26th Mar 2007 07:02
Oxford Catalysts Group PLC26 March 2007 26th March 2007 OXFORD CATALYSTS GROUP PLC ("Oxford Catalysts" or "the Company" or "the Group") Preliminary Results for the Year Ended 31st December 2006 Oxford Catalysts Group PLC, the leading catalyst innovator for clean fuels,announces today its maiden set of preliminary results since its successfulflotation on the AIM market in April 2006. Highlights • Listed on AIM on 26th April 2006; raised £14.0 million net of expenses • Close to 4 fold increase in non-disclosure and/or material transfer agreements since IPO • Testing of Fischer-Tropsch ("FT") catalyst with three major oil companies ("oil Majors") • Award of a £118,000 joint grant from the Carbon Trust in partnership with leading UK-based Solid Oxide Fuel Cell company • Prototype development program with Proventec Plc coming to successful fruition • Continuing to meet technical targets; breakthrough in FT performance • Patent filings proceeding as expected • Significant increase in resources and capabilities: completion of state-of-the-art laboratory, along with substantial increase in staff since IPO • Appointment of Jeremy Scudamore as Non-executive Director • Tight financial control; £13.5m in cash and short term deposits Dr Pierre Jungels, CBE, Chairman of Oxford Catalysts, said: "We continue to make good progress delivering on the milestones we set ourselvesat the time of the IPO, whilst maintaining our focus on commercialisation,technology development and the protection and enhancement of our intellectualproperty. "We expect that the high level of interest and engagement will continue, andthat the foundations and key relationships we have put in place will growtowards successful long-term commercialisation partnerships. The Board looksforward to another successful year of achievement in 2007." For further information, please contact: Roy Lipski, CEO, Oxford Catalysts Tel: 07789 810 592Megan MacIntyre, KBC Peel Hunt Tel: 020 7418 8900Jonathon Brill, Billy Clegg, Financial Dynamics Tel: 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 hydrogen gas or steam,instantaneously, starting from room temperature, using a cheap and safe liquidfuel alongside the Company's patented catalysts. Such unprecedented instanthydrogen or steam has exciting potential applications in a broad range ofmarkets, from portable power to cleaning and decontamination. In April 2006 Oxford Catalyts Group PLC listed on London's AIM market (codingsymbol OCG). Oxford Catalysts operates a wholly owned subsidiary in the UK(Oxford Catalysts Limited ("OCL")). CHAIRMAN'S STATEMENT Dr Pierre Jungels, CBE It is with great pleasure that I make my first full report as Chairman of OxfordCatalysts Group PLC. The Company has made good progress in 2006, and since itsadmission to the London Stock Exchange plc's AIM market in April 2006, themanagement team has been steadily delivering against our plans whilstsuccessfully laying important commercial and technical foundations for thefuture. Oxford Catalysts' business model is to license its technology for commercialexploitation. The Company aims to enter into a relatively small number of keydevelopment partnerships with leading manufacturers, producers or suppliers inthree main application areas: petroleum and petrochemical catalysts; hydrogenproduction for fuel cells and; instant steam production for a variety ofmarkets. I am pleased to report that we continue to experience impressive growth ininterest from, and engagement with, potential partners and customers. To date,we have entered into some 40 non-disclosure and/or material transfer agreements,and we are in active discussions with numerous companies over testing, and thepotential co-development and licensing of our technology. These include: asignificant number of oil Majors; some of the world's largest national oilcompanies, refiners and oil services companies; many of the world's leadingcatalyst companies; process gasses multinationals; fuel cell businesses; majorelectronics manufacturers, and defence contractors. The significant growth in our resources and capabilities has continued, with thecompletion of our state-of-the-art laboratory and the ongoing recruitment ofhigh quality personnel. We now have 17 employees, including 11 scientists andengineers, and a business development team. I would like to take thisopportunity to thank them all for their hard work and dedication, and tocongratulate them on the impressive achievements they have helped the Companyattain during the course of 2006. Recently, we welcomed Jeremy Scudamore to our Board as a Non-executive Director.The Company is very fortunate to be able to benefit from Jeremy's extensivebusiness and industry experience, including his expertise in licensing IP;(Jeremy was Chief Executive and later Chairman of Avecia Group, and is currentlya Non-executive Director of ARM Holdings PLC). Separately, Dr Andy Naylor willbe stepping down from the Board at the next AGM on 14th May 2007. I would liketo thank him for his valuable contribution during his tenure on the Board andwish him well for the future. Outlook We continue to make good progress delivering on the milestones we set ourselvesat the time of the IPO, whilst maintaining our focus on commercialisation,technology development, and the protection and enhancement