Oxford Catalysts Group plc - Preliminary results for the year ended 31 December 2007
31 Mar 2008
Oxford Catalysts Group PLC, the leading catalyst innovator for clean fuels, announces today its preliminary results for the year ended 31 December 2007.
Highlights
* Development revenues of £163,000, 156%
ahead of 2006 - split across Europe,
the USA and Asia
* First license deal signed with Novus Energy for
second generation
waste-to-fuels
* Potential to deliver
royalty income of $750,000 p.a. per average
full-scale
plant
* Novus Energy plans to
roll out dozens of full-scale facilities over a
period of 5
years
* Memorandum of understanding with FMCG giant to
commercialise Instant Steam
technology
* Dedicated business development function in
place - appointment of two
senior executives
* Proventec steam cleaning prototype development
successfully concluded
* Completed second and third of five milestones
in Carbon Trust grant funded
project on or ahead of technical
targets
* Pilot plant testing of catalysts expected in
2008
* In response to ongoing growth and development
needs: appointment of
full-time Group CFO; doubling of office
and laboratory space and investment
in additional state-of-the art
equipment
* £15.6 million in cash and short term
deposits at year end, including £4.0
million raised from major institutional
investor, Pioneer Investments
Dr Pierre Jungels, CBE, Chairman of Oxford Catalysts, said:
"Oxford Catalysts is in better shape than ever. We've assembled a world-class team and have made huge strides in commercialising our technology. The breadth and depth of engagement with partners and potential customers achieved in 2007 is very encouraging.
"We are where we hoped we would be at this stage of our development, yet with a stronger balance sheet, which is proving to be a particularly valuable asset in the current market environment. We foresee significant progress ahead and multiple opportunities to create value for our shareholders."
For further information, please contact:
Roy Lipski, CEO, Oxford
Catalysts
01235 841 700
Jonathan Marren / Oliver Stratton, KBC Peel Hunt (Nomad and
Broker) 020
7418 8990
Billy Clegg / Alex Beagley, Financial
Dynamics
020 7831 3113
Notes to Editors
Oxford Catalysts designs and develops specialty catalysts for the generation of clean fuels from both conventional fossil fuels and certain renewable sources. The Company has two key platform technologies resulting from almost 20 years of research at the University of Oxford's prestigious Wolfson Catalysis Centre. The first platform is for a novel class of catalysts incorporating metal carbides, which can match or exceed the benefits of traditional precious metal catalysts, at a lower cost, for several key processes used in the petroleum and petrochemical industries. The second relates to a series of unique chemical reactions which can be used to generate either steam or hydrogen gas, instantaneously, starting from room temperature, using a cheap and liquid fuel alongside the Company's patented catalysts. Such unprecedented Instant Steam has exciting potential applications in a broad range of markets, from cleaning and disinfecting, to backup power and propulsion.
Oxford Catalysts Group PLC is listed on London's AIM market (coding symbol OCG). Oxford Catalysts operates a wholly owned subsidiary in the UK (Oxford Catalysts Limited ("OCL")).
CHAIRMAN'S STATEMENT
Dr Pierre Jungels, CBE
This is my second full year report to shareholders as Chairman of Oxford Catalysts Group PLC, and I am pleased to report on significant progress.
Oxford Catalysts is commercialising cutting-edge technology that has the potential to reduce the cost of catalysts used in, and enhance the performance of, key processes in both the conventional and alternative energy markets, as well as provide a unique means of producing portable steam instantly.
The advances that the Company has made during the period are very encouraging, as is management's continued success in delivering against strategy. As we approach the second anniversary of our IPO, Oxford Catalysts is looking less and less like a university start-up, and more and more like an established commercial organisation.
The Company has instilled efficient business processes, procedures and disciplines, which together with the first-rate team we have assembled, leave Oxford Catalysts well placed to keep company with some of the world's top businesses.
I believe that we have solid foundations from which to manage our rapid growth.
During the period, the Board was strengthened with the appointment of Jeremy Scudamore as a Non-executive Director. Jeremy led the £1.3 billion buyout of Zeneca Specialities from AstraZeneca in what was, at the time, the largest ever buyout in Europe. Jeremy currently enjoys a number of other public company Non-executive Directorships in the technology industry, including ARM Holdings PLC - regarded by many as a textbook example of a successful IP licensing business.
July saw us welcome Pioneer Investments to the share register, along with the placing of 3,225,807 new shares which raised £4.0 million net of expenses for the Company. Pioneer Investments, which has assets under management of over Euro200 billion, is the fund management arm of the UniCredit Group, one of the largest banking and financial services organisations in Europe.
The continued achievements of the business are largely down to the people we have. The Board is grateful to the whole of the Oxford Catalysts team for their dedication and for their hard, as well as smart work during the year.
Outlook
We are confident that 2007's strong performance will continue. Oxford Catalysts is well positioned to capitalise on its achievements in the development and commercialisation of its technology, whilst continuing to focus on the protection and enhancement of its IP. This is an exciting period for Oxford Catalysts.
