Last checked at 27 Apr 2010 07:00
27th April 2010
Pursuit Dynamics PLC
("Pursuit" or "the Company" or "PDX")
Analyst and investor event - business update
PDX is hosting an event today to update analysts and investors on the progress of the business so far this year. In addition to the Company's interim and full year results presentations, PDX intends to host updates for analysts and investors in Q1 and Q3 each year. The PDX business model is organized into four lines of business and each will be presented as summarized in the following sections.
Decontamination Line of Business
On 22nd April 2010 PDX announced an agreement to form a 50/50 joint venture with Kaercher Futuretech GmbH ("Kaercher"), a wholly owned subsidiary of Alfred Kaercher GmbH, the world's leading manufacturer of high-pressure cleaning equipment. Under the terms of the joint venture, PDX and Kaercher will jointly develop, manufacture and market civil and military decontamination and disinfection products for the global market utilizing PDX's technology and Kaercher's technical know-how. Existing Kaercher products can be retrofitted with PDX technology, subject to a royalty payment to PDX. The first new products are planned to be launched towards the end of 2010 and revenues are expected at the end of 2010, growing strongly in 2011.
PDX and Kaercher believe that there are a significant number of market opportunities available to the joint venture. These include a number of military contracts with the US Government, each expected to be worth approximately US$150 million, and civil contracts in a range of industries including healthcare, food preparation and agriculture, education and transportation. The US Chamber of Commerce has estimated that the US civil decontamination market for equipment sales is worth in excess of US$4 billion annually, whilst the global market is estimated to be worth US$12 billion.
The market for mobile and man-portable decontamination products is relatively new but fast growing. The overall market size for this product range is estimated to be growing from some hundreds of systems per year at present up to many thousands per year over the next three to five years. Product development is underway and early product release is scheduled for Q3 2010, with the full scale release due in early 2011. PDX has already received several enquiries from two major international customers to develop mobile decontamination, heat reducing and smoke scrubbing solutions. PDX will continue to work with EADS to develop military and aviation solutions on a bespoke basis for the EADS network of relationships.
Brewing Line of Business
On 25th February 2010 PDX announced its re-entry into the brewing industry with a suite of new products and services, led by its main product, the PDX Wort Heater. PDX is also developing a new innovative mashing-in product plus a disinfection product (each planned for 2011). PDX is in advanced discussions with three of the top six global brewers regarding installing the PDX Wort Heater in their breweries. Due to the structure of the global brewing industry, PDX only needs to sell into a select number of global brewers to penetrate a substantial part of the market.
In the coming weeks PDX expects to announce the appointment of new leadership for the Brewing business unit to drive the business forward globally.
PDX sees an addressable global market of at least 15,000 copper installations, with prices for basic installations ranging from €125,000 to €150,000 (with attractive gross margins). Given the clear energy benefits, the Company is optimistic that a significant proportion of the market will implement the solutions in the next five years.
PDX has now completed development of the PDX Brewing Calculator, which enables quantitative evaluation of the energy savings resulting from fitting a PDX Wort Heater for each individual plant. Pricing will target a two year pay back to the brewery on the basis of 30% energy savings. Energy savings above 30% may be split between the brewer and PDX.
Brewing Research International ("BRI") is the premier technology and information organization providing technical, information and research services to the global brewing, malting and drinks industries. PDX and BRI have signed a new agreement for BRI to assist PDX over the next five years with customer introductions, conferences and exhibitions. BRI is to act as an active sales and marketing agent for PDX and, importantly, BRI has recently validated extensive PDX quality test results with a global brewer. PDX Brewing solutions can be verified in any installation quickly and efficiently by focussing on engineering designs, quality tests and energy savings measurements.
Fire Suppression Line of Business
PDX licenses its water atomising fire suppression system to ANSUL, a subsidiary of Tyco Fire and Building Products ("Tyco"), which markets it under its AQUASONIC range. PDX is entitled to a royalty from top line revenues with no associated costs.
