Interim Results
Oxford Catalysts Group PLC
27 September 2007
27th September 2007
OXFORD CATALYSTS GROUP PLC
('Oxford Catalysts' or 'the Company' or 'the Group')
Interim Results for the Period Ended 30th June 2007
Oxford Catalysts Group PLC, the leading catalyst innovator for clean fuels,
announces today its second set of interim results since its successful admission
to trading on AIM in April 2006.
Highlights
• Revenue in H1 2007 of £87,000, 35% ahead of full year 2006
• First two letters of intent / memoranda of understanding signed
- precursors to binding commercial agreements
• First revenue generated in the area of biogas conversion
• Proventec steam cleaning prototype development successfully concluded
• Appointment of two senior commercial executives from leading industry
players: BOC / Linde and Grace Davison
• £12.8 million in cash and short term deposits at half year end, well
within budget; a further £4.0 million raised post balance sheet from major
institution, Pioneer Investments
Roy Lipski, Chief Executive of Oxford Catalysts, said:
'It has been a period of considerable achievement for Oxford Catalysts, with the
pace of commercialisation of our technologies accelerating. The number of
companies we are engaged with has increased, we continue to have success in
getting our catalysts out for testing by industry, and we have recently signed
our first two letters of intent / memoranda of understanding. First half
revenues, which rose several-fold on the same period last year, reflect this
strong commercial progress. The Board looks to the immediate and long term
future with confidence.'
For further information, please contact:
Roy Lipski, CEO, Oxford Catalysts 01235 841 700
Jonathan Marren, KBC Peel Hunt (Nomad and Broker) 020 7418 8990
Jonathon Brill, Billy Clegg, Financial Dynamics 020 7831 3113
Notes to Editors
Oxford Catalysts designs and develops specialty catalysts for the generation of
clean fuels from both conventional fossil fuels and certain renewable sources.
The Group has two key platform technologies resulting from almost 20 years of
research at the University of Oxford's prestigious Wolfson Catalysis Centre.
The first 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 and
petrochemical industries.
The second relates to a series of unique chemical reactions which can be used to
generate either steam or hydrogen gas, instantaneously, starting from room
temperature, using a cheap liquid fuel alongside the Group's patented catalysts.
Such unprecedented instant steam or hydrogen has exciting potential applications
in a broad range of markets, from portable power to cleaning and
decontamination.
Oxford Catalysts' business model is to license its technology for commercial
exploitation. The Group aims to enter into a relatively small number of key
co-development partnerships with leading manufacturers, producers or suppliers
in three main application areas: petroleum and petrochemical catalysts; instant
steam for a variety of markets, and; hydrogen production for fuel cells.
In April 2006, Oxford Catalysts Group PLC floated on London's AIM market (coding
symbol OCG). Oxford Catalysts operates a wholly owned subsidiary in the UK
(Oxford Catalysts Limited).
Copies of this interim report will be sent to shareholders and will be available
at the Business Office of the Company, 115e Milton Park, Oxford OX14 4RZ and on
the Company's web site, www.oxfordcatalysts.com.
CHAIRMAN'S STATEMENT
Dr Pierre Jungels, CBE
It is with great pleasure that I make my second interim report as Chairman of
Oxford Catalysts Group PLC.
The Group has made good progress in the first half of 2007; I am glad to report
that we continue to experience strong growth in interest from, and engagement
with, potential partners. To date, we have entered into nearly 60 non-disclosure
/ material transfer agreements, as well as having signed our first two letters
of intent / memoranda of understanding - precursors to full binding
commercial agreements.
In July, we welcomed Pioneer Investments to our share register, after the
placing of 3,225,807 new ordinary shares of 1p each, which raised £4.0m net of
expenses for the Company. Pioneer Investments, which has assets under management
of over €232 billion (as at 31 March 2007), is the fund management arm of the
UniCredit Group, one of the largest banking and financial services organisations
in Europe. We are grateful for the support and confidence that yet another major
institutional investor such as Pioneer Investments has shown in our technologies
and commercialisation progress.
The proceeds of the Placing will be used to further strengthen the Company's
position by accelerating and expanding development in additional areas which
have emerged since the IPO, including opportunities in Instant Steam and biogas
conversion.
The growth in our resources also continues with the addition of top industry
talent; I am delighted to welcome our most recent senior commercial recruits,
Dave Wardle and Derek Atkinson who have joined us from BOC / Linde and Grace
Davison respectively.