We are forging good relationships with global players in our key markets. Our cutting-edge technologies continue to attract the attention and advances of our peers. We are enthusiastic about the coming year, and anticipate continued growth and development building on our solid foundations.
CHIEF EXECUTIVE'S REPORT
Roy Lipski
I am happy to report on the major operational and strategic advances made by the Group during 2007. We have a highly motivated, world-class team that has extended the breadth of engagement we have with potential customers the world over.
Commercialisation
The Group's commercialisation program is gaining traction, with the pace of progress continuing to accelerate.
We have signed our first license deal through a strategic
alliance with Novus Energy LLC to develop and deploy technology for
the production of second-generation fuel-grade alcohols from
organic waste materials. This has the potential to deliver royalty
income of $750,000 p.a. per average full-scale plant; Novus Energy
has announced plans to roll out dozens of on-site facilities in the
US over a period of 5 years, and a similar number in Europe. We are
working well with our new partner; the pilot plant for
demonstrating the
technology is targeted to be operational in the first half of the
year, with the first commercial unit expected in 2009/10.
To date, Oxford Catalysts has secured 80 non-disclosure and / or material transfer agreements - double the number at the same time last year (40). Furthermore, we signed our first three letters of intent / memoranda of understanding (MoU), including an MoU for the commercialisation of our Instant Steam technology with a global Fast Moving Consumer Goods (FMCG) giant. This agreement has the potential to propel the Group's catalyst innovations to a multitude of consumers worldwide.
We have continued our engagement with oil Majors for the potential deployment of our catalysts in large scale Fischer-Tropsch (FT) applications; encouragingly, those companies that have tested our catalyst have continued to come back for further samples. In addition, testing of our most recently developed hydro-desulphurisation (HDS) catalyst is timetabled for 2008 with large oil companies and refiners in Europe, the US, Asia and the Middle East.
Oxford Catalysts is successfully supplementing its activities with oil Majors by engaging with specialists in the area of small scale FT. On a small scale, the economics of gas-to-liquid conversion are more challenging, and hence the role of highly active and cost-effective catalysts - a defining strength of the Group's catalysts - is becoming central to the commercial viability of the process. A key attraction of these opportunities is that they offer the potential to generate revenues for the Group sooner than large scale applications of FT, whilst at the same time validating our credentials on a commercial platform. We are seeing particularly strong interest in this area and are expecting to progress to long duration, as well as pilot scale testing with several parties in 2008. As pilot unit testing is the penultimate stage before commercial demonstration, this is an encouraging development for our shareholders.
During 2007, we successfully completed the Instant Steam prototype development for Proventec, and are currently exploring licensing opportunities for the technology developed. Other potential partners have expressed real interest in our steam technology for uses such as cleaning and disinfecting, power generation and propulsion.
The Oxford Catalysts brand is increasingly recognised in its markets. Our innovations have received high profile media attention during the period, including coverage on BBC News and feature articles in Petroleum Technology Quarterly, Chemical & Engineering News, Chemistry & Industry, Eureka magazine, The Chemical Engineer and Chemistry Today.
Technical Development
Considerable progress has been made in FT catalyst development, including the demonstration of highly active and cost-effective catalysts, particularly for small scale FT applications such as biomass-to-liquid and gas-to-liquid for associated / flare gas monetisation. Through our work with external partners, under outsourcing agreements, we have demonstrated the manufacture of the FT catalyst in half kilogram batches, and have now moved on to the multi-kilogram scale.
The Group has made good progress in developing its suite of HDS catalysts. We are now able to show high levels of desulphurisation capability in the laboratory, even with the most difficult diesel feedstock blends, whilst requiring lower metal loadings and less of the most expensive metal component commonly used.
We have also successfully completed the second and third of five milestones in the Carbon Trust grant funded project to develop catalysts for reforming natural gas and LPG, for combined heat and power fuel cell applications. Our technical targets were consistently met or exceeded, and we remain on track to complete the project on time.
The first half of 2008 is expected to see the testing of our technology in the Novus Energy pilot plant, following earlier completion of the catalyst selection stage and the provision of front-end process engineering design.
During the period, our trigger steam prototype was created - a cheap, simple and portable device with exciting avenues of potential. For example, the steam that it generates could be used to deliver and enhance the performance of other active agents, such as detergents. The advances that Oxford Catalysts has made were accelerated by our work with an FMCG giant, and have resulted in the development of other embodiments of the Instant Steam technology for different applications.
There has also been solid progress made in the critical area of safety for our portable steam technology. This includes the completion of a comprehensive hazard identification process using external consultants, and the successful conclusion of thermal stability and flammability tests of our fuel mixture. These are essential to meet the relevant regulations; further work is underway towards obtaining full regulatory approval.
