11th Jun 2007 07:01
Pursuit Dynamics PLC11 June 2007 Date: 11 June 2007 On behalf of: Pursuit Dynamics Embargoed until: 0700hrs Pursuit Dynamics PLC ("Pursuit Dynamics" or the "Company") Interim Results for the six months ended 31 March 2007 Pursuit Dynamics PLC (AIM: PDX) develops and exploits its proprietary PDXplatform technology, whose benefits include significant reductions in energyusage and process time with yield improvements for industries such as Food,Brewing, Fire Suppression, Decontamination and Bioethanol production. The Company today announces its interim results for the six months ended 31March 2007. Commercial Highlights • The PDX reactor system has demonstrated significant yield improvements over conventional processes in the production of bioethanol • First PDX system in full scale production in the food industry • Commercial launch of the PDX Wort Heater and first orders received • Factory Mutual approval for FireMist technology, anticipated by end July • Strong closing order book Financial Highlights • Turnover increased to £1.2m (2006: £0.5m) • Operating loss following increased investment in distribution and engineering research and development capabilities of £2.7m (2006: £1.8m) • Closing cash balance £10.6m • Fund raising in February 2007 raised £7.6m net of expenses Commenting on the results, Andrew Quinn, Chairman, said: "The Company has made strong progress in the first six months of the financialyear, both in terms of research and development and continued commercialisationof the technology. The commercial launch in brewing and the first full scale system operating inthe food industry, are significant milestones in the development of thebusiness, as is the anticipated regulatory approval of the FireMist technologyby Factory Mutual. The results of our bioethanol programme to date have been very encouraging. ThePDX reactor has demonstrated a significant improvement over conventionalprocesses in the production of bioethanol. Details of our Phase 1 tests havebeen published in a separate announcement today. We exit the first half very encouraged by our medium and long term prospects.Our disruptive technologies are gaining wide recognition, delivering realcommercial benefits, including substantial energy savings. We expect to grow ourrevenues significantly in the second half of the year." For Further Information, please contact: Pursuit Dynamics John Heathcote, Chief Executive Tel: 01480 422050 Redleaf Communications Emma Kane / Paul Dulieu / Tom Newman Tel: 020 7822 0200 Notes to Editors Pursuit Dynamics PLC (AIM: PDX) develops and exploits its proprietary PDXplatform technology, which uses supersonic shockwaves to process or atomiseliquids and semi-solid solutions in a controllable and energy efficient way. Pursuit Dynamics is headquartered in Huntingdon, UK and has an office inNorwalk, Connecticut, USA. Pursuit Processing Equipment Ltd., the processingequipment division of Pursuit Dynamics, operates from facilities in Brooklands,Surrey, UK. Further information is available at the Company's website:www.pursuitdynamics.com Publication quality photographs are available from Redleaf Communications. CHAIRMAN'S STATEMENT It is my pleasure to report strong progress for the Company in the first sixmonths of the financial year, both in terms of our research and developmentactivities and continued commercialisation of the PDX technology. We believethat the Company is now well positioned to maximise the potential of ourtechnology. The progress made during the first six months of this year hasprovided further validation of the significant commercial benefits that ourtechnology can deliver to companies across a wide range of sectors. Financial Results Turnover increased by 147% in the first half of the financial year to £1.2m(2006: £0.5m) and by 22% over the second half of the financial year to 30September 2006 (£1.0m). At 31 March 2007, our order book had increased from £0.6m to £1.8m. Our substantial investment in sales, distribution, engineering research anddevelopment capabilities, combined with the impact of extra sales volume on costof goods sold and a charge for share based payments of £0.2m following theadoption of FRS 20, resulted in a £1.6m increase in our operating expenses to£3.9m. The additional investment in sales and distribution has enabled us to putin place the resources needed to exploit the opportunities we see in food andbrewing. The additional investment in engineering research and development hasenabled us to accelerate our development programmes in areas such as bioethanolprocessing and our defence applications. The combination of the increase in turnover and accelerated investment hasresulted in our net operating loss increasing from £1.8m to £2.7m. In February 2007, we raised £7.6m, net of expenses, from a placing of 6,995,000ordinary shares at 115 pence per share. This contributed to our closing cashbalance of £10.6m (30 September 2006: £5.1m). Interest income at £0.1m was at asimilar level to the prior period. Net cash burn in