The final Factory Mutual ("FM") approval for large volumes (1080 cubic metres) was received in February 2010 and ANSUL's entire ACQUASONIC product line has now received FM approvals for all industrial applications. Subsequently, the AQUASONIC product line was launched worldwide in March 2010 through all Tyco/ANSUL distributors. A specific global training and marketing program rollout is underway, and early indications are that interest is strong in Europe and Asia. Tyco expects the pipeline of market opportunities to grow strongly in 2010.
PDX and Tyco have recently started a dialog to develop significantly the PDX/Tyco relationship into new product areas, such as mobile products, and to improve the fire suppression product line as a whole. In particular, a new family of nozzles that demonstrate superior performance have been created by PDX. These include a 360 degree compact high performance nozzle with smaller droplet sizes and greater speed of coverage. As a result of these new technologies, it may be possible to reduce significantly the capital and operating costs of water mist systems and to make them lighter and more effective.
Bio- fuels Line of Business
The bio-fuels market presents a significant market opportunity for PDX. According to the Renewable Fuels Association ("RFA"), the Generation One opportunity, based on the US corn ethanol market, is determined by a 12 billion gallon market that PDX expects will grow to 15 to 20 billion gallons in the next two to three years. PDX expects the total addressable market for its products to be at least 6 billion gallons. The decision by the US Government to increase the Blend Wall (the proportion of ethanol that is mixed into one gallon of gasoline) will meaningfully increase PDX's addressable market. The RFA expects the Blend Wall to increase by 50% this year from its current level of 10% to 15%.
Over the past six months PDX has undertaken extensive testing and validation work with ICM, Inc. ("ICM"), to determine the true value of the PDX ethanol reactor in the corn to ethanol market. ICM is the industry leader in the design, construction, and support of ethanol plants and has designed and installed two thirds of the total number of US ethanol plants. Test results from the ICM test programme confirm the clear benefits of the PDX technology and PDX is continuing to pursue the commercial rollout with a number of producers. PDX expects to make a further statement about the implementation rollout in the near future.
PDX also expects the Generation Two cellulosic market to offer a significant opportunity for the Company and it is expected to overtake the corn-based ethanol market over the next five to ten years. PDX has recently entered into a programme of trials with a major US player who has developed a new process for cellulosic ethanol utilizing PDX's equipment and know-how. The target is to develop a process engineering and intellectual property platform that could lead to a breakthrough in the emerging cellulosic ethanol market, capable of processing a wider range of non-food organic materials into ethanol. PDX expects to announce more about this line of business later this year.
According to the RFA, total ethanol output is forecast to reach more than thirty billion gallons in the next ten years globally.
Future Developments
PDX is exploring new lines of business in a range of other industries, such as water production and cleaning, oil exploration, fuel injection, bio-fuel from algae as well as a range of other market opportunities. PDX has established a new rigorous analysis model to select which of these should be researched and or developed. Further updates on these potential opportunities will be provided when appropriate.
- Ends -
For Further Information, please contact:
Pursuit Dynamics PLC
Roel Pieper, Chief Executive Tel: +44 (0)1480 422050
Donald Bell, Chief Financial Officer
Financial Dynamics Ben Foster / Marc Cohen Tel: +44 (0) 20 7831 3113
Cenkos Securities plc
Ian Soanes / Max Hartley Tel: +44 (0)20 7397 8924
Mirabaud Securities LLP
Rory Scott Tel: +44 (0) 20 7878 3360
Notes to Editors
About PDX
·; Pursuit Dynamics PLC (AIM: PDX) owns and commercializes the PDX fluid processing reactor whose benefits include significant reductions in energy usage, process acceleration and result enhancement for industries such as Bio ethanol production, Food & Drink, Brewing, Fire Suppression and Decontamination.
·; Pursuit Dynamics is headquartered in Huntingdon, UK and has an office in Norwalk, Connecticut, USA.
·; Further information is available at the Company's website: www.pursuitdynamics.com or www.pdx.biz