CAP.L Regulatory News (CAP)

24 Nov 2006 07:17

Clean Air Power Limited24 November 2006 For immediate release 24 November 2006 Clean Air Power plc ("Clean Air Power" or "the Company") Trading Update Clean Air Power plc (AIM:CAP) the developer of Dual-FuelTM combustion technologythat enables heavy-duty diesel engines to run on a combination of both dieseland natural gas provides an update on its 2006 activity. Dual-FuelTM Technology Clean Air Power is pleased to announce that the Tesco trial of the 'Genesis'product has now been completed with both the Company and Tesco in agreement thatit achieved all of its objectives. The results are currently under review andfinal trial conclusions from Tesco are expected in early 2007. The Company anticipates further trials with other major company fleets over thecoming year as interest in the Genesis product continues to build. In the UK, sales growth has been significantly slower than anticipated, while inmainland Europe the company has completed its first Genesis conversion on a DAFvehicle for an Italian cooperative based near Rome. This conversion opens up apotentially important market on the continent where a more mature natural gasrefuelling infrastructure assists market penetration. Italy and Germany, inparticular, are already well served with public natural gas fuelling stations. In Australia, the Company has seen a rapidly developing market for its productsas improvements are made to the country's gas infrastructure and thecommissioning of new processing plants which increase the availability ofnatural gas. In November an order for around £0.5m was received from WilliamAdams Pty Ltd for delivery in 2006. In addition a contract was agreed withMitchell Corp Australia Pty Ltd for the supply of 50 vehicles, with the optionfor another 20, to be delivered during 2007 and 2008. Total revenue from thissecond contract is expected to amount to £1.5m for the 50 vehicles rising to£2.1m if the option on the additional 20 units is taken up. This contract withMitchell's will be finalised during the next month subject only to additionalfunding being provided by the Australian government. Clean Air Power's activities with truck manufacturers in Europe continues withthe Board being confident of developing cooperation during the coming year.Whilst original expectations anticipated revenues from this market sector during2007, the process of securing agreements with major truck manufacturers istaking longer than anticipated. Actual revenue will now not occur in the comingyear. Components Business Clean Air Power manufactures some of the components incorporated in thecompany's Dual Fuel Technology. A number of these components are also used inspark ignited gas engines, hydraulic gearboxes and certain other applications. With sales mainly in Europe and the USA, growth in demand for gas enginecomponents during 2006 has exceeded expectations and has been accompanied bystrong margins. We anticipate further market growth in 2007. Emissions Reduction Business This area of the business provides solutions to very large stationary dieselengines such as those used in pumping stations. The current market is mainly inthe US and we provide a service whereby the emissions from new installations aretreated to meet local legislation. The Company expects revenues and margins for 2006 to be in line withexpectations and with similar levels of business being maintained during thecoming year. Summary Clean Air Power is now well placed to take advantage of the growing momentum forreduced climate change emissions, whilst also delivering significant costreductions, and is capitalising on regions such as Australia where there is aclear demand for its technology. The company expects similar demand to developthroughout Europe in the coming year. As highlighted above, Company sales have been lower in certain regions whichleads the Board to anticipate that profits for the full year will be belowexpectations, but not significantly. However, the Board remains confident thatdiscussions with truck manufacturers and large fleet operators will lead to goodprogress during 2007, coupled with strong demand for Dual-FuelTM in itsidentified key growth markets. For further details please contact: Clean Air Power Tel: +44 (0) 1494 527110John Pettitt, Chief ExecutivePeter Rowse, Finance Director Buchanan Communications Tel: +44 (0)20 7466 5000Charles Ryland/Ben Willey This information is provided by RNS The company news service from the London Stock Exchange