Last checked at 24 May 2012 07:00
Pursuit Dynamics plc
("PDX" or the "Company")
Interim Statement for the six months ended 31 March 2012
PDX (AIM:PDX), the developer of the PDX® Atomiser and PDX® Reactor products and technology, is pleased to announce its results for the six months to 31 March 2012 and to update shareholders on the commercialisation of its products and technology.
Operational highlights
·; The Company was informed on 18 May that at this stage, following completion of their evaluation trials, Procter & Gamble ("P&G") did not intend to pursue further evaluation and development or enter into exclusive licensing discussions with PDX as the Company envisaged under the Joint Development Agreement ("JDA").
·; As a result of this, the Company's revenues for the year ending 30 September 2012 will be materially below the Company's earlier expectations. The Company has been undertaking a strategic review of the business and in the light of the P&G decision the review will be accelerated to allow an update to be provided by the end of June 2012.
Financial highlights
·; PDX raised £10.7 million net of fees through a rights issue and placing in March 2012.
·; A cost reduction program has been executed, reducing operational costs by 25% from 2010/11 levels.
·; Revenue in the period was £484k (2011: £105k).
·; Cash operating loss for the period was £7.0 million (2011: £5.0 million). The cash balance was £9.1 million as at 31 March 2012 (30 September 2011; £7.3 million).
·; The current cash position of the Company is approximately £7.0 million and the current monthly burn-rate is approximately £750k excluding discretionary third party spend on capital expenditure, research and development and will reduce further. This run-rate covers all the costs of the business other than discretionary third party spend on capital expenditure, research and development. Further review of all areas of the business will occur as part of the strategic review.
·; Capital expenditure in the period was £1.2 million (2011: £0.9 million), reflecting the final stage of the Bioenergy early-adopter roll-out.
General Outlook
Interim CEO, Jeremy Pelczer, said: "As noted in the P&G update on 21 May there is no doubt that the Company is disappointed with the decision by P&G. The challenges and opportunities we face will be addressed within the current strategic review, the findings of which will determine the next stage in the Company's development. Confidence remains strong in the technology and within the strategic review we are considering all options. In light of the P&G decision we need to make significant and carefully-costed decisions in targeting the right applications, partners and customers to produce meaningful revenue growth."
Strategic Review
The Company has been undertaking a strategic review of the business and in the light of the P&G decision the review will be accelerated to allow an update to be provided by the end of June 2012.
The strategic review is examining all options to accelerate the existing lines of business, addressing immediate internal cost saving opportunities and proactively explore external solutions.
Lines of Business
Industrial Licensing
Our JDA with P&G was first announced in November 2010 and extended in April 2012 to end May 2012. The extension of the activities on the JDA resulted in the resources in this LOB being prioritised on this opportunity. Despite being informed that P&G does not intend to pursue further evaluation and development or enter into exclusive licensing discussions with PDX as the Company envisaged under the Joint Development Agreement there a pipeline of license prospects does remain. The strategic review will address an assessment of the robustness of these opportunities in terms of magnitude and timing.
Bioenergy
At 30 September we had completed five installations to date of our Ethanol Reactor System ("ERS") with 314 million gallons per annum ("MGPA") of installed capacity. We had Letters of Intent in place for additional sites representing a total of over 1 billion gallons per annum in potential total capacity.
Our three major focus areas were announced as the achievement of auditable results confirming financial benefits to the customer and therefore to ourselves; the establishment of commercial agreements enabling commencement of revenue; and the optimisation of system results using proven scientific tools.
In the period we completed the additional installation of one ERS. We have removed the ERS from one site by mutual agreement where the benefits of the installation could not be fully exploited for sufficient economic gain. The net impact of these actions is to increase installed capacity by 66 MGPA to 380 MGPA as at 31 March.
In addition we have built and added to our inventory three ERS units which are ready for installation when required. The tie-ins required for the installation of an EPS unit are in place at one site already.
In terms of our focus areas, first, in the area of achieving auditable results, we have clarified established results at existing sites and where appropriate we have invoiced and received payment for our share of the benefits. We have active development projects aimed at optimising and improving ERS performance based on the learning of the last 6 months.
Second, in the area of establishing commercial agreements, we have extended contracts as needed and continue to have strength in existing customer and broader market relationships.
Third, in the area of optimisation of system results, our new validation and optimisation tools have been effective and well received by customers.
Brewing, Food and Beverage
In Brewing, with regard to our Wort Boiling product, we have learnt that, where a given installation has no energy recovery system, there is good evidence our product generates meaningful energy saving in the range of 20-50% depending on the configuration of the installation.
The latest additions to our brewing suite of products, the Mashing and Cereal Cooking products, launched in November 2011, are subject to current discussion with a potential license partner regarding installation on customer sites. Our modelling to date indicates that the level of benefits to be gained from the mashing and cereal cooking products will be greater than delivered under the Wort Boiling product through faster brewing processing.
Turning to food, an area where we have made 21 installations to date, we made two installations in the period. These additional installations have again confirmed important benefits to our customers, although it is fair to say they are not significant enough to support the shared benefit model in this industry. We have therefore focused our sales and marketing resource onto increasing the volume of installations. Licensing deals, both exclusive and non-exclusive, are in current negotiation.
Waste Treatment
Our phase one water treatment trials with Thames Water have shown the PDX reactor can achieve strong pathogen kill and improve biogas generation. This will now be investigated further during phase two at higher temperatures and with higher solid loadings and retention times. A decision on future developments will be part of the strategic review.
Public Health and Safety
In Nuclear, where we have a Joint Venture with National Nuclear Laboratories Ltd ("NNL"), we have already recognised research and product development revenues and have been targeting a multi-product portfolio intended to generate revenues through their deployment with NNL and other partners.
Two nuclear projects were finished in February and the next phases are in negotiation with the end customer. Lab tests for peelable coatings (the process whereby nuclear contamination on surfaces is trapped in a coating that can be removed) were successful this month and more tests are underway, and our evaluation of potential partners and customers is commencing this month.
In Decontamination, we launched our First Responder System (FRS) in the spring as anticipated (in February in the UK and in April in Malaysia) and have produced the first 10 units ready for sale. We have received positive early feedback and submitted several quotations to potential customers.
In Disinfection, our first commercial product, the M800, is a ready to use system which consists of an applicator, disinfectant and operating procedure. It has been developed as the first product in a fuller suite.
We anticipate being ready to deliver the product from July 2012 and we have already sold a pre-series unit.
Analyst Presentation and Investor Conference Call
There will be a presentation to analysts from the Company at 9.00am today. This presentation will also be available simultaneously as a webcast for investors.
Investors will be able to dial in using the following details:
Telephone Numbers: +44(0)20 3450 9987
Confirmation Code: 2499280
The presentation slides will be available via the Company's website: www.pdx.biz
For further information please contact:
Pursuit Dynamics | +44 (0)1480 422 050 |
Jeremy Pelczer, Interim CEO | |
Richard Webster, CFO | |
M:Communications | +44 (0) 20 7920 2339 |
Nick Miles | |
Elly Williamson | |
Cenkos Securities plc | +44 (0)20 7397 8924 |
Ian Soanes | |
Max Hartley | |
Mirabaud Securities | +44 (0)20 7878 3360 |
Rory Scott |
CONSOLIDATED INCOME STATEMENT
for the six months ended 31 March 2012
Note | Six months ended 31 March 2012 Unaudited £ | Year ended 30 September 2011 Audited £ | Six months ended 31 March 2011 Unaudited £ | |
Continuing operations: | ||||
Revenue | 483,771 | 490,382 | 104,700 | |
Operating expenses | (7,470,976) | (11,807,714) | (5,097,073) | |
Operating loss before non-cash expenses | (6,987,205) | (11,317,332) | (4,992,373) | |
Non-cash operating expenses | ||||
Depreciation of tangible fixed assets | (178,639) | (182,061) | (53,759) | |
Impairment of tangible fixed assets | 8 | (530,322) | - | - |
Amortisation of intangible fixed assets | (29,540) | (262,609) | (169,112) | |
Share option compensation charge | (63,157) | (3,616,652) | (1,968,895) | |
Total non-cash operating expenses | (801,658) | (4,061,322) | (2,191,766) | |
Total operating expenses | (8,272,634) | (15,869,036) | (7,288,839) | |
Operating loss | (7,788,863) | (15,378,654) | (7,184,139) | |
Finance income | 9,115 | 46,947 | 28,222 | |
Finance costs | (4,906) | (3,185) | (320) | |
Loss before taxation | (7,784,654) | (15,334,892) | (7,156,237) | |
Income tax credit | - | - | - | |
Loss for the period | (7,784,654) | (15,334,892) | (7,156,237) | |
Loss per share for loss attributable to the equity holders of the company | ||||
Loss per 1p share | ||||
- Basic and fully diluted | 4 | 10.21 p | 21.30 p | 10.21 p |
CONSOLIDATED STATEMENT of comprehensive income
for the six months ended 31 March 2012
Six months ended 31 March 2012 Unaudited £ | Year ended 30 September 2011 Audited £ | Six months ended 31 March 2011 Unaudited £ | |
Loss for the year | (7,784,654) | (15,334,892) | (7,156,237) |
Other comprehensive income | |||
Currency translation differences | 61,476 | (65,665) | 111 |
Total comprehensive income for the year | (7,723,178) | (15,400,557) | (7,156,126) |
CONSOLIDATED BALANCE SHEET
As at 31 March 2012
Note | Six months ended 31 March 2012 Unaudited £ | Year ended 30 September 2011 Audited £ | Six months ended 31 March 2011 Unaudited £ | |
Non-current assets | ||||
Property, plant and equipment | 2,588,224 | 2,079,331 | 1,213,696 | |
Intangible fixed assets | 7 | 95,221 | 115,807 | 187,699 |
2,683,445 | 2,195,138 | 1,401,395 | ||
Current assets | ||||
Inventories | 253,998 | 105,291 | 88,266 | |
Trade and other receivables | 1,136,164 | 875,497 | 840,438 | |
Corporation tax receivable | - | - | 330,554 | |
Cash and cash equivalents | 9,076,901 | 7,312,203 | 4,283,433 | |
10,467,063 | 8,292,991 | 5,542,691 | ||
Trade and other payables | (1,887,388) | (2,251,654) | (1,689,309) | |
Net current assets | 8,579,675 | 6,041,336 | 3,853,382 | |
Non-current liabilities | (20,610) | (24,879) | (29,592) | |
Net assets | 11,242,510 | 8,211,595 | 5,225,185 | |
Capital and reserves attributedto equity holders of the Company | ||||
Called up share capital | 862,866 | 750,632 | 703,248 | |
Share premium account | 66,203,027 | 55,624,325 | 46,088,625 | |
Merger reserve | 4,061,185 | 4,061,185 | 4,061,185 | |
Foreign exchange reserve | (64,943) | (126,419) | (60,643) | |
Profit and loss account | (59,819,625) | (52,098,128) | (45,567,230) | |
Total equity | 11,242,510 | 8,211,595 | 5,225,185 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary shares Unaudited £ | Sharepremium Unaudited £ | Mergerreserve Unaudited £ | Foreign exchange reserve Unaudited £ | Profit andloss account Unaudited £ | Total Unaudited £ | ||||||
At 1 October 2010 | 699,931 | 45,620,075 | 4,061,185 | (60,754) | (40,379,888) | 9,940,549 | |||||
Comprehensive income | |||||||||||
Loss for the period | - | - | - | - | (7,156,237) | (7,156,237) | |||||
Other comprehensive income | |||||||||||
Currency exchange differences | - | - | - | 111 | - | 111 | |||||
Total comprehensive income | - | - | - | 111 | (7,156,237) | (7,156,126) | |||||
Transactions with owners | |||||||||||
Exercise of share options | 3,317 | 468,550 | - | - | - | 471,867 | |||||
Share optioncompensation charge | - | - | - | - | 1,968,895 | 1,968,895 | |||||
Total transactionswith owners | 3,317 | 468,550 | - | - | 1,968,895 | 2,440,762 | |||||
At 31 March 2011 | 703,248 | 46,088,625 | 4,061,185 | (60,643) | (45,567,230) | 5,225,185 | |||||
| |||||||||||
Ordinary shares Unaudited £ | Share premium Unaudited £ | Merger reserve Unaudited £ | Foreign exchange reserve Unaudited £ | Profit and loss account Unaudited £ | Total Unaudited £ | ||||||
At 1 October 2011 | 750,632 | 55,624,325 | 4,061,185 | (126,419) | (52,098,128) | 8,211,595 | |||||
Comprehensive income | |||||||||||
Loss for the period | - | - | - | - | (7,784,654) | (7,784,654) | |||||
Other comprehensive income | |||||||||||
Currency exchange differences | - | - | - | 61,476 | - | 61,476 | |||||
Total comprehensive income | - | - | - | 61,476 | (7,784,654) | (7,723,178) | |||||
Transactions with owners | |||||||||||
Issue of ordinary share capital | 111,829 | 11,071,079 | - | - | - | 11,182,908 | |||||
Cost of issue of ordinary share capital | - | (516,391) | - | - | - | (516,391) | |||||
Exercise of share options | 405 | 24,014 | - | - | - | 24,419 | |||||
Share optioncompensation charge | - | - | - | - | 63,157 | 63,157 | |||||
Total transactionswith owners | 112,234 | 10,578,702 | - | - | 63,157 | 10,754,093 | |||||
At 31 March 2012 | 862,866 | 66,203,027 | 4,061,185 | (64,943) | (59,819,625) | 11,242,510 | |||||
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 March 2012
Six months ended 31 March 2012 Unaudited £ | Year ended 30 September 2011 Audited £ | Six months ended 31 March 2011 Unaudited £ | |
Cash flows from operating activities (see note 6) | |||
Cash used in operations | (7,760,845) | (11,487,037) | (5,706,965) |
Bank interest paid | (2,595) | (151) | (151) |
Interest element of finance lease payments | (2,311) | (3,034) | (169) |
Taxation received | - | 607,254 | 276,700 |
Net cash used in operating activities | (7,765,751) | (10,882,968) | (5,430,585) |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (1,217,860) | (1,940,576) | (908,451) |
Purchase of intangible assets | (8,954) | (55,892) | (34,287) |
Proceeds from sale of fixed assets | - | 2,182 | - |
Decrease (increase) in short term deposits with banks | - | 5,000,000 | 5,000,000 |
Finance income | 9,115 | 46,947 | 28,222 |
Net cash inflow/(outflow) from investing activities | (1,217,699) | 3,052,661 | 4,085,484 |
Cash flows from financing activities | |||
Proceeds of ordinary share issue | 11,182,908 | 8,000,000 | - |
Issuance cost of shares | (516,391) | (161,827) | - |
Proceeds of options exercised | 24,419 | 2,400,664 | 655,753 |
Capital element of finance lease payments | (4,264) | (3,881) | (63) |
Net cash inflow/(outflow) from financing activities | 10,686,672 | 10,234,956 | 655,690 |
Net (decrease)/increase in cash and cash equivalents | 1,703,222 | 2,404,649 | (689,411) |
Cash and cash equivalents at beginning of period | 7,312,203 | 4,972,844 | 4,972,844 |
Exchange (losses)/gains | 61,476 | (65,290) | |
Cash and cash equivalents at end of period | 9,076,901 | 7,312,203 | (4,282,433) |
notes to the interim financial STATEMENTs
for the six months ended 31 March 2012
General
The Company is a limited liability company incorporated and domiciled in England & Wales. The address of its registered office is Shackleton House, Kingfisher Way, Hinchingbrooke Business Park, Huntingdon, Cambridgeshire, PE29 6HB.
This condensed consolidated interim financial information was approved for issue on 24 May 2012.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 September 2011 were approved by the Board of directors on 22 February 2012 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This consolidated interim financial information has not been reviewed or audited.
2. Basis of preparation of half-year report
The financial information has been prepared in accordance with all IFRS and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that had been published by 31 March 2012 as endorsed by the European Union (EU). The Standards that will be applicable for the year ending 30 September 2012 are not known with certainty at the time of preparing the interim results. Accordingly, the accounting policies for that accounting period will be determined finally only when the annual financial statements for the year ending 30 September 2012 are prepared.
The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 September 2011, as described in those annual financial statements. As at the date of signing the interim financial statements, there are no new Standards likely to affect the financial statements for the year ending 30 September 2012.
3. Accounting policies
The accounting policies are consistent with those of the annual financial statements for the year ended 30 September 2011.
4. Loss per share
The calculation of basic and diluted loss per share is based on a loss on ordinary activities after tax of £7,784,654 (year ended 30 September 2011: £15,334,892 and six months ended 31 March 2011 £7,156,237) and a weighted average number of shares of 76,245,669 (30 September 2011: 71,987,306 and 31 March 2011 70,091,456).
5. Dividend
The directors do not intend to recommend the payment of any dividends until they consider it prudent to do so, having regard to the need to retain sufficient funds to finance the development of the Group's activities.
6. Cash used in operations
for the six months ended 31 March 2012
Six months ended 31 March 2012 Unaudited £ | Year ended 30 September 2011 Audited £ | Six months ended 31 March 2011 Unaudited £ | |
Loss before taxation | (7,784,654) | (15,334,892) | (7,156,237) |
Adjustments for: | |||
- Depreciation of property, plant and equipment | 178,639 | 182,061 | 53,759 |
- Impairment of tangible fixed assets | 530,322 | - | - |
- Amortisation of intangible fixed assets | 29,540 | 262,609 | 169,112 |
- (Profit)/loss on disposal of fixed assets | - | (2,182) | - |
- Share option compensation charge | 63,157 | 3,616,652 | 1,968,895 |
- Finance expense | 4,906 | 3,185 | 320 |
- Finance income | (9,115) | (46,947) | (28,222) |
Changes in working capital: | |||
- Inventories | (148,707) | (7,562) | 9,463 |
- Trade and other receivables | (260,667) | (452,117) | (417,059) |
- Trade and other payables | (364,266) | 292,156 | (306,996) |
Cash outflow from operations | (7,760,845) | (11,487,037) | (5,706,965) |
7. Development costs
During the period development costs of £8,954 were capitalised.
8. Impairment of tangible fixed assets
IFRS requires management to undertake a test for impairment of tangible fixed assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment testing involves management judgement requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections. The recoverable amount of tangible fixed assets is the greater of net selling price and value in use.
The net impairment losses recognised in the consolidated income statement for the six months ended 31 March 2012 relate to the Bioenergy installations.