Outlook
Our catalysts have the prospect of becoming an integral element in solutions
currently being developed to address some of the world's most pressing needs. We
are actively pursuing opportunities to align ourselves with such complementary
technologies, and to capitalise on the potential for rapid growth which these
represent.
Oxford Catalysts has secured solid foundations from which to grow, including
cutting-edge technologies, a strong balance sheet, superb facilities and a
world-class team. The first half of 2007 has witnessed a substantial increase in
revenue. We are proud of our achievements to date; the Board looks to the
immediate and long term future with confidence.
Chief Executive's RePORT
Roy Lipski
I am very pleased to report the major advances made by the Group during the
first half of the year. Furthermore, the Oxford Catalysts brand is becoming
progressively established globally in our target markets and within the
financial community. Media interest in both the trade and national press have
generated many enquiries which are leading to a number of exciting new
commercial opportunities.
Commercialisation
The Group's commercialisation program is gaining traction, with the pace of
engagement continuing to accelerate; we now have 59 non-disclosure and / or
material transfer agreements in place (year end 2006: 40). Furthermore, Oxford
Catalysts recently signed its first two letters of intent / memoranda of
understanding. Such agreements are precursors to signing binding commercial
contracts, and further illustrate the great strides made in commercialising the
Group's technologies.
There are currently five oil Majors testing, or lining up to test, our
Fischer-Tropsch (FT) catalyst. Encouragingly, all of those companies that have
tested our catalysts have requested further samples. To complement our work with
these Majors on large-scale applications, we have started discussions with
technology developers working on small scale FT applications, including second
generation biofuels and flare / associated gas capture. At a small scale, the
economics of Gas-to-liquid conversion become challenging and hence the role of
highly active and cost-effective catalysts, such as those developed by the
Group, become increasingly important. A key attraction of these opportunities is
that they offer the potential to generate revenues for the Group sooner than
large scale applications of FT.
I am glad to advise that the steam cleaning prototype development program which
began last year with Proventec Plc, a provider of specialist steam cleaning
equipment, has been completed successfully. We are currently exploring long term
commercial licensing opportunities for the technology developed.
Finally, encouraging developments in business areas that have increased in
prominence since the IPO have seen us already earning income from work in biogas
conversion, whilst Instant Steam is shaping up to potentially become a
significant source of early revenue for the Group.
Technical Development
We continue to forge ahead in the development of our technology, with the
successful completion of the second technical milestone (of five) in our Carbon
Trust sponsored project with a major solid oxide fuel cell company. The
milestone was successfully delivered on time and ahead of the technical target
set. (The reforming technology being developed produces hydrogen for fuel cells,
intended primarily for domestic use.)
Our latest embodiment of the Instant Steam technology - a trigger spray
system - was successfully demonstrated and received positive endorsement
in both the technical and general press. The trigger spray system is cheap,
simple, portable and easy to use. Its potential is vast, as it could be used in
a broad range of applications where the hot steam it generates would be utilised
to deliver, and enhance the performance of, other active agents (such as
detergents).
I am also glad to report that our technical leadership is increasingly being
recognised within the international chemical industry, as evidenced by our
success in recent awards; the Company was a finalist in the innovation category
of the annual Chemical Industry Association awards (along with the world's two
largest chemical companies), as well as being finalists in innovation awards
from both the American Institute of Chemical Engineers and ICIS Chemical
Business magazine.
Intellectual Property
We continue making sustained progress protecting and enhancing our intellectual
property. Our second key carbide patent recently received its letter of
allowance in the United States (the final stage before allocation). Furthermore,
three new patents were filed during the period, in the name of Oxford Catalysts,
covering developments in Instant Steam and Fischer-Tropsch.
People & Premises
The Oxford Catalysts team continued to grow and strengthen in the first half of
2007. David Wardle joined the Group from BOC / Linde as Business Development
Director, heading commercial activities for our steam and hydrogen businesses.
In July, Derek Atkinson began as Business Development Director in charge of the
Company's petroleum and petrochemical catalysts, following 17 years at Grace
Davison.
2007 also saw the official opening of our new state-of-the-art laboratory,
located at Milton Park, Oxfordshire. The new site not only offers outstanding
facilities, which are helping us to attract top scientists and engineers, but
also provides a very impressive setting to introduce potential clients to Oxford
Catalysts.
