HYR.L Regulatory News (HYR)

29 Sep 2006 07:03

HydroDec Group plc29 September 2006 Hydrodec Group plc Interim Results Hydrodec Group plc (AIM:HYR) today announces Interim Results for the six monthsended 30 June 2006. Highlights Operational: • Completed construction and opened the 20,000 litre per day refining facility at Young, New South Wales on schedule • Secured significant orders for SuperfineTM from South Australian utility and others • Appointed US Vice President and targeting operations in US in 2008 • Strong results from SuperfineTM testing by SD Myers and Doble Engineering in the US Financial: • Revenues: £413,302 (2005: nil) • Net operating loss £1,149,457 (2005: £682,893) • Net assets £10,880,046 (2005: £10,123,406) Hydrodec Chairman John Gunn said: "We have made rapid progress in the period in raising levels of awareness of thequality of our Superfine product and have seen corresponding growth in demandfrom key clients in the Australian transformer oil market. "The foundations we have established over the past six months have seen Hydrodecmove from an innovative technology to a revenue generating business. As take upof Superfine continues and progress into the lucrative American market is made,I look forward to reporting further progress to you in the near future." For further information please contact:- John Gunn, Chairman, Hydrodec Group plc Tel: 020 7236 6236 Nick Fox, M:Communications Tel: 020 7153 1530 Chairman's Statement The first half of 2006 has seen significant developments in thecommercialisation of Hydrodec's technology. On 24 April the commissioning of the20,000 litre per day refining facility in Young, New South Wales was completed.During the construction of the plant, significant progress was made to createmarket awareness and understanding of SuperfineTM oil within the transformer oilindustry. In March 2006 TransGrid, the New South Wales power transmission authority,issued a standing purchase order stating Hydrodec is now qualified to treat itsused low-level and high-level PCB contaminated transformers and associatedequipment. Additionally, significant purchase orders for SuperfineTM werereceived, including the treatment and refining of 230,000 litres of low levelPCB contaminated transformer for a South Australian Utility and agreement tosupply more than 200,000 litres of oil for refining from SP AusNet of Victoria. SuperfineTM orders also came from a New South Wales utility and a servicecompany in Southern Australia for transformer retro-fills. Bulk shipment ofSuperfinetm commenced in late August 2006. Whilst the orders are relativelysmall in terms of financial impact, the rapid and increasing take up and themarket acceptance of SuperfineTM is extremely encouraging. This was underlined by the announcement on 8 August (following the periodcovered by these accounts) that written acceptance had been received from aleading Australian transformer manufacturer, and conditional acceptance from atleast one other, along with major transformer purchasers, for bulk supply ofSuperfineTM in new transformers. It is anticipated these orders will continue togrow as SuperfineTM gains market penetration. The new contracts are underpinnedby additional used oil feedstock supply commitments from major utilitycompanies, which commenced in July 2006. Whilst the initial focus is on the Australian market, Hydrodec's technology hasglobal applications, and a key market for the future will be the USA. InFebruary 2006, the Company announced the appointment of John Cowan as ExecutiveVice President North American Operations. John has more than 25 years experiencein the environmental technology and treatment industries in the US andAustralia. Hydrodec is continuing negotiations with US transformer services and transformeroil management companies for the establishment of a Hydrodec oil refiningtechnology in North America. The Company is targeting commencement of oilrefining operations in North America in early 2008. A key step in achieving thisoccurred on 24 April 2006 when Hydrodec received the results of independenttesting of SuperfineTM by SD Myers and Doble Engineering laboratories in theUSA. The independent report concluded that SuperfineTM is "a high qualitymineral insulating oil meeting industry standards". In particular SuperfineTMproved to have excellent oxidation stability and very good corrosive sulphurresults when evaluated against extended corrosive sulphur test regimes. Continued national and international government action, corporate activity andpublic awareness illustrate the increasing profile and importance of the greenindustry to the global economy. Hydrodec is at the forefront of sustainableenvironmental technology and, in a short space of time, has made tremendouscommercial progress. SuperfineTM is progressively securing internationaltechnical acceptance and continues to increase its market penetration of theAustralian transformer oil market. Hydrodec has moved from an innovative technology to a revenue generatingbusiness and as take up of SuperfineTM continues and progress into the lucrativeAmerican market is made, I look forward to reporting further progress to you inthe near future. John Gunn Non-executive Chairman About Hydrodec: Hydrodec's technology is a modified oil refining process. It utilises anadvanced form of catalytic hydrogenation, and is based upon packed bedhydrogenation processes, together with patented intellectual property thatprevents the deactivation of the catalyst. This means that a variety ofPersistent Organics Pollutants or POP's can be treated in an environmentallysafe, zero-emission process with no direct air emissions. The technology can be applied to a number of oils, but the initial market thathas been targeted is the treatment of transformer oil. Transformer oil that hasbeen re-refined through the Hydrodec process is sold as Superfinetm oil. CONSOLIDATED PROFIT AND LOSS Note (Unaudited) (Unaudited) 6 months 6 months ended 30 ended 30 June 2006 June 2005 £ £ Turnover 413,302 - Cost of sales (164,849) - Gross profit 248,453 - Administrative expenses (1,397,910) (682,893) Operating loss (1,149,457) (682,893) Share of loss of associate - (54,934) Interest receivable 53,928 31,992 Loss on ordinary activities before and after (1,095,529) (705,835)taxation Loss retained for the period (1,095,529) (705,835) Loss per shareBasic 4 (0.61)p (0.45)p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (Unaudited) (Unaudited) 6 months 6 months ended ended 30 June 31 June 2006 2005 £ £ Loss for the financial period (1,095,529) (705,835)Currency differences (159,611) (14,999)Total recognised losses (1,255,140) (720,834) CONSOLIDATED BALANCE SHEET Note (Unaudited) (Unaudited) As at As at 30 June 2006 30 June 2005 £ £Fixed assetsIntangible 6 7,079,403 7,669,353Tangible assets 3,450,036 378,901 10,529,439 8,048,254 Current assetsDebtors 375,116 136,804Cash at bank and in hand 493,257 2,210,150 868,373 2,346,954 Creditors: amounts falling due within one (376,054) (271,802)year Net current assets 492,319 2,075,152 Creditors: amounts falling due after one (141,712) -year Total assets less current liabilities 10,880,046 10,123,406 Capital and reservesCalled up share capital 893,227 782,500Share premium account 15,325,306 10,065,050Share options reserve 1,913,889 -Foreign exchange reserve (163,473) -Profit and loss account (7,088,903) (724,144) Equity shareholders' funds 7 10,880,046 10,123,406 CASH FLOW STATEMENT Note (Unaudited) (Unaudited) 6 months 6 months ended ended 30 June 30 June 2006 2005 £ £ Net cash (outflow)/inflow from operating 8 (1,540,082) (652,336)activities Returns on investments and servicing offinanceInterest received 53,928 340 Taxation - - Capital expenditure and financial investmentPayments to acquire tangible fixed assets (1,353,818) (99,683) FinancingIssue of new shares 72,617 -Share issue costs (52,434) (Decrease)/increase in cash 9 (2,767,355) (804,113) NOTES TO THE INTERIM REPORT 1 BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Theprincipal accounting policies of the Group have remained unchanged from thoseset out in the Group's 31 December 2005 annual report and financial statements.The interim financial statements have not been reviewed by the Group's auditors. 2 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. 3 TAXATION There is no tax charge for the interim period. 4 EARNINGS PER SHARE 6 months ended 6 months ended 30 June 2006 30 June 2005 £ £ Loss for the financial period 1,095,529 705,835 Number Number of shares of shares Weighted average number of shares 178,645,402 156,500,000in issue For basic earnings per share (0.61)p (0.45)p 5 DIVIDENDS No dividends have been paid or proposed for the period. 6 INTANGIBLE FIXED ASSETS (Unaudited) £Cost At 31 December 2005 and 30 June 2006 7,866,003 AmortisationAt 31 December 2005 524,400Charge for the period 262,200At 30 June 2006 786,600 Net book valueAt 30 June 2006 7,079,403 At 31 December 2005 7,341,603 The goodwill arises on the acquisition of Hydrodec Development Corporation PtyLimited and is being amortised over its estimated useful life of 15 years. 7 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS (Unaudited) (Unaudited) 6 months 6 months ended ended 30 June 30 June 2006 2005 £ £ Loss for the financial period (1,095,529) (705,835)Share issue costs - (52,434)Currency transaction differences (159,611) (14,999) (1,255,140) (773,268) Opening shareholders' funds 12,135,186 10,896,674Closing shareholders' funds 10,880,046 10,123,406 8 NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (Unaudited) (Unaudited) 6 months 6 months ended ended 30 June 2006 30 June 2005 £ £ Operating loss (1,149,457) (682,893)Depreciation 13,262 14,013Amortisation of goodwill 262,200 196,650(Increase) in debtors (119,496) (86,270)Decrease in inventories 2,526 -(Decrease) in creditors (422,308) (93,836)Increase in employee entitlements 32,802 -Movement in Foreign Exchange (159,611) -Net cash (outflow)/inflow from (1,540,082) (652,336)operating activities 9 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (Unaudited) (Unaudited) 6 months 6 months ended ended 30 June 30 June 2006 2005 £ £ (Decrease)/increase in cash in the (2,767,355) (804,113)periodNet funds at the beginning of the 3,260,612 3,014,263periodNet funds at the end of the period 493,257 2,210,150 This information is provided by RNS The company news service from the London Stock Exchange