TPG.L Regulatory News (TPG)

19 Sep 2006 07:01

Corac Group Plc19 September 2006 For Immediate Release 19 September 2006 CORAC GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 Corac Group plc ("Corac") the intellectual property, engineering and licensinggroup specialising in compressor technology, announces its interim results forthe six months ended 30 June 2006 and continued success in the commercialisationof its technology. Operational Highlights * Appointment of Alan Wood, CBE as Non-Executive Director in April 2006. Downhole Gas Compression (DGC) * Development of flow loop test rig to allow evaluation of a full set of compressors in simulated downhole conditions; * JIP Steering Committee endorsed progress of Joint Industry Programme, which remains on track; * Planning for field trials underway with Conoco Phillips (UK), Eni SpA and Repsol YPF with units deployed in 2008; * Two competitive DTI grants won for DGC power electronics system, providing £900,000 over three year period. Industrial air * First 150 kW machine due to be shipped to Leobersdorfer Maschinenfabrik AG; * Two field trial CS Fusion machines for major Far Eastern compressor manufacturer in progress; High Pressure Gas Seals * Manufacturing capability of product range is nearing completion with partner AESSEAL. Financial Highlights * Turnover up 31% to £527,000 (2005: £403,000); * Loss before taxation of £1.0 million (2005: £943,000 - restated for adoption of FRS20); * Loss per share 1.4p (2005: 1.4p); * Cash at year end £3.4 million (£3.5 million at 31 December 2005) after Institutional Placing of £1.1 million during period. Commenting on the future, Chairman, Professor Gerry Musgrave, said: "As the Downhole Gas Compressor progresses towards a working prototype for thissignificant global market, it is important that our other target markets haveproducts that deliver income and cash flow now, establishing the Group'spresence in these respective sectors. We are pleased with our ongoing progressand continue to look forward to the future with enthusiasm." For further information: Professor Gerry Musgrave, Executive ChairmanThomas Ivings, Finance DirectorCorac Group plc 01895 813463 Richard Darby, Suzanne Brocks, Ben WilleyBuchanan Communications 020 7466 5000 Notes to editors Corac is an intellectual property, engineering and licensing group, focussing onhigh speed electrical direct drive turbo machinery based on its unique expertisein gas bearings for which it holds several patents. Corac has created aninnovative 'no oil' turbo compressor together with a unique gas seal, and ispart of a joint industry programme for the downhole gas extraction industry. Further information on Corac is available on the internet at www.corac.co.uk CHAIRMAN'S STATEMENT Introduction The Group continues to make sound progress, with the building of prototypes forour Industrial Air partners, flow loop testing facilities for our Downhole GasCompressor (DGC) and production design of high pressure gas seals with ourpartner, AESSEAL. In April, we were delighted to welcome to the Board as a Non-Executive DirectorAlan Wood CBE, Chief Executive of Siemens plc, who brings a wealth of experiencein the large industrial engineering arena and contacts within the internationalcommunity. As the development of our products continues, we had a portfolio of 52 patentsby the end of the six months under review, an increase of 6 patents. Financial Review The financial results for the six months ended 30 June 2006 show a loss aftertax of £1.0 million (2005: £0.9 million restated for the adoption of FRS20) onturnover of £527,000 (2005: £403,000). In addition to this turnover, the Companyalso received £21,000 (2005: £45,000) of grant income. The operating loss of £1,094,000 compares with the 2005 operating loss of£1,036,000 (restated for the adoption of FRS20) and is in line with managementexpectations. At 30 June 2006, the Group's cash and treasury deposits amounted to £3.4 million(£3.5 million at 31 December 2005). During the period under review, the Companyissued 3,528,900 Ordinary Shares of 10p each for cash at £0.32 per share bymeans of an Institutional Placing which, net of costs, raised approximately £1.1million. At 30 June 2006 the number of issued shares was 74,429,700. Downhole Gas Compressors Since the beginning of the year, the Group has been working with Advantica, asubsidiary of National Grid, in the design of a major test rig for flow looptesting in the final development phase of the Joint Industry Programme (JIP).This recently culminated in the signing of a contract with Advantica for thedevelopment and operation of the flow loop test rig, which will allow theevaluation of a full set of compressors in simulated downhole conditions. Duringthe period, the JIP Steering Committee endorsed our progress which remains ontrack. All three partners, Conoco Phillips (UK), Eni SpA and Repsol YPF will