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) This information is provided by RNS The company news service from the London Stock Exchange

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