During the fourth quarter of 2007, we announced the purchase of two new Amtec Spider16 high-throughput screening reactor systems for HDS and FT, at a cost of Euro750,000. Each Spider system enables the simultaeous testing of 16 catalysts. Since the development of catalysts requires a large number of test runs, the Spider systems will dramatically reduce the time required for the final optimisation of our catalysts. Such high-throughput resources are still scarce in our industry; their possession will help Oxford Catalysts cement its position within the clean fuels market.
The Group continues to benefit from its links with the University of Oxford, gaining access to cutting-edge analytical and characterisation equipment; this type of equipment is rare and often unavailable to companies of our size.
Finally, I am glad to report that our technical leadership is increasingly being acknowledged within the international chemical industry, as evidenced by our success in recent awards; the Company was a winner in the Kirkpatrick Chemical Engineering Achievement Awards in 2007, a finalist in the innovation category of the annual Chemical Industry Association awards (alongside the world's two largest chemical companies), as well as being finalists in innovation awards from both the American Institute of Chemical Engineers and ICIS Chemical Business magazine.
Intellectual Property
Oxford Catalysts has continued its sustained progress in protecting and enhancing its intellectual property with three new patents filed during the period; in the areas of Instant Steam and FT.
Our first carbide-based catalyst patent has been granted in the USA, and allowed in Australia (previously granted in Europe); whilst our second key carbide patent was recently granted in the USA (previously granted in South Africa).
Resources
We have been successful at attracting top talent and
establishing a world-class team. This is a testament to both the
potential and credibility of our technology, and to the
attractiveness of our business model. Along with the
state-of-the-art resources and facilities that we have assembled,
Oxford Catalysts is now better positioned than ever to compete as
the catalyst
innovator for clean fuels.
In 2007, we created a dedicated business development function and recruited a first-rate team from major industry players.
David Wardle joined Oxford Catalysts in April to head business development primarily for our Instant Steam technology. During his previous eighteen years working for the BOC Group, Dave was responsible for developing a wide range of technology-based businesses; his most recent role was as Corporate Business Development Manager, which positioned him as a key member of a select entrepreneurial team charged with initiating step-change revenue growth for the BOC Group.
Derek Atkinson, who joined us in July, is in charge of
developing the business for our technology solutions in both the
conventional and alternative energy markets. Previously, Derek
worked for seventeen years at Grace Davison, a leading supplier of
catalysts, where he enjoyed global roles in both sales and
marketing. He was responsible for strategy for the product
development, market introduction and subsequent sales of
adsorbents, catalysts and catalyst carriers used in a variety of
petrochemical applications. Derek was also the key driver, within
Grace Davison, of the initiation and early development work on
silica and
alumina based supports for Fischer-Tropsch.
As a result of continued growth and development, Oxford Catalysts transitioned from a part time FD to a full time CFO during the period. Susan Robertson became Chief Financial Officer in October following seventeen years at The BOC Group. From its inception in 2003 until 2006, Susan was Vice President and CFO of Japan Air Gases (JAG), then a £700 million turnover joint venture owned by The BOC Group and Air Liquide. Following her successful integration of the two founding JV companies, Susan presided over a significant rise in shareholder return achieved through improved profitability, increased dividends and the restructuring of equity capital to debt financing.
Momentum within the team is strong; other appointments include a senior technical manager with thirty years' scale-up experience gained in two of the world's foremost catalyst companies. He is just one example of the high calibre technical resources we are continuing to attract into the business.
Following the official opening of our laboratory in March 2007, we have subsequently extended the lease to double the floor space of the laboratory and office areas, which enabled us to continue to add equipment for the performance testing and characterisation of catalysts, as well as the two high-throughput screening reactors for HDS and FT.
People in our industry are genuinely excited by the technologies that we have and the business which we are building. The major progress in staffing and resourcing achieved during the year has allowed us to keep up with the high level of interest we are seeing in our technologies, and to meet visible requirements we have for the future.
Financial Review
This is the Group's first set of full financial statements under International Financial Reporting Standards (IFRS). The conversion to IFRS has had no impact on previously reported shareholder equity.
Revenues in the full year to 31 December 2007 increased by 156% to £163,000 (2006: £64,000), derived from development work with partners in Europe, the USA and Asia, as well as grant revenue from the Carbon Trust.
The loss for the financial year of £1,744,000 (2006: £972,000) reflects Oxford Catalysts' accelerated growth over the past year, in line with the Company's stated strategy. In accordance with accounting standards, the Group is required to recognise a fair value charge for employee share options (IFRS2). This charge, however, has no effect on the Group's net assets or cash as at 31 December 2007. The total employee share options charge to the income statement for the period is £199,000 (31 December 2006: £558,000).
Financial resources continue to be managed prudently. Cash reserves and short term investments at period-end were £15.6 million. Our current spend is in line with expectations, and is forecast to increase as the Group enters the next stage of its development. Thereafter, costs are anticipated to stabilise as the Company attains the level of resourcing that the Directors envisage is necessary for its current technology licensing business model.
The full text of this announcement is available on RNS.