Financials
This is the Group's first set of financial statements under the International
Financial Reporting Standards (IFRS). As set out in the notes to the accounts,
the introduction of IFRS has had minimal effect on the reporting of underlying
operating performance of the Group in the period.
Revenue in the six months to 30 June 2007 amounted to £87,000; 35% ahead of
revenue for the full year 2006 and over 550% up on the same time last year.
Since the Company has accelerated its growth over the past six months, the
adjusted operating result of a pre-tax loss of £433,000, excluding non-cash
share based payment charges and amortisation (see note 4), compares favourably
with the adjusted operating loss of £411,000 at the year end 31 December 2006.
The charge in the interim financial statements which arises in respect of
employee share based payments, under IFRS 2, amounts to £110,000 (30 June 2006:
£277,000).
Cash resources continue to be tightly managed. Cash reserves and short term
investments at period-end were £12.8 million, and subsequently rose by £4
million following the placing of shares completed in July. Our current spend is
in line with expectations, and is forecasted to increase as the Group enters the
next stage of its development.
CONSOLIDATED INCOME STATEMENT
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Note 6 months 6 months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
(unaudited) (unaudited) (audited)
£'000 (restated) £'000
£'000
Revenue 87 13 64
Cost of sales (326) (27) (583)
Gross profit (239) (14) (519)
Share based payments (IFRS2) (110) (277) (558)
Depreciation and amortisation (74) - (32)
Other administrative expenses (590) (204) (301)
Total administrative expenses (774) (481) (891)
Operating loss (1,013) (495) (1,410)
Interest on bank deposits and similar income 468 113 438
Loss on ordinary activities before tax (545) (382) (972)
Tax - - -
Loss for the period from continuing operations 4 (545) (382) (972)
Loss per share from continuing operations
Basic and diluted (pence) 5 (1.46) (1.18) (2.82)
All amounts relate to continuing operations. There are no recognised gains or
losses other than the losses shown above.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007
Note 30 June 2007 30 June 2006 31 December
(unaudited) (unaudited) 2006
£'000 (restated) (audited)
£'000 £'000
Non-current assets
Intangible assets 194 60 180
Property, plant and equipment 630 36 525
824 96 705
Current assets
Trade and other receivables 333 83 256
Short term investments - cash held on deposits 12,810 - 13,526
Cash and cash equivalents 2 14,313 2
13,145 14,396 13,784
Total assets 13,969 14,492 14,489
Current liabilities
Trade and other payables (187) (105) (283)
Current tax liabilities (38) - (27)
(225) (105) (310)
Non-current liabilities
Deferred licence payments (101) - (101)
Total liabilities (326) (105) (411)
Net assets 13,643 14,387 14,078
Equity
Called up share capital 6 373 373 373
Share premium account 6 13,897 13,897 13,897
Merger reserves 6 369 369 369
Retained earnings 6 (996) (252) (561)
Total equity 6 13,643 14,387 14,078
The financial statements were approved by the Board of Directors on 26 September
2007, and were signed on its behalf by:
Paul Barnes FCCA
Finance Director
26 September 2007
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Note 6 months 6 months Year ended
Ended Ended 31 December
30 June 2007 30 June 2006 2006
(unaudited) (unaudited) (audited)
£'000 (restated) £'000
£'000
Net cash outflow from operating activities 7 (991) (252) (824)
Investing activities
Interest received 468 113 438
Purchases of patents and trademarks (16) (10) (30)
Purchases of property, plant and equipment (177) (38) (555)
Investments - cash placed on/(taken off) deposit 716 - (13,527)
Net cash (used in)/from investing activities 991 65 (13,674)
Financing activities
Proceeds on issue of shares - 14,014 14,014
Net cash from/(used in) financing activities - 14,014 14,014
Net increase/(decrease) in cash and cash equivalents - 13,827 (484)
Cash and cash equivalents at the beginning of the 2 486 486
period
Cash and cash equivalents at the end of the period 2 14,313 2
NOTES TO THE ACCOUNTS
FOR THE SIX MONTHS ENDED 30 JUNE 2007
1. PRINCIPAL ACCOUNTING POLICIES
Basis of Preparation
For the year ending 31 December 2007, the Group will prepare consolidated
financial statements under International Financial Reporting Standards ('IFRS')
as adopted by the European Commission. These will be those International
Accounting Standards, International Financial Reporting Standards and related
interpretations (SIC-IFRIC interpretations), subsequent amendments to those
standards and related interpretations, future standards and related
interpretations issued or adopted by the IASB that have been endorsed by the
European Commission. This process is ongoing and the Commission has yet to
endorse certain standards issued by the IASB.
