TPG.L Regulatory News (TPG)

13 Sep 2005 07:02

Corac Group Plc13 September 2005 For Immediate Release 13 September 2005 CORAC GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Corac Group plc ("Corac"), the intellectual property and licensing companyspecialising in compressor technology, announces interim results for the sixmonths ended 30 June 2005. Operational Highlights for Three Product Lines Industrial air • Successful launch of the CS Fusion no-oil industrial air compressor at the Hannover Fair, Germany. Trialling the technology anticipated in the near future; • Successful exhibition of 50 kW and 150 kW high speed direct drive turbo compressors; Downhole gas compression • Phase 2 of the Joint Industry Programme ('JIP') signed in June 2005, which involves the design and testing of important components and sub-systems of the downhole gas compressor to an international specification; High pressure dry gas seals • First commercial units of high pressure gas seals now being manufactured and tested at AESSEAL's Rotherham plant; • Marketing programme commenced in May 2005; Financial Highlights • Turnover for the period £403,000 (2004: £318,000); • Loss before tax £923,000 (2004: Loss £860,000); • Cash balance of £3.7 million (31 December 2004: £4.1 million); Commenting on outlook, Chairman, Professor Gerry Musgrave said: "Our CS Fusion machine has generated substantial interest giving us confidencethat we are able to penetrate the substantial industrial air market. Thistogether with our other industrial air opportunities, our licence fee incomefrom our dry gas seals and the potential upside from our downhole gascompression project, should give us an exciting long term future." For further information: Corac Group plc 01895 813463Prof. Gerry Musgrave, Executive ChairmanRoberta Miles, Finance Director Buchanan Communications 020 7466 5000Richard DarbySuzanne Brocks 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 a jointindustry 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 further solid progress in Corac's three product lines inthe first half of 2005. The successful launch of the CS Fusion no-oil industrialair compressor at the Hannover Fair in Germany has generated much interest inour industrial air products. Phase 2 of the Joint Industry Programme for thedownhole gas compressor has been signed following completion of Phase 1 and inaddition, marketing activities and volume production trials of our dry gas sealshave commenced with AESSEAL plc. Financial Review The financial results for the six months ended 30 June 2005 show a loss aftertax of £923,000 (2004: £860,000) on turnover of £403,000 (2004: £318,000). Inaddition to this turnover, the Company also received £45,000 (2004: £48,000) ofgrant income. The operating loss of £1,016,000 compares with 2004 operating loss of £966,000which included a significant one-off licence fee. The Company had £3.7 million in cash and treasury deposits on 30 June 2005 (£4.1million at 31 December 2004). The Board continues to review additional fundingrequirements to bring the downhole technology to its full commercial potentialand maximise future shareholder value. Industrial Air In April 2005, Corac exhibited for the first time at the Hannover IndustrialFair its CS Fusion no-oil industrial air compressor and two high speed directdrive turbo compressors in 50 kW and 150 kW sizes. In response to much interestat the Fair from major compressor companies worldwide, successful demonstrationshave been carried out at Corac's development facilities in Uxbridge. We are indiscussions with a number of parties about trialling the technology, which weanticipate will be concluded in the near future. The launch of the CS Fusion machine has significantly enhanced the marketabilityof our industrial air products. The CS Fusion unit uses a single stage of ourdeveloped direct drive turbo compressor to boost a water injected screwcompressor. A demonstrator using a modified 50 kW waterscrew and a Corac single50 kW spool produced an impressive output equivalent to a 132 kW machine, bycombining the benefits of high volume throughput of the turbo with the highpressure capability of the waterscrew. In addition, all the benefits of no oil,small size and low cost of ownership are retained. More importantly, the CSFusion machine does not threaten existing market players, but enhances theircapability. Therefore, we expect that the sale of the turbo compressors for theCS Fusion machine will give us significant market presence because of itspotential for early adoption with several leading companies. We have further developed our understanding of the refrigeration marketplace andestablished that our unique bearing technology in our turbo compressors lendsitself well to the refrigeration business. The current market for industrialrefrigeration systems is substantial, and Corac's technology is ideally suitedto the higher capacity chiller market sector. In particular, the use of ammoniaas a refrigerant gas is becoming more desirable. This natural gas satisfies newenvironmental legislation and ideally suits our technology as it results in amore efficient compressor. We are having on-going dialogue with a number ofpotential partners in the refrigeration industry. In general, we have developed modular turbo compressor technology which can beapplied to a number of different applications: turbo boosting waterscrews anddry screws, plastic bottle blowing systems and refrigeration which should enableCorac to exploit many sectors within the market. Downhole Gas Compression We were pleased to announce on 15 June 2005 the signing of the second phase ofthe Joint Industry Programme ('JIP'). This reflects the confidence of the JIPpartners, who have now committed over £2.5 million of funding since projectcommencement towards supporting and accelerating our on-going development ofCorac's unique downhole gas compressor product. The successful completion of Phase 1 has seen considerable engineering andexperimental verification work carried out. This has enabled an understanding ofthe operating environment likely to be encountered downhole and clearlyidentified solutions for the compressor's operability under a wide range of wellconditions. The functionality of Corac's air bearings with natural