ACTA.L Regulatory News (ACTA)

19 Mar 2008 07:00

Acta S.p.A.19 March 2008 19 March 2007 Acta S.p.A Preliminary Results for the year ended 31 December 2007 Acta, the AIM listed catalyst developer, today announces its preliminary resultsfor the twelve months ended 31 December 2007. 2007 Highlights •Strong growth in revenues following increased product sales, the launch of new products and the targeting of new markets •First major development contract announced with a global manufacturer, and Sumitomo Corporation •Commercial traction in core markets of hydrogen generation and waste to energy •Strategic investment of £4.6m by Sumitomo Corporation •Technical milestones achieved and seven new patent applications filed •Operational targets achieved with commissioning of pilot production plant resulting in annual capacity of up to €4.5m •Recruitment of industry leading management 2007 Financial Results •Revenues increased sharply to €600k (2006: €72k) •Loss before tax of €5.5m (2006: €4.8m) •Operating cash outflow of €4.1m (2006: €3.9m) •Year end cash of €7.9m, better than expectations £€5.75m placing provides sufficient funds to 2010 2008 First Quarter Progress •First phase of existing development contract delivered on time. Negotiations underway for next phase •Collaboration agreement signed with Tokuyama Corporation, leading membrane maker, to co-ordinate development activities •Collaboration agreement signed with CMR focussed on the portable fuel cell sector •Low cost disposable fuel cell units developed and exhibited as battery replacement for low power units Robert Drummond, Chairman of Acta, said: "Acta enjoyed a successful 2007. Encouraging revenue growth underpinned thestrong commercial interest in our HYPERMEC catalysts and we successfullytargeted new markets for further growth. We have met all our commercial,technical and operational milestones and we have secured further funding for ourgrowth plan. 2008 has started well for the company and we are confident that weshall demonstrate further commercial progress and revenue growth as we drive thecommercialisation of Acta's key catalyst technologies." For further information, please contact: Acta S.p.A:Toby Woolrych, Chief Operating Officer Tel: +44 (0) 20 7360 4900 Smithfield Consultants:George Hudson / Katie Hunt / Will Henderson Tel: +44 (0) 20 7360 4900 Numis as Nominated Advisor and Broker:David Poutney / Jag Mundi / Alex Ham Tel: +44 (0) 20 7260 1000 - Ends - Notes to Editors: Acta S.p.A. Acta develops and manufactures unique patented catalysts which have beenlaunched initially to the hydrogen generation, portable power and waste toenergy markets. Acta's catalysts for ammonia decomposition into hydrogen offer the automotiveindustry access to a practical hydrogen carrier for the first time. Thecatalysts extract hydrogen from ammonia at room temperature, allowing ammonia,one of the most widely used chemicals in the world, to become a fuel forautomotive use, solving the problem of hydrogen storage and transportation. Acta's catalyst range for alkaline membrane fuel cells allows fuel celldevelopers to stop using expensive platinum so that fuel cells can be madecommercially viable for mass adoption, particularly in automotive and portableelectronics applications. Adoption of HYPERMEC catalysts greatly reduces thecost of fuel cells and additionally allows for the first time the use of a widerange of safe liquid bio-fuels such as ethanol and glycerol. Simple passivealkaline membrane fuel cells can act as a high performance and environmentallyfriendly alternative to lead acid and alkaline batteries at a commerciallyacceptable price. Acta is also developing other commercial opportunities using its catalysts forwaste treatment in the bio-fuel, polymer and other industries. Acta listed on AIM in October 2005. Chairman's Statement 2007 has seen a strong growth in revenues, a strategic investment by SumitomoCorporation and the securing of our first major development contract. We arevery pleased with the growing momentum for Acta's catalysts and we look forwardto developing this with further commercial progress during 2008. Business Progress Acta continued to demonstrate good commercial progress with strong revenