TPG.L Regulatory News (TPG)

29 May 2012

CORAC GROUP PLC

AGM Statement and Business Update

Corac Group plc ("Corac") the innovative technology-led engineering group, serving the global oil and gas, defence and industrial markets, provides a business update today in advance of its AGM being held at the Group's Technology Centre, Slough later today. Highlights include:

·; Consolidation of the recent acquisitions proceeding according to plan

·; Rebranding of all three businesses underway

·; Both acquired businesses continue to build strong order books

·; Corac development projects progressing in line with recent announcements

·; Broader pipeline with greater commercial interest in Corac's technology platform

·; Group retains a robust financial position with net cash

·; Current performance in line with expectations

Consolidation and rebranding of the enlarged Group

Following the successful completion of the acquisition of the Wellman Defence and Wellman Hunt Graham businesses in April 2012, the consolidation of these businesses into the enlarged Corac Group is progressing well.

As part of the acquisition agreement, the Wellman brand is being retained by the vendor. To better reflect its business activity and recognise the opportunity to promote its technology more widely, Wellman Defence has been rebranded Atmosphere Control International ("ACI"). Wellman Hunt Graham will simply be known as Hunt Graham ("HG") in order to retain its well established international brand identity.

As an enlarged Group and in line with building the three businesses as separately established but co-operating entities, the original Corac technology business is being rebranded as Corac Energy Technologies ("CET"). All three companies will be referred to in general communications as members of the Corac Group plc to strengthen their status as complementary businesses within the Group.

A new senior management structure is now in place, focusing on delivering continuity of operations, business results and growth, as well as the integration of management reporting and other head office functions.

Atmosphere Control International and Hunt Graham

Both the acquired businesses have continued to develop their order books and manage the delivery of existing customer work as planned. As an example of this, HG has just secured a significant refurbishment order for a condenser unit at a chemical plant in South Wales with a long term customer that has had an active relationship with the business spanning many years. The original unit was installed by HG in 1995 and the new activity will assure the customer of continued availability and reliable performance for many years to come, being typical of the customer support provided by HG.

ACI has been awarded the second part of a nine year worldwide in-service maintenance and support contract for Submarine Atmosphere Control Equipment for the Royal Navy's fleet of Nuclear Powered Submarines. This four year, multi million pound key contract extension provides significant future revenue and contribution visibility and further reinforces the commitment to the ACI technical solution.

In addition, ACI has delivered the last two of four regenerable CO2 removal systems to Navantia, the Spanish submarine builder, for installation in its advanced S-80 Class Submarine programme. These are the latest and most advanced designs produced by ACI for the worldwide Air-Independent Propulsion submarine market and have attracted the attention of a number of overseas submarine builders. ACI is optimistic of leveraging this platform through follow-on opportunities in training, spares and support as well as providing further systems for other vessels.

Corac Energy Technologies

CET's Technology Delivery Team together with our development partners, continue to make progress on current projects in line with recent announcements. In addition, the Business Development Team is supporting a growing range of enquiries from existing and new potential partners for Technology application projects and continues to broaden and deepen its pipeline of commercial opportunities in its core oil and gas markets as well as in the industrial sector.

We are pleased to announce that following discussions with a number of global industrial companies' in the Turbocompression sector, CET has secured two agreements for funded early stage design and consultancy projects, which will benefit the current financial year's performance. These feasibility studies will explore areas where Corac's core technology can be applied in industrial Turbocompression applications. The CET Technology Innovation and Development Teams are now working on test and preliminary design work that if successful could provide the opportunity to progress to prototype build programs.

Alongside this progress, CET is now in final stage and contract negotiations with three major oil and gas companies regarding our core motor and gas compression technologies. The Board will make further announcements with regards to completion of these negotiations when appropriate, and is hopeful that these agreements will benefit performance in the second half of the current financial year.

Outlook

As an enlarged Group, Corac continues to trade in line with the Board's expectations. The Group order book as at the end of April 2012 stood at £17.3m providing considerable visibility for performance for the financial year as a whole and initial optimism for continuing progress in 2013. Net cash at the end of April 2012 stood at £7.5m.

Phil Cartmell, Executive Chairman said:

"Consolidation of our recent acquisitions is going to plan and the three businesses are focussed on delivery of their commercial and development plans; the Group's order book and pipelines are strong and our financial position is robust. We look forward to the future as an enlarged business with growing revenues in attractive global markets."

Analyst and Investor Site Visit

Corac management is hosting a site visit to the new CET Technology Centre in Slough for a group of analysts and institutional investors this afternoon. Discussions will be consistent with the Business Update above.

ENDS

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NOTES TO EDITORS

Corac is a UK based innovative technology-led engineering group, serving the global oil and gas, defence and industrial markets, trading shares on the London Alternative Investment Market (AIM) since July 2001.