gas and theoperation of the compressor system under typical flow conditions have beenmodelled. Significant breakthroughs have also been achieved in the area of powertransmission and downhole electronics, thereby maximising performance. Phase 2 involves the design and testing of important components and sub-systemsof the downhole gas compressor to an international specification which shouldenable us to have good market penetration of the world's gas wells. Currentlywe are developing a comprehensive flow loop test programme for next year priorto a field trial of a prototype in a live gas well. This sector of the business is proving attractive to certain investorcommunities and the Board continues to monitor this interest to ensure thecorrect decision is taken to maximise value for shareholders. High Pressure Dry Gas Seals Corac continues to work closely with AESSEAL plc, our licensee, for themanufacture and sale of our high pressure dry gas seal. This work involvesestablishing volume production capabilities and testing facilities at AESSEAL'sRotherham plant where the first commercial units are now being tested. Inparallel, the marketing programme involves the training of their specialistsales executives worldwide and introducing the technology to the oil and gasindustry. This programme commenced in May at an AESSEAL sales conference with apresentation to their international distributors and customers. The first openinternational presentation of the products and the technology was given to theoil and gas industry at The Offshore Europe Conference & Exhibition in Aberdeenlast week and was well received. Engineering progress continues at a pace whichshould lead to royalties and increased income to Corac in the near future. Outlook Our gas seal licence with AESSEAL has verified our business model of licensingour products in the market. The CS Fusion machine has generated substantialinterest from a significant number of companies worldwide and we expect, fromthe results of our marketing and demonstrations so far, a breakthrough inlicensing sales. The outstanding performance, particularly in terms of energysavings which can be gained from the CS Fusion unit, gives us confidence that weare able to penetrate the substantial £2 billion industrial air market. Ourdownhole gas compression project has more than satisfied our JIP partners and inview of our progress should give the Company an exciting long term future. Professor G Musgrave Executive Chairman 13 September 2005 CONSOLIDATED PROFIT & LOSS ACCOUNT For the six months ended 30 June 2005 6 months 6 months Year ended ended 30 ended 30 31 December June 2005 June 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 403 318 727Cost of sales (390) (48) (430) Gross profit 13 270 297 Development costs (404) (581) (1,007)Administrative expenses (670) (703) (1,366)Other operating income 45 48 83 Operating loss (1,016) (966) (1,993)Net interest receivable 93 106 216 Loss on ordinary activities beforetaxation (923) (860) (1,777) Taxation - - 490 Loss for the period (923) (860) (1,287) Loss per shareBasic pence per share (1.3) (1.3) (1.9) CONSOLIDATED BALANCE SHEET For the six months ended 30 June 2005 At 30 June At 30 June At 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000Fixed assetsTangible assets 324 410 373 Current assetsStock 45 50 50Debtors 1,105 838 850Cash held on long-term deposit 3,659 4,460 4,045Cash at bank and in hand 51 314 38 4,860 5,662 4,983Creditors: amounts falling duewithin one year (1,140) (686) (395) Net current assets 3,720 4,976 4,588 Total assets less currentliabilities 4,044 5,386 4,961 Share capital and reservesShare capital 6,877 6,869 6,871Share premium 11 11 11Capital redemption reserve 575 575 575Own shares held by Employee BenefitTrust (300) (300) (300)Profit and loss account (3,119) (1,769) (2,196) Equity shareholders' funds 4,044 5,386 4,961 CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2005 6 months 6 months Year ended ended 30 ended 30 31 December June 2005 June 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash outflow from operatingactivities (798) (1,071) (1,851) Net cash inflow from returns oninvestment and servicing of finance 93 106 216 Taxation 335 427 427 Net cash outflow from capital expenditure (9) (49) (72) Net cash outflow before use ofliquid resources and financing (379) (587) (1,280) Management of liquid resources 386 868 1,283 Financing 6 17 19 Increase in cash in the period 13 298 22 Reconciliation of net cash flow tomovement in net funds Increase in cash in period 13 298 22Cash outflow from decrease in liquid (386) (868) (1,283)resources Movement in net funds from cashflows (373) (570) (1,261)in periodNet funds at start of period 4,083 5,344 5,344 Net funds at end of period 3,710 4,774 4,083 NOTES TO THE INTERIM STATEMENT For the six months ended 30 June 2005 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 2004 Annual Report and Financial Statements. The figures for the year ended 31 December 2004 have been extracted from theAnnual Report and Financial Statements which have been filed with the Registrarof Companies. The auditors' 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 auditors. 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 2005 June 2004 December 2004 (unaudited) (unaudited) (audited) Weighted average number of shares inissue 68,740,145 68,658,701 68,683,950 4 SHAREHOLDERS' FUNDS Share Share Capital Own Profit Total capital premium redemption shares reserve held by and Employee loss Benefit Trust £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 6,871 11 575 (300) (2,196) 4,9612005Issue of shares 6 - - - - 6Loss for period - - - - (923) (923) At 30 June 2005 6,877 11 575 (300) (3,119) 4,044 5 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 months 6 months Year ended 30 ended 30 ended 31 June 2005 June 2004 December 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating loss (1,016) (966) (1,993)Depreciation 58 61 121Decrease in stocks 4 - -(Increase)/decrease in debtors (590) (428) 49Increase/(decrease) in creditors 746 262 (28) Net cash outflow from operatingactivities (798) (1,071) (1,851) 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. END This information is provided by RNS The company news service from the London Stock Exchange