The interim financial report has been prepared using accounting policies
consistent with IFRS and in accordance with IAS 34 'Interim Financial
Reporting', and is the Group's first interim report under IFRS.
Accounting Policies
The interim report is unaudited and has been prepared on the basis of IFRS
accounting policies. Despite the conversion to IFRS there are no significant
differences in accounting policies and therefore no adjustments arose on
conversion.
Segments
For management purposes, the Group reports its entire activities as one
business. Accordingly, the Directors consider there to be only one reportable
segment, being the design, development and provision of catalysts.
2. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information for the six months ended 30 June 2007 and 30 June 2006
has not been audited and does not constitute full financial statements within
the meaning of Section 240 of the Companies Act 1985.
The financial information relating to year ended 31 December 2006 does not
constitute full financial statements within the meaning of Section 240 of the
Companies Act 1985. This information is based on the Group's statutory accounts
for that period, restated for IFRS. The statutory accounts were prepared in
accordance with United Kingdom Generally Accepted Accounting Principles (UK
GAAP) and received an unqualified report, and have been filed with the Registrar
of Companies.
As a result of adjustments in our first year audited accounts the numbers
previously disclosed in the interims financial statements at 30 June 2006 for
loss per share and for share premium have been restated in these interim
financial statements.
3. EXPLANATION OF TRANSITION TO IFRS
IFRS 1 - 'First-time adoption of International Financial Reporting Standards'
sets out the procedures that the Group must follow as it adopts IFRS for the
first time as the basis for preparing its consolidated financial statements. The
Group is required to establish its accounting policies as at 30 June 2007 and,
in general, apply these retrospectively to determine the IFRS opening balance
sheet at its date of transition, 1 January 2006. The Company had previously
adopted UK GAAP as its underlying basis of accounting. Following review of UK
GAAP standards with those required under IFRS, the Directors consider that there
are no retrospective adjustments or restatement that need to be made to the
opening balance sheet at 1 January 2007.
4. RECONCILIATION OF OPERATING LOSS TO ADJUSTED OPERATING LOSS
6 months 6 months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Reported operating loss (545) (382) (972)
Add back:
share based payments (IFRS2) 110 277 558
amortisation of other intangibles 2 - 3
Adjusted operating loss (433) (105) (411)
5. EARNINGS PER SHARE
The calculation of earnings per share is based on the following losses and the
weighted average number of shares:
6 months ended 30 June 6 months ended 30 June Year ended 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
Loss Number Pence Loss Number Pence Loss Number Pence
£'000 of per £'000 of per £'000 of per
shares share shares share shares share
'000 '000 '000
Adjusted earnings per (433) 37,341 (1.16) (105) 32,387 (0.32) (411) 34,601 (1.19)
share*
Reconciliation to
reported earnings (net
of tax at 30%):
amortisation of other (2) - (0.00) - - - (3) - (0.00)
intangibles
share based payments (110) - (0.30) (277) - (0.86) (558) - (1.63)
(IFRS 2)
Basic & diluted earnings (545) 37,341 (1.46) (382) 32,387 (1.18) (972) 34,601 (2.82)
per share
* Adjusted earnings per share, excluding non-cash share based payments and
amortisation of other intangibles, have been included as the Directors consider
that this figure provides a more useful measure of the ongoing business, since
it is a more accurate reflection of cash utilisation.
6. RECONCILIATION OF MOVEMENT IN TOTAL EQUITY
Called up Share Merger Retained
Share Premium reserve earnings £'000
capital account £'000 £'000
£'000 £'000
At 1 January 2007 373 13,897 369 (561) 14,078
Loss recognised for the period - - - (545) (545)
Employee share based payments (IFRS2) - - - 110 110
At 30 June 2007 373 13,897 369 (996) 13,643
7. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
6 months 6 months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating loss (1,013) (493) (1,410)
Depreciation 72 2 29
Amortisation - other intangibles 2 1 3
Share based payments expense (IFRS2) 110 277 558
Operating cash flows before movement in working capital (829) (213) (820)
Increase in receivables (77) (33) (204)
(Decrease)/increase in payables (85) (6) 200
Net cash outflow from operating activities (991) (252) (824)
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