of our intellectualproperty. We expect that the high level of interest and engagement will continue, and thatthe foundations and key relationships we have put in place will grow towardssuccessful long-term commercialisation partnerships. The Board looks forward toanother successful year of achievement in 2007. CHIEF EXECUTIVES REPORT Roy Lipski Introduction The Company has continued to grow since its admission to AIM on 26th April 2006.With our team of scientists, engineers and business development professionalsprogressing rapidly towards its full complement, in our new offices andlaboratory, we are confident that we have firm foundations from which ourcommercial relationships will continue to grow and prosper. Market Dynamics Cleaner, more sustainable energy and fuels are currently receiving increasingamounts of attention and support from governments, industry, and the populationat large. This ongoing shift in attitudes has translated itself into ever morefavourable business climates in the Company's key markets. For example, there is increasing pressure on refiners worldwide to meetlow-sulphur requirements, which is leading to a boost in thehydro-desulphurisation ("HDS") catalyst market. This is especially apparentfollowing the US low-sulphur diesel legislation ("ULSD") which came into effecton 1st June 2006. Meanwhile, consumer electronics manufacturers are ever more focused on portablepower solutions - especially small fuel cells - that will break out of theconfines set by current battery technology, in an environmentally friendly way. There has also been a steady increase in interest in recovery and use of biogasand other waste methane sources to produce useful products, such as syntheticfuels through processes incorporating Fischer-Tropsch synthesis. Finally, thereare several current and new applications ideally suited to our instant steamtechnology, such as steam cleaning that is now receiving recognition for itshealth and environmental benefits. Commercial Progress We are in active discussions with many of the key industry players in our coremarkets, including most of the major oil and catalyst companies. Thisunderscores the excellent progress we have made in business development sinceour IPO. Management is also encouraged by the volume of enquiries now coming into the Company as a result of our successful endeavours to build the OxfordCatalysts brand in the markets in which we operate. We currently have some 40 non-disclosure and/or material transfer agreements inplace, with 10 more pending for completion in the next 1-2 months. This is upfrom 25 at the time of the interim results, and 11 at the time of the IPO. Theincrease in engagement with potential partners is also reflected in the rise inrequests for catalyst samples, which have now been provided to severalorganisations in the petroleum, petrochemicals, biogas processing and fuel cellindustries. For example, testing of our FT catalyst has progressed well, with two oil Majorshaving requested repeat samples and one additional Major currently testing ourcatalyst (all of whom are doing so at their own expense). Further terms fortesting are under negotiation with other petroleum industry players and a numberof catalyst companies. During the second half of 2006 we announced a prototype development project withProventec Plc, a provider of specialist steam cleaning equipment, as well asseparately a joint grant from the Carbon Trust to develop reforming catalystsand associated technologies with a leading UK-based Solid Oxide Fuel Cellcompany. Both of these projects are making good progress, with follow-oncommercialisation negotiations set to begin with Proventec in the coming months. Finally, we have recently completed a substantial project with a leading UKengineering consultancy to assess feasibility, and prioritise, the multiplepossible applications of our instant steam technology. From the results of thisstudy, we will be concentrating on a small number of selected applicationsstarting in the second quarter of 2007. Technical Developments Our technical program is making strong progress according to plan and in linewith our expectations at the time of the IPO. The development of a steam generator prototype design for Proventec, which meetstheir requirements on pressure, temperature, flow and moisture levels isprogressing well, and we anticipate agreeing an outline design in the comingmonths. This device will enable the first truly portable steam cleaningapparatus on the market, with a view to deployment in hospitals and foodprocessing plants, as well as for street cleaning. We have successfully increased the life expectancy of our steam catalyst, andhave been able to demonstrate steam generation at elevated pressures. We havealso made a significant breakthrough with our FT catalyst technology which hasled to improvements in performance, as well as increased understanding of howthe mix of reaction products can be catalytically shifted between waxes andlighter hydrocarbons. During 2007, we will be focused on delivering on our current joint developmentprojects, showcasing proof-of-concept demonstrations of several of our keytechnologies, and continuing the scaling up of our petroleum/petrochemicalcatalysts. Intellectual Property We have established strong foundations from which to