the six month period underreview was £2.1m. The PDX Technology To date the PDX technology has developed on two main fronts: "reactor" and"atomisation", which are supported by more than 40 patents and a considerablebank of intellectual property. We have chosen routes to market appropriate foreach technology application area. Our reactor technology demonstrates considerable energy savings and throughputincreases in large scale food and brewing applications and, most recently, hasgenerated yield improvements at the test cell level in the activation of starchin maize products during Phase 1 of our bioethanol programme. Our atomisation technology has led to a material improvement in the dispersionof agents (water and other chemicals) by significantly reducing droplet size andthereby increasing the surface area and effectiveness of the agent. Thetechnology is being exploited in two main areas, namely fire suppression anddecontamination. Strategy Our strategy is to develop novel uses of the PDX technology in application areaswhere a demonstrable competitive edge can be exploited in a reasonable timeperiod. Pursuit Dynamics' PDX platform technology has worldwide applicationsacross a wide range of sectors. The Company's current focus is on five coreareas (Food, Brewing, Fire Suppression, Decontamination and Bioethanol) in orderto drive shareholder value through the commercialisation of its technology. The 'reasonable time period' for commercialisation of the technology acrossthese different focus areas can vary significantly and is often subject toadditional rounds of testing by external bodies such as Factory Mutual andvarious defence agencies. Unlike the biotechnology sector where there arelengthy but relatively set timeframes for each of the phases during the trialperiods, timescales can vary significantly for Pursuit Dynamics. It is thereforeappropriate that the Company is pursuing the commercialisation of its technologyacross a range of sectors. Operating performance Pursuit Processing Equipment Pursuit Dynamics announced a series of high profile orders in the period and hassuccessfully completed the integration of BPT Skerman which was acquired inMarch 2006. This business provides the implementation capability required tosell the PDX food and brewing processing equipment solutions and provides uswith the system integration resources we require in Europe. Food The Company's PDX(R) Sonic fluid processing product, which is a highly efficientsystem for use in the manufacture of prepared foods and soft drinks, waslaunched in January 2005 and has been licensed to a number of leading industryplayers in the EU, USA and Central America. During the period under review, we have secured orders from AAK Foods andPremier Foods. The system supplied to AAK Foods is now in full scale production.The Premier Foods order, at £1.2m, is the largest order to date received by theCompany. Brewing Launched in May 2007, the PDX(R) Wort Heater delivers energy savings of up to50% during the energy intensive wort boiling process in brewing, withoutcompromising on quality or flavour. Utilising PDX's shockwave technology, thePDX(R) Wort Heater has no moving parts and can be cleaned in situ, thusminimising operational down time and increasing reliability. During the period under review, we announced orders from Moulson Coors, wherethe system is used for special production runs. Since the end of the periodunder review, we have also commercially launched the PDX Wort Heater andreceived an order for two systems from Shepherd Neame, Britain's oldest brewer. Pursuit Dynamics - Licensing Fire Suppression We believe that FireMist(R), Pursuit Dynamics' patented fire suppressiontechnology, is the most effective of all commercially available water mistsystems. It has successfully extinguished Class A and B fires in building andaircraft fire simulation tests. In December 2005, Pursuit Dynamics granted anexclusive global licence for fire suppression to Tyco Fire & Building Products,a division of Tyco International Ltd (NYSE: TYC; BSX: TYC), the world leader infire suppression. Tyco has informed the Company that they expect to gain Factory Mutual approvalfor the system before the end of July, which will permit the use of the FireMisttechnology in a new fire suppression offering. This new product offering, whichshould be available for sale in August 2007, has been demonstrated to use aroundone third of the water required by existing high pressure water mist systems toextinguish set fires in a 260 cubic metre chamber and around 2% of the waterrequired by conventional sprinkler systems. This significantly reduces waterdamage, which has historically been one of the major reasons that customers haveused other agents to suppress fires. Decontamination In March 2006, Pursuit completed a one year contract with DARPA, a USgovernmental defence research agency for an application of its PDX(R) Basiliskdecontamination system. The system has a number of applications fordisinfection, human and animal healthcare and in the