16th Dec 2008 07:00
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For Immediate Release |
16 December 2008 |
CORAC GROUP PLC
('Corac' or the 'Company')
Trading Update & Disposal
Corac Group plc, the intellectual property and licensing company specialising in compressor technology, announces a trading update and a disposal of its patented high pressure gas seals business.
Trading update
Downhole Gas Compressor ('DGC')
In June 2008, the Company announced that ENI SpA ('ENI'), a Joint Industry Programme ('JIP') partner, had committed to the first field trial downhole gas compressor ('DGC') unit to be deployed in one of their gas wells in Italy. The Company was aiming for deployment of the DGC field trial unit in Q1 2009.
Corac has been working closely with contractors engaged by ENI. These specialist suppliers have highlighted the need for additional safety equipment which will be delivered by third parties. This, unfortunately, will increase lead times. Corac is modifying its control systems to facilitate this and the combined impact will be a delay in deployment from Q1 2009 to a target of Q4 2009. The Company will use the time for continued testing at Spadeadam in Cumbria to improve reliability and reduce deployment risk.
The other JIP partners Conoco Phillips and Repsol continue to be involved in this programme.
Industrial Air
Leobersdorfer Maschinenfabrik GmbH & Co. KG ('LMF') has trialled Corac's Industrial Air compressors for the last two years and more recently a machine has been operating in a major international food and beverage company. As a result of these successful trials, LMF has placed an order for a further four pre-production industrial air machines for the purposes of supercharging LMF's piston compressors used in high pressure applications. Delivery of these units is required in the first quarter of 2009.
The Joint Development Agreement with Fu Sheng is progressing with two turbo boosting machines operating 24/7 and continuing to provide 18% efficiency gains against equivalent competitive systems. Further orders are anticipated in 2009.
Seals
Corac also announces an agreement with AESSEAL plc ('AES') whereby it will receive a cash lump sum in lieu of royalties on its patented high pressure gas seals. In February 2007, the Company announced an agreement to transfer its Intellectual Property Rights on its gas seals to AES, who would continue its engineering development, manufacture and sale of the product in return for a royalty. This transaction releases value from Corac's technology, which will be used on its downhole gas and industrial air products.
Financial Year to 31 December 2008
As a consequence of the delay to the DGC programme, the revenue for the financial year ending 31 December 2008 is expected to be significantly below market expectations with a corresponding increase in the expected full year loss before tax.
The cash balance at 31 December 2008 is anticipated to be approximately £2.5 million.
Commenting on trading, Professor Gerry Musgrave, Executive Chairman of Corac, said:
"The delay in the DGC programme is extremely disappointing causing a timing shift in revenues and cash receipts. However, we are pleased to have won the LMF order, which further endorses the commercial acceptance of our technology and demonstrates the success of our working relationship with LMF. Many of LMF's clients are internationally well-known companies and our close association with LMF will enhance our ability to supply our technology through their international marketing and sales channels."
For further information:
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Professor Gerry Musgrave |
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Corac Group plc |
Tel: 01895 813463 |
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Ivonne Cantu/Camilla Hume - Corporate Finance |
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Christian Hobart - Sales |
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Cenkos Securities plc |
Tel: 020 7397 8900 |
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Richard Darby/Ben Romney |
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Buchanan Communications Ltd |
Tel: 020 7466 5000 |
NOTES TO EDITORS
Corac is an intellectual property, engineering and licensing group which holds many patents. It focuses on high speed electrical direct drive turbo machinery based on its unique expertise in gas bearings. Corac has created an innovative 'no oil' turbo compressor together with a unique gas seal, and is part of a joint industry programme for the downhole gas extraction industry.
Further information on Corac is available on the internet at www.corac.co.uk
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