unaudited---------------------------------------------------------------------------------------------------- £ £ £----------------------------------------------------------------------------------------------------Net cash outflow from operating activities (see note 9) (1,801,466) (2,340,806) (1,209,210)----------------------------------------------------------------------------------------------------Returns on investment and servicing of finance Interest received 111,826 90,772 57,269----------------------------------------------------------------------------------------------------Net cash inflow from return on investment and servicing of finance 111,826 90,772 57,269----------------------------------------------------------------------------------------------------Taxation United Kingdom corporation tax - research and development tax credit received - 130,479 -----------------------------------------------------------------------------------------------------Net cash inflow from taxation - 130,479 -----------------------------------------------------------------------------------------------------Capital expenditure and financial investment Payments to acquire tangible fixed assets (124,714) (193,533) (29,902)Receipts from sale of tangible fixed assets - 24,712 24,712----------------------------------------------------------------------------------------------------Net cash outflow from capital expenditure and financial investment (124,714) (168,821) (5,190)----------------------------------------------------------------------------------------------------Acquisitions Payments to acquire business assets (5,895) - -Acquired bank overdrafts (75,000) - -----------------------------------------------------------------------------------------------------Net cash outflow for acquisitions (80,895) - -----------------------------------------------------------------------------------------------------Net cash outflow before management of liquid resources and financing (1,895,249) (2,288,376) (1,157,131)----------------------------------------------------------------------------------------------------Management of liquid resources Decrease in short term deposits with banks - 2,950,000 2,950,000----------------------------------------------------------------------------------------------------Net cash outflow from management of liquid resources - 2,950,000 2,950,000----------------------------------------------------------------------------------------------------Financing Proceeds of ordinary share issue 8,000,007 - -Issuance costs of shares (500,308) - -Proceeds received for minority interest share in subsidiary - 20 -Proceeds of options exercised 40,155 123,740 82,105Increase in loan 18,186 73,736 -----------------------------------------------------------------------------------------------------Net cash inflow from financing 7,558,040 197,496 82,105----------------------------------------------------------------------------------------------------Increase in cash 5,662,791 859,120 1,874,974---------------------------------------------------------------------------------------------------- Notes to the interim financial statements 1. Preparation of the interim financial statements The unaudited results for the six months ended 31 March 2006 have been preparedin accordance 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 six months ended 31 March 2006 is unauditedand does not constitute statutory accounts within the meaning of the CompaniesAct 1985. The profit and loss account and cash flow statement for the year ended30 September 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 The calculation of basic and diluted loss per share is based on a loss onordinary activities after tax of £1,469,762 (year ended 30 September 2005: £2,710,464 and six months ended 31 March 2005: £1,278,468) and a weighted average number of shares of 48,727,911 (30 September 2005: 45,287,597 and 31 March 2005: 45,256,925). 3. Dividend The directors do not intend to recommend the payment of any dividends until theyconsider it prudent to do so, having regard to the need to retain sufficientfunds to finance the development of the Group's activities. 4. Turnover The turnover relating to acquisitions during the period amounts to £95,284. 5. Net operating expenses Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Unaudited Audited Unaudited £ £ £----------------------------------------------------------------------------------------------------Increase in stocks of finished goods and work in progress (15,230) (76,790) (70,537)Raw materials and consumables 218,394 223,578 178,318Other external charges 33,998 15,905 9,849Staff costs: Commercial and business development 583,771 719,513 338,103Engineering, research and development 330,605 469,968 229,177Depreciation of tangible fixed assets 41,015 74,646 35,629Amortisation of intangible fixed assets 278,672 557,059 278,528Other operating charges 609,132 965,682 407,282Operating leases - land & buildings 53,726 40,000 20,000 - plant & machinery 4,212 10,426 -Auditors' remuneration - audit fees - 25,000 - - non-audit services 4,500 11,300 3,000---------------------------------------------------------------------------------------------------- 2,142,795 3,036,287 1,429,349---------------------------------------------------------------------------------------------------- 6. Net operating loss The profit relating to acquisitions during the period amounts to £6,242 7. Debtors Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Unaudited Audited Unaudited £ £ £----------------------------------------------------------------------------------------------------Trade debtors 387,071 54,066 24,314Corporation tax recoverable 172,665 132,412 188,449Other debtors 59,849 18,834 31,044Prepayments and accrued income 432,237 105,007 142,553---------------------------------------------------------------------------------------------------- 1,051,822 310,319 386,360---------------------------------------------------------------------------------------------------- 8. Creditors: amounts falling due within one year Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Unaudited Audited Unaudited £ £ £----------------------------------------------------------------------------------------------------Trade creditors 322,973 147,475 135,102Other taxation and social security 55,072 41,476 33,703Accruals and deferred income 168,961 94,899 21,580Loan due to related undertakings 91,922 73,736 ----------------------------------------------------------------------------------------------------- 638,928 357,586 190,385---------------------------------------------------------------------------------------------------- 9. Reconciliation of operating loss to net cash outflow from operatingactivities Six months Six months ended Year ended ended 31 March 30 September 31 March 2006 2005 2005 Unaudited Audited Unaudited £ £ £----------------------------------------------------------------------------------------------------Operating loss (1,648,425) (2,946,097) (1,389,737)Amortisation 278,672 557,059 278,528Depreciation 41,015 74,646 35,629Decrease in value of marketable securities - 2,422 2,422Decrease/(Increase) in stocks 33,390 (76,790) (70,537)(Increase)/decrease in debtors (641,260) 69,706 49,702Increase/(decrease) in creditors 135,142 (21,752) (115,217)----------------------------------------------------------------------------------------------------Net cash outflow from operating activities (1,801,466) (2,340,806) (1,209,210)---------------------------------------------------------------------------------------------------- 10. Copies of report Copies of the interim 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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