continue protecting andenhancing our intellectual property. The first of the patents licensed exclusively from Isis Innovation Ltd (oncarbide technology) was granted in Europe during the first quarter of 2006, andhas now passed the significant nine month open period without challenge. We havealso recently received a letter of allowance in the US for this patent, and thusexpect the formal grant to follow. The second patent, also related tocarbide-based technology, was granted in South Africa and has progressed toexamination in Japan, China, and recently the USA. The third patent, on instant hydrogen and steam technologies, is awaitingexamination in a number of key territories around the world. The fourth andfifth patents, which concern extensions of the third patent, have beenconsolidated into a single patent filing which has now progressed to theInternational phase and was recently published. We will continue to protect and enhance our IP portfolio in 2007, through thecareful management of our existing portfolio of patents, and through thedeveloping of new intellectual property and the filing of new patents. People & Premises We are now fully installed in bespoke high-specification facilities at MiltonPark, one of Europe's largest multi-use business parks and host to the highestconcentration of science and biotechnology companies in Oxfordshire. Ourlaboratories are fully equipped for the development, preparation,characterisation, and testing of catalysts and small scale devices incorporatingour catalyst technologies, whilst providing an impressive environment for clientmeetings. The Company's headcount has grown significantly since the IPO with the additionof scientific, engineering and business development personnel. We currentlynumber 17, from 7 different nationalities, including 11 research scientists andchemical engineers, and a business development team. We continue to be delightedby the high calibre of professionals we have been able to recruit, and areconfident of having put in place the foundations of a world-class team, and ofachieving our staffing target of 25 by 4Q07. In addition, we have establishedconsultancy arrangements for business development across Europe and the USA with3 well-known industry experts. Financial Review The Group's adjusted loss before tax (adjusted for the cost of share options(FRS20)) for the period ended 31 December 2006 was £0.41m (2005: £0.15m - OxfordCatalysts Limited ("OCL")). In accordance with accounting standards, the Group is required to recognise afair value charge for employee share options (FRS20). This charge, however, hasno effect on the Group's net assets or cash as at 31 December 2006. The totalemployee share options charge to the profit and loss account for the period is£0.56m. The Group's loss before tax, after employee share option charges,amounted to £0.97m (2005: £0.15m - OCL). Group Turnover amounted to £0.06m (2005: £0.0m - OCL), which includes revenuesfrom the Group's first commercial development agreement with Proventec Plc. TheGroup also benefited from net interest of £0.44m. We enter the coming financial year with better cash reserves than we hadanticipated, which puts us in a good position from which to achieve our goals.At 31 December 2006 cash and short term deposits totalled £13.53m (2005: £0.49m- OCL). During the first few months of 2007, the Group has continued toprudently husband cash resources against tightly managed budgets. CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2006 Notes 2006 2005 £ £Turnover 63,712 -Administrative expenses - operational (916,160) (147,455)Administrative expenses - share based payments (FRS20) (557,745) -Total administrative expenses (1,473,905) (147,455)Loss on ordinary activities before interest receivable and similar (1,410,193) (147,455)incomeInterest receivable and similar income 438,466 -Loss on ordinary activities before taxation (971,727) (147,455)Tax on loss on ordinary activities 3 - -Loss for the financial year (971,727) (147,455)Loss per shareBasic and diluted 2 (2.82)p (0.51)p There are no recognised gains or losses in either period other than the lossesshown above. CONSOLIDATED BALANCE SHEETAT 31 DECEMBER 2006 Notes 2006 2005 £ £Fixed assetsIntangible assets 179,604 51,020Tangible assets 525,458 - 705,062 51,020Current assetsDebtors 255,886 51,603Short term investments - cash held on deposit 13,526,874 -Cash at bank and in hand 5 2,000 485,736 13,784,760 537,339Creditors: amounts falling due within one year (310,343) (110,436)Net current assets 13,474,417 426,903Total assets less current liabilities 14,179,479 477,923Creditors: amounts falling due after more than one year (101,257) -Net assets 14,078,222 477,923Capital and reservesCalled up share capital 6 373,412 287,205Share premium account 6 13,897,132 -Merger reserve 6 369,115 338,173Profit and loss account 6 (561,437) (147,455)Shareholders' funds 14,078,222 477,923 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 Notes 2006 2005 £ £Net cash outflow from operating activities 4 (823,988) (88,409)Returns on investments and servicing of financeInterest received 438,466 -Capital expenditure and financial investmentsPurchase of intangible fixed assets (30,657) (51,233)Purchase of tangible fixed assets (554,965) -Cash outflow before management of liquid resources and financing (971,144) (139,642)Management of liquid resourcesInvestments - cash held on deposit (13,526,874) -FinancingIssue of ordinary share capital 373,412 374Share premium received on share issues (net of expenses) 13,640,870 625,004Cash inflow from financing 14,014,282 625,378(Decrease)/increase in cash in the year 5 (483,736) 485,736 NOTES TO THE PRELIMINARY RESULTSFOR THE YEAR ENDED 31 DECEMBER 2006 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 2006 or 2005, but is derivedfrom those accounts. Statutory accounts for 2006 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. This announcement is prepared on the basis of the accounting policies as statedbelow. They have all been applied consistently throughout the year. Basis of Accounting The financial statements have been prepared under the historical cost conventionand in accordance with applicable United Kingdom accounting standards. Basis of Consolidation The consolidated accounts incorporate the financial statements of the Companyand its subsidiary. In order to enable the successful flotation of the Group, itwas necessary to undertake a restructuring of the Group. As part of the Groupreconstruction, on 12 April 2006 Oxford Catalysts Group PLC acquired, in returnfor the issue of new ordinary share capital, the entire share capital of OxfordCatalysts Limited. This acquisition has been accounted for as a merger in linewith the reporting requirements of Financial Reporting Standard ("FRS") 6 "Acquisitions and Mergers". Therefore the Group financial statements have beenprepared as if the Group was in existence for the whole of the current and prioryears. Turnover Turnover represents amounts receivable for goods and services provided in thenormal course of business, net of trade discounts, VAT and other sales relatedtaxes. Intangible Assets Licences Licences are capitalised at the present value of the minimum licence payments.Amortisation will commence at the earlier of when related revenue is beingearned or the minimum license payments commence, and it will be charged in equalannual instalments over the life of the patents to which the licences relate.Provision is made for any impairment. Patents Patents and trademarks are included at cost and depreciated in equal annualinstalments over a period of 20 years, which is their estimated useful economiclife. Provision is made for any impairment. Tangible Fixed Assets Tangible fixed assets are stated at cost or valuation, net of depreciation andany provision for impairment. Depreciation is provided on all tangible fixedassets at rates calculated to write off the cost or valuation, less estimatedresidual value, of each asset on a straight-line basis over its expected usefullife, as follows: Plant and machinery, 3-5 years. Residual value is calculated on prices prevailing at the date of acquisition. 2. LOSS PER SHARE 2006 2005 £ £Basic and diluted loss per share has been calculated on the loss of (971,727) (147,455)The weighted average number of shares in issue was 34,412,521 28,720,493 Under merger accounting principles set out under the reporting requirements ofFinancial Reporting Standard ("FRS") 6 "Acquisitions and Mergers", the number ofshares in issue at 31 December 2005, is, for the purpose of calculating loss pershare, based on the number on shares the Oxford Catalysts Group PLC issued toacquire Oxford Catalysts Limited on 12 April 2006. 3. TAX ON LOSS ON ORDINARY ACTIVITIES Current Tax Due to the availability of losses incurred in the year, there is no charge tocorporation tax. Deferred Tax At 31 December 2006 the Group has a net unprovided deferred tax asset of£366,743 (2005: £56,376) arising from trading losses from incorporation. Noprovision for the net deferred tax asset has been made at 31 December 2006 onthe grounds of uncertainty over its recoverability in light of the Company'snascent revenue streams and commitment to continued investment in research anddevelopment. 4. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS 2006 2005 £ £Operating loss (1,410,193) (147,455)Depreciation and amortisation 32,837 213Increase in debtors (204,283) (51,603)Increase in creditors 199,906 110,436Non-cash share-based payments (FRS20) 557,745 -Net cash outflow from operating activities (823,988) (88,409) 5. ANALYSIS AND RECONCILIATION OF NET FUNDS 2006 2005 £ £(Decrease)/increase in cash in the year (483,736) 485,736Net funds at 1 January 485,736 -Net funds at 31 December 2,000 485,736 6. CHANGES IN SHARE CAPITAL AND RESERVES Called Up Share Premium Merger Profit & Loss Total Share Capital Reserve Account £ £ £ £ £At 31 December 2005 (OCL only) 374 625,004 - (147,455) 477,923Arising on acquisition of OCL by 286,831 (625,004) 338,173 - -merger accountingAt 31 December 2005 287,205 - 338,173 (147,455) 477,923Share issues (by OCL prior to merger) - - 30,942 - 30,942Share issues (cash) 86,207 13,897,132 - - 13,983,339Loss for the financial year - - - (971,727) (971,727)Employee share based payments (FRS20) - - - 557,745 557,745At 31 December 2006 373,412 13,897,132 369,115 (561,437) 14,078,222 7. STATUTORY INFORMATION Copies of the 2006 Annual Report will be posted to shareholders in April 2007,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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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