TPG.L Regulatory News (TPG)

21 Sep 2007 07:01

Corac Group Plc21 September 2007 FOR IMMEDIATE RELEASE 21 September 2007 CORAC GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Corac Group plc ("Corac") the intellectual property, engineering and licensinggroup specialising in compressor technology, announces its interim results forthe six months ended 30 June 2007. Financial Highlights * Loss after tax reduced by 30% to £702,000 (2006: £1million) * Turnover up 45% to £765,000 (2006: £527,000) Operational Highlights Downhole Gas Compressor ('DGC') * Positive results have encouraged JIP partners to identify first wells for field trials * Successful loop testing programme set to continue in Cumbria until early 2008 * Engineers currently establishing requirements and budgets for field trials in Argentina and Italy Industrial Air * Successful shipping of Industrial Air products to end customers * Positive feedback on Corac's technology from our two present customers, LMF and Fu Sheng * Hybrid compressor technology becoming more widely accepted by the Industrial Air industry Commenting on the future, Chairman, Professor Gerry Musgrave, said: "We are delighted with the progress that both the Downhole Gas Compressor andthe Industrial Air products have made over the past six months. Corac continuesto establish its presence in these exciting markets. We are also continuing toexplore opportunities in other markets which would further diversify Corac'soperations and expertise. The Downhole Gas Compressor development is particularly exciting for us and welook forward to completing the successful testing programme in Cumbria so thatwe can begin field trials on the wells of our JIP partners. The Companycontinues to look forward to the period ahead with confidence." For further information: Professor Gerry Musgrave, Executive ChairmanThomas Ivings, Finance DirectorCorac Group plc 01895 813463 Richard Darby, Suzanne Brocks, Ben RomneyBuchanan Communications 020 7466 5000 NOTES TO EDITORS Corac is an intellectual property, engineering and licensing group which holdsmany patents. It focuses on high speed electrical direct drive turbo machinerybased on its unique expertise in gas bearings. Corac has created an innovative'no oil' turbo compressor together with a unique gas seal, and is part of ajoint 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 I am pleased to report that the last six months have been exceptionally busywith progress on all fronts. We are shipping Industrial Air compressors tocustomers and we have been heavily engaged in testing of the downhole compressorat our secure site in Cumbria. Progress has resulted in further enquiries aboutthe application of our technology from large groups in both the Oil & Gas andthe Industrial Air sectors. Financial Review The financial results for the six months ended 30 June 2007 show a loss aftertax of £702,000, a reduction from a loss after tax of £1,007,000 for the sameperiod last year. The results were in line with management expectations. At 30June 2007, the number of issued shares was 74,814,500. Shareholder funds are being used to maximise progress for the Company. Turnoverfor the six months ended 30 June 2007 was £765,000, compared with £527,000 in2006. The Company also received £61,000 (2006: £21,000) of grant income. Downhole Gas Compression ('DGC') The DGC Programme continues to reduce risk as a result of test procedures beingundertaken in Cumbria. The DGC development started over four years ago with a feasibility study, wherewe worked with Shell to investigate how the DGC concept applied to their assetsand whether it could yield economic returns. The results were so positive thatthe Joint Industry Programme ('JIP') commenced with Conoco Phillips, ENI andRepsol in three phases: Phase 1: The development of concepts to establish whether a Downhole Gas system could operate to within given environmental parameters. Phase 2: The detailed design of the components, which were manufactured and tested. Phase 3: The development and construction of the DGC unit and electronics, which were tested in our facility before proceeding to the loop test rig in Cumbria. Throughout the programme our partners have collaborated and monitored ourprogress, funding each phase with stage payments. The Cumbrian test rig commissioned last year replicates the environment of thedownhole well. It is capable of accommodating our five compressors in a stringwhich 'pump' methane gas at temperatures in excess of 100oC. Our fullymanufactured units have been on test this year and have been delivering thespeed and pressure requirements in this onerous environment. Our current testing programme has been proceeding well, highlighting a number ofdesign issues which are to be expected when rigorously testing in such a harshenvironment. We are pleased that in every area where problems have occurred wehave been able to analyse and rectify them, giving the Corac team a reputationfor delivering reliability. Testing will continue until the beginning of 2008,although it is envisaged that we will retain the Cumbria site beyond that datefor future production testing. The positive results from the loop testing programme have encouraged two of ourJIP partners to identify the first wells for field trials. Corac engineerstogether with the well-completion engineers from the gas companies have beenestablishing the engineering requirements and budgets for field trials inArgentina and Italy. This has also resulted in Corac engaging with major globalservice contractors to take advantage of their knowledge and experience, forexample in deploying electrical submersible pumps (ESPs) for the oil sectorwhich has a parallel with our unique downhole gas compressor. The UK continental shelf has a significant number of waning wells and oursolution can provide a valuable tool to gain more of the stranded gas reservesor play a role in establishing strategic reserves. Industrial Air It is pleasing to report that we are now shipping products in this sector of ourmarket and, even more importantly, that our hybrid compressor concept is beingaccepted by the Industrial Air industry. This bodes well for the future asevidenced by a number of other industrial conglomerates engaging with us with aview to adopting our technology. Gaining a significant share of the oil freeindustrial compressed air market will take time, but the experience we arehaving with our two present customers, LMF and Fu Sheng, is encouraging at thisstage of our development. The demonstration units that we have shipped and will be shipping for the restof this year are to be used by end customers and are expected to lead to anescalation of orders, as well as wider acknowledgement of Corac's technology.Our two existing contracts at the moment are serving two different sectors ofthe Industrial Air market illustrating that there are opportunities to take upfurther relationships and licence agreements in particular sectors. As the market grows, our technology will benefit from cost reduction throughvolume manufacturing. This will reinforce the apparent efficiency gains from thehybrid machine together with our inherent no- oil low maintenance machines togive an extremely cost effective product. Outlook Both the Downhole Gas Compressor and the Industrial Air products are opening upour market opportunities and we see Corac continuing to establish its presencein these markets. Further opportunities are being identified in powerelectronics in other markets and, for example, a compressor is being designed tohandle ammonia to address the commercial refrigeration market. We look forwardto the period ahead with confidence. PROFIT & LOSS ACCOUNTFor the six months ended 30 June 2007 6 months 6 months Year ended 30 ended 30 ended 31 June 2007 June 2006 December 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 765 527 1,642Cost of sales (592) (458) (1,479) Gross profit 173 69 163 Development costs (604) (421) (1,117)Administrative expenses (627) (763) (1,435)Other operating income 61 21 24 Operating loss (997) (1,094) (2,365)Net interest receivable 77 87 165 Loss on ordinary activities before taxation (920) (1,007) (2,200) Taxation 218 - 827 Loss for the period (702) (1,007) (1,373) Loss per share Basic pence per share (0.9) (1.4) (1.8) BALANCE SHEETFor the six months ended 30 June 2007 At 30 June At 30 June At 31 December 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assetsTangible assets 161 228 192 Current assetsStock - 45 -Debtors 569 1,480 770Cash held on long-term deposit 2,360 3,370 3,454Cash at bank and in hand 88 47 72 3,017 4,942 4,296 Creditors: amounts falling due within one year (618) (1,657) (1,312)Net current assets 2,399 3,285 2,984 Total assets less current liabilities 2,560 3,513 3,176 Share capital and reservesShare capital 7,481 7,443 7,443Share premium 864 858 858Capital redemption reserve 575 575 575Own shares held by Employee Benefit Trust (298) (300) (298)Share-based payment reserve 192 118 150Profit and loss account (6,254) (5,181) (5,552) Equity shareholders' funds 2,560 3,513 3,176 CASH FLOW STATEMENTFor the six months ended 30 June 2007 6 months 6 months Year ended 30 ended 30 ended 31 June 2007 June 2006 December 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash outflow from operating activities (1,709) (1,357) (1,832) Net cash inflow from returns on investmentand servicing of finance 78 87 165 Taxation 519 - 515 Net cash outflow from capital expenditure (10) (6) (17) Net cash outflow before use of liquidresources and financing (1,122) (1,276) (1,169) Management of liquid resources 1,094 41 (42) Financing 44 1,232 1,234 Increase/(decrease) in cash in the 16 (3) 23period Reconciliation of net cash flow tomovement in net funds Increase/(decrease) in cash in the period 16 (3) 23 Cash (outflow)/inflow from (decrease)/increase in liquid resources (1,094) (41) 42 Movement in net funds from cashflows (1,078) (44) 65in period Net funds at start of period 3,526 3,461 3,461 Net funds at end of period 2,448 3,417 3,526 NOTES TO THE INTERIM STATEMENTFor the six months ended 30 June 2007 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 company have remained unchanged from thoseset out in the company's 2006 Annual Report and Financial Statements. The figures for the year ended 31 December 2006 have been extracted from theAnnual Report and Financial Statements which have been filed with the Registrarof Companies. The auditor's report on those accounts was unqualified and did notcontain any statements under Section 237(2) or (3) of the Companies Act 1985.The financial information set out in this interim report does not constitutestatutory financial information within the meaning of Section 240 of theCompanies 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 company'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 2007 June 2006 December 2006 (unaudited) (unaudited) (audited) Weighted average number of shares 74,799,618 73,989,003 74,211,163in issue Diluted loss per share is not calculated since the conversion to ordinary sharesof share options would be anti-dilutive. 4 SHAREHOLDERS' FUNDS Share Share Capital Own Share- Profit Total capital premium redemption held by based and reserve Employee payment loss Benefit reserve account Trust £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 7,443 858 575 (298) 150 (5,552) 3,1762007Issue of shares 38 6 - - - - 44 FRS20 share option charge - - - - 42 - 42 Loss for period - - - - - (702) (702) At 30 June 2007 7,481 864 575 (298) 192 (6,254) 2,560 5 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 months 6 months Year ended 30 ended 30 ended 31 June 2007 June 2006 December 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating loss (997) (1,094) (2,365)Share-based payment provision 42 15 48Depreciation 40 51 98Decrease in stocks - - 45(Increase)/decrease in debtors (100) (924) 97(Decrease)/increase in creditors (694) 595 245 Net cash outflow from operating (1,709) (1,357) (1,832)activities 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