beplanning field trials in 2007 with the units deployed in 2008. They are allhighly motivated by the prospects of wells all over the world delivering up to40% extra gas. Preparation for field trials has already commenced and will continue next yearwith site selection and infrastructure development, as well as the building ofcompressor units. Each JIP partner is budgeting significant sums for completionof the final development phase, of which the Group will receive a materialelement. With significant increases in energy prices throughout the last year,the potential market for our unique downhole compressor system is becoming evengreater. The innovation in our power electronics system has enabled Corac to win twocompetitive DTI grants providing a contribution of £900,000 towards costs, to bereceived over a three-year period. The result of this collaborative researchwork will extend the operating temperature capabilities of our AC/DC electronicsswitching system for our downhole compressor modules. This will also potentiallygive us capabilities in handling motor controls for other high temperatureapplications. Industrial Air Following the signing of contracts with two international compressormanufacturers around the year-end, the first 150 kW machine is due to be shippedto Leobersdorfer Maschinenfabrik AG. This machine is scheduled to be exhibitedin Munich Congress in November 2006. The second contract with a major FarEastern compressor manufacturer is for two field trial CS Fusion machines whichare in progress. This is expected to lead to further orders as Corac is offeringnew technology that delivers 15% greater efficiency than competing dry screwmachines, with the advantages of no oil contamination, reduced maintenance andlower capital and operating costs. These characteristics are important for manyend users, particularly those in China, where there is a growth rate of some 26%per year for this type of compressor. Our involvement with these international players is exciting because bothcompanies operate in different application areas giving the Group steady growthin revenues for the future and the opportunity for significant market presence.There are a number of other companies showing interest in our technology, bothin the conventional air sector, as well as in refrigeration. Whilst breakinginto new market areas is slow and often frustrating, we anticipate furthercontracts in the near future. High Pressure Gas Seals Licence The dry gas seals business continues to progress with our partner, AESSEAL.Manufacturing capability of our product range in accordance with the standardsrequired by the industry is nearing completion. Selective presentations topotential end customers continue to be encouraging. Outlook and Future Prospects As the Downhole Gas Compressor progresses towards a working prototype for thissignificant global market, the risks associated with this innovative project arereduced. Whilst the Downhole Gas Compressor will not be a true commercialproduct until 2009, it is important that our other target markets have productsthat deliver income and cashflow now, establishing the Group's presence in theserespective sectors. We are pleased with our ongoing progress and continue tolook forward to the future with enthusiasm. Professor G MusgraveExecutive Chairman19 September 2006 CONSOLIDATED PROFIT & LOSS ACCOUNTFor the six months ended 30 June 2006 6 months 6 months Year ended 30 ended 30 ended 31 June 2006 June 2005 December 2005 (restated) (restated) (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 527 403 836Cost of sales (458) (390) (796) --------- ---------- ---------- Gross profit 69 13 40 Development costs (421) (404) (974)Administrative expenses (763) (690) (1,359)Other operating income 21 45 83 --------- ---------- ----------Operating loss (1,094) (1,036) (2,210)Net interest receivable 87 93 182 --------- ---------- ----------Loss on ordinary activities beforetaxation (1,007) (943) (2,028) Taxation - - 116 --------- ---------- ----------Loss for the period (1,007) (943) (1,912) --------- ---------- ----------Loss per share Basic pence per share (1.4) (1.4) (2.8) At 30 June At 30 June At 31 December 2006 2005 2005 (restated) (restated) (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assetsTangible assets 228 324 273 Current assetsStock 45 45 45Debtors 1,480 1,105 556Cash held on long-term deposit 3,370 3,659 3,411Cash at bank and in hand 47 51 50 --------- ---------- ---------- 4,942 4,860 4,062Creditors: amounts falling duewithin one year (1,657) (1,140) (1,062) --------- ---------- ----------Net current assets 3,285 3,720 3,000 --------- ---------- ----------Total assets less current liabilities 3,513 4,044 3,273 --------- ---------- ----------Share capital and reservesShare capital 7,443 6,877 7,058Share premium 858 11 11Capital redemption reserve 575 575 575Own shares held by Employee Benefit Trust (300) (300) (300)Share-based payment reserve 118 86 103Profit and loss account (5,181) (3,205) (4,174) --------- ---------- ----------Equity shareholders' funds 3,513 4,044 3,273 --------- ---------- ---------- 6 months 6 months Year ended 30 ended 30 ended 31 June 2006 June 2005 December 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash outflow from operating (1,357) (798) (1,473)activities Net cash inflow from returns on investmentand servicing of finance 87 93 182 Taxation - 335 495 Net cash outflow from capital expenditure (6) (9) (13) --------- ---------- ---------- Net cash outflow before use of liquidresources and financing (1,276) (379) (809) Management of liquid resources 41 386 633 Financing 1,232 6 187 --------- ---------- ---------- (Decrease)/increase in cash in the period (3) 13 11 --------- ---------- ---------- Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in period (3) 13 11Cash outflow from decrease in liquid (41) (386) (633)resources --------- ---------- ----------Movement in net funds from cashflows in (44) (373) (622)periodNet funds at start of period 3,461 4,083 4,083 --------- ---------- ----------Net funds at end of period 3,417 3,710 3,461 --------- ---------- ---------- 1 BASIS OF PREPARATION The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Theinterim financial information has been prepared on the basis of the accountingpolicies set out in the company's annual financial statements for the year ended31 December 2005 with the exception that FRS 20 'Share-based Payments' has beenadopted in the interim financial statements. In accordance with FRS 20, the fair value of equity-settled share-based paymentsis determined at the date of grant and is expensed on a straight-line basis overthe vesting period based on the company's estimate of the options that willeventually vest. The adoption of FRS 20 has resulted in a charge to the profitand loss account of £15,000. Following the adoption of FRS 20, a prior year adjustment has been made whichresults in a decrease in the profit and loss reserve brought forward at 1January 2006, and the creation of a share-based payment reserve, of £103,000.The profit and loss account for the period ended 30 June 2005 and the year ended31 December 2005 have been restated for charges of £20,000 and £37,000respectively. The figures for the year ended 31 December 2005 have been extracted from theAnnual Report and Financial Statements which have been filed with the Registrarof Companies, amended for the adoption of FRS 20. The auditor's report on thoseaccounts was unqualified and did not contain any statements under Section 237(2)or (3) of the Companies Act 1985. The financial information set out in thisinterim report does not constitute statutory financial information within themeaning of Section 240 of the Companies Act 1985. The interim information in this report has been neither audited nor reviewed bythe company's auditor. 2 TURNOVER All turnover has been derived from the group's research and developmentactivities, and the commercialisation of its resultant intellectual property. 3 LOSS PER SHARE The calculation of the loss per share is based on the loss for the perioddivided by the weighted average number of shares in issue during the period asfollows: 6 months 6 months Year ended 30 ended 30 ended 31 June 2006 June 2005 December 2005 (unaudited) (unaudited) (audited) Weighted average number of shares inissue 73,989,003 68,740,145 68,905,374 ----------- ---------- ----------- 4 SHAREHOLDERS' FUNDS Share Share Capital Own Share- Profit Total capital premium redemption shares based and reserve held by payment loss Employee reserve account Benefit (restated) (restated) Trust £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 7,058 11 575 (300) 103 (4,174) 3,273 Issue of 385 847 - - - - 1,232sharesFRS 20 share option charge - - - - 15 - 15 Loss for - - - - - (1,007) (1,007)period -------- -------- -------- -------- -------- -------- -------- At 30 June 2006 7,443 858 575 (300) 118 (5,181) 3,513 -------- -------- -------- -------- -------- -------- -------- 5 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 months 6 months Year ended 30 ended 30 ended 31 June 2006 June 2005 December 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating loss (1,094) (1,036) (2,210)Share-based payment provision 15 20 37Depreciation 51 58 112Decrease in stocks - 4 4Increase in debtors (924) (590) (84)Increase in creditors 595 746 668 ------- ------- -------Net cash outflow from operatingactivities (1,357) (798) (1,473) ------- ------- ------- 6 COPIES OF THE INTERIM STATEMENT Copies of the interim statement will be sent to shareholders. Further copieswill be available from the Company's registered office at Brunel Science Park,Kingston Lane, Uxbridge, Middlesex UB8 3PQ for one month from today. This information is provided by RNS The company news service from the London Stock Exchange