defence industry,principally in chemical and biological defence applications. During the period, we lodged, as a sub-contractor, a number of bids with majordefence contractors in response to requests from the US Federal Government. Weexpect to learn the results of these proposals during the fourth quarter of thisfinancial year and in the meantime we continue to develop further businessopportunities for our Basilisk technology. We therefore expect the revenuesforecast for the second half of the current financial year to be secured in thefirst half of the next financial year. Research and Development Pursuit Dynamics aims to pursue opportunities across a number of sectors wherethe potential is greatest. As I have said, for regulatory and commercial reasonsthe time from development to commercialisation can be lengthy. It can also besurprisingly swift, as evidenced by the results the Company has announced todayin relation to the increased bioethanol yields the PDX technology has achieved. Bioethanol Research and development based on the pre-treatment of material used forbioethanol production, with a view to materially increasing the efficiency ofthe production process, has been a focus of our research and development effortsince December 2006. We have now completed Phase 1 of our trials and we can confirm that the PDXreactor system has achieved repeated and externally verified yield increases inthe amount of ethanol that can be extracted from a standard maize feedstock. In addition, we have successfully converted cellulosic materials to ethanol.This process has historically been considered uneconomic using conventionaltechnologies. The findings from Phase 1 of the bioethanol programme are extremely promisingand clearly demonstrate the potential application of the PDX technology in theproduction of bioethanol. The increase in yields in the "Starch to Ethanol"process created by the application of the PDX reactor system, if scalable,represents a very important development in the bioethanol industry. Phase 2 of our research and development programme on bioethanol is now underway.We are focussed on optimising the PDX technology in conventional "Starch toEthanol" production and continue to investigate the opportunities to usecellulosic materials, including by-products as well as crops, in the productionof bioethanol. We believe that there is a definite opportunity for the PDX reactor system to beapplied in large-scale production of bioethanol and are currently looking atcommercialisation opportunities. A separate announcement has been released today. Oil and gas In the oil and gas sector, we are working with third parties and undertaking anumber of trials in different application areas, ranging from emulsion breakingwith heavy oils to various separation applications. These trials requireconsiderable analytical work to be undertaken, usually by the third party withwhom we are engaged, and therefore research and development tends to be alengthy process. However, we are pleased to report that we have been making steady progress andare confident that we are moving towards commercialisation in a number of theareas we are researching. Current Trading and Outlook We expect to show significant second half revenue growth compared to the sameperiod last year. However, we expect delays in the placing of some contracts andthe timing of Factory Mutual approval to result in the movement of some revenuesfrom the second half of 2007 into the first half of 2008. The results of Phase 1 of our bioethanol programme demonstrate the potential forsignificant improvement over conventional processes in the production ofbioethanol and lead us to believe that this is an additional area where PDXtechnology can be applied commercially. We exit the first half very encouraged by our medium and long term prospects. Wehave powerful technology, which is now widely recognised as delivering realcommercial benefits, including substantial energy savings. Andrew QuinnChairman11th June 2007 Six months Year Six months ended ended ended 31 March 30 September 31 March 2007 2006 2006 Note Unaudited Restated Restated------------------------- ----- --------- --------- --------- £ £ £------------------------- ----- --------- --------- ---------Turnover 1,222,465 1,496,022 494,370Net operating expenses 4 (3,893,793) (5,779,367) (2,266,449)------------------------- ----- --------- --------- ---------Operating loss (2,671,328) (4,283,345) (1,772,079)Interest receivable 115,112 243,325 111,826Interest payable (5,614) (3,844) __------------------------- ----- --------- --------- ---------Loss on ordinaryactivities beforetaxation (2,561,830) (4,043,864) (1,660,253)Tax credit on loss onordinary activities 75,674 91,715 64,000------------------------- ----- --------- --------- ---------Loss on ordinaryactivities aftertaxation (2,486,156) (3,952,149) (1,596,253)Minority Interest 640 (2,142) 2,837------------------------- ----- --------- --------- ---------Loss on ordinaryactivities afterminority interest (2,485,516) (3,954,291) (1,593,416)(being the loss for theperiod)Loss per 1p share- Basic and fullydiluted 4.81p 7.93p 3.27p 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. Six months Year Six months ended ended ended 31 March 30 September 31 March 2007 2006 2006 Unaudited Restated Restated Note £ £ £---------------------------- ----- -------- -------- --------Fixed assetsIntangible fixed assets 2,206,439 2,487,837 2,791,825Tangible fixed assets 665,947 691,440 428,657---------------------------- ----- -------- -------- -------- 2,872,386 3,179,277 3,220,482Current assetsStocks 159,469 161,569 136,620Debtors 5 1,170,751 1,032,520 1,051,822Cash at bank and in hand 10,599,699 5,071,663 6,708,101---------------------------- ----- -------- -------- -------- 11,929,919 6,265,752 7,896,543Creditors: amounts falling duewithin one year 6 (1,048,165) (1,093,699) (638,928)---------------------------- ----- -------- -------- --------Net current assets 10,881,754 5,172,053 7,257,615---------------------------- ----- -------- -------- --------Creditors: amounts falling dueafter one year (38,043) (52,483) ----------------------------- ----- -------- -------- --------Net assets 13,716,097 8,298,847 10,478,097---------------------------- ----- -------- -------- -------- Capital and reservesCalled up share capital 578,478 508,545 507,578Share premium account 24,172,787 16,581,100 16,551,420Merger reserve 4,061,185 4,061,185 4,061,185Profit and loss account (15,081,456) (12,837,726) (10,622,850)---------------------------- ----- -------- -------- --------Total Shareholders' funds 8 13,730,994 8,313,104 10,497,333---------------------------- ----- -------- -------- --------Minority interest (14,897) (14,257) (19,236)---------------------------- ----- -------- -------- --------Capital Employed 13,716,097 8,298,847 10,478,097---------------------------- ----- -------- -------- -------- Six months Year ended Six months ended 30 ended 31 March September 31 March 2007 2006 2006 Unaudited Restated Restated £ £ £------------------------------ -------- -------- --------Net cash outflow from operatingactivities (see note 7) (2,177,795) (3,373,289) (1,801,466)------------------------------ -------- -------- --------Returns on investment and servicing offinanceInterest element of finance leasepayments (5,614) (3,844) __Interest received 115,112 243,325 111,826------------------------------ -------- -------- --------Net cash inflow from return oninvestment and servicing of finance 109,498 239,481 111,826------------------------------ -------- -------- --------TaxationUnited Kingdom corporation tax -research and development tax creditreceived __ 108,663 __------------------------------ -------- -------- --------Net cash inflow from taxation __ 108,663 __------------------------------ -------- -------- --------Capital expenditure and financialinvestmentPayments to acquire tangible fixedassets (65,814) (394,401) (124,714)Receipts from sale of tangible fixedassets 17,000 __ __------------------------------ -------- -------- --------Net cash outflow from capitalexpenditure and financial investment (48,814) (394,401) (124,714)------------------------------ -------- -------- --------Payments to acquire business assets __ (5,875) (5,895)------------------------------ -------- -------- --------Costs of Acquisition __ (16,332) __------------------------------ -------- -------- --------Acquired bank overdrafts __ (74,826) (75,000)------------------------------ -------- -------- --------Net cash outflow before managementof liquid resources and financing (2,117,111) (3,516,579) (1,895,249)------------------------------ -------- -------- --------Management of liquid resourcesDecrease in short term deposits with __ __ __banks -------- -------- --------------------------------------Net cash outflow from management of __ __ __liquid resources -------- -------- --------------------------------------FinancingProceeds of ordinary share issue 7,998,260 8,000,007 8,000,007Proceeds received for minority interest __ __ __share in subsidiaryIssuance costs of shares (350,823) (500,308) (500,308)Proceeds of options exercised 14,183 70,802 40,155Capital element of finance leasepayments (14,439) (25,846) __------------------------------ -------- -------- --------(Decrease)/Increase in loan (2,034) (1,723) 18,186------------------------------ -------- -------- --------Net cash inflow from financing 7,645,147 7,542,932 7,558,040------------------------------ -------- -------- --------Increase in cash 5,528,036 4,026,353 5,662,791------------------------------ -------- -------- -------- 1. Preparation of the interim financial statements The unaudited results for the six months ended 31 March 2007 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 2006, with the exception of theeffects of FRS20. The financial information for the six months ended 31 March 2007 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 2006, and the balance sheet at 30 September 2006 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 2006 was unqualified anddid not contain a statement under either section 237(2) or section 237(3) of theCompanies Act 1985. The results, include, for the first time the impact of the adoption of FRS20 inrelation to share based transactions. Prior period comparatives have beenrestated to reflect the impact of the new accounting policy. 2. Loss per share The calculation of basic and diluted loss per share is based on a loss onordinary activities after tax of £2,485,510 (year ended 30 September 2006restated: £3,954,291 and six months ended 31 March 2006 restated: £1,593,416)and a weighted average number of shares of 51,727,021 (30 September 2006:49,896,361 and 31 March 2006: 48,727,911). 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. Net operating expenses Six months ended Year ended Six months ended 31 March 30 September 31 March 2007 2006 2006 Unaudited Restated Restated £ £ £------------------------- ---------- --------- ---------Increase in stocks offinished goods and work inprogress 43,151 8,441 (15,230)Raw materials andconsumables 685,457 1,232,277 218,394Other external charges 86,540 114,562 33,998Staff costs:Commercial and businessdevelopment 977,706 1,366,841 583,771Engineering, research anddevelopment 622,475 745,527 330,605Depreciation of tangiblefixed assets 87,757 98,098 41,015Amortisation of intangiblefixed assets 281,399 559,928 278,672Other operating charges 696,362 942,199 613,632Share Based Payments perFRS20 241,786 269,653 123,654(Profit)/Loss on disposalof fixed assets (13,449) 71,041 __Operating leases - land &buildings 181,444 324,281 53,726- plant & machinery 3,165 46,519 4,212------------------------- ---------- --------- --------- 3,893,793 5,779,367 2,266,449------------------------- ---------- --------- --------- 5. Debtors Six months ended Year ended Six months ended 31 March 30 September 31 March 2007 2006 2006 Unaudited Restated Restated £ £ £---------------------------- -------- -------- ---------Trade debtors 304,394 406,381 387,071Corporation tax recoverable 191,136 115,465 172,665Other debtors 128,664 156,115 59,849Prepayments and accruedincome 546,557 354,559 432,237---------------------------- -------- -------- --------- 1,170,751 1,032,520 1,051,822---------------------------- -------- -------- --------- 6. Creditors: amounts falling due within one year Six months ended Year ended Six months ended 31 March 30 September 31 March 2007 2006 2006 Unaudited Restated Restated £ £ £---------------------------- -------- -------- ---------Trade creditors 295,033 601,592 322,973Sundry Creditors 145,283 44,491 __Other taxation and socialsecurity 158,473 122,555 55,072Accruals and deferredincome 379,398 253,048 168,961Loan due to relatedundertakings 69,978 72,013 91,922---------------------------- -------- -------- --------- 1,048,165 1,093,699 638,928---------------------------- -------- -------- --------- 7. Reconciliation of operating loss to net cash outflow from operatingactivities Six months Year Six months ended ended ended 31 March 30 September 31 March 2007 2006 2006 Unaudited Restated Restated £ £ £---------------------------- -------- -------- ---------Operating loss (2,671,328) (4,283,345) (1,772,079)Amortisation 281,399 559,928 278,672Depreciation 87,757 98,098 41,015(Profit)/Loss on disposalof fixed assets (13,449) 71,041 __Decrease in value of marketable __ __ __securitiesShare Option CompensationCharge 241,786 269,653 123,654Decrease/(Increase) instocks 2,102 8,441 33,390(Increase)/decrease indebtors (62,561) (550,131) (641,260)Increase/(decrease) increditors (43,501) 453,026 135,142---------------------------- -------- -------- ---------Net cash outflow fromoperating activities (2,177,795) (3,373,289) (1,801,466)---------------------------- -------- -------- --------- 8. Reconciliation of movements in shareholders' funds Six months ended Year ended Six months ended 31 March 30 September 31 March 2007 2006 2006 Unaudited Restated Restated £ £ £---------------------------- -------- -------- --------Proceeds on Ordinary shareissue 7,998,260 8,000,007 8,000,007Proceeds of Ordinary sharesissued on exercise ofoptions 14,183 70,802 40,155Issuance costs of shares (350,823) (500,308) (500,308)Loss for the financial year (2,485,516) (3,954,291) (1,593,416)Share Option compensationcharge 241,786 269,653 123,654---------------------------- -------- -------- --------Shareholders' funds atstart of year 8,313,104 4,427,241 4,427,241---------------------------- -------- -------- --------Shareholders' funds as at31 March 2007 13,730,994 8,313,104 10,497,333---------------------------- -------- -------- -------- 9. Contingent liabilities The Group has received a claim for £644,146 plus potential tax from a formeremployee. The directors have taken external legal advice and, on the basis ofinformation presently available, believe that this claim is unlikely to resultin material loss to the Group. However an adverse verdict could result inmaterial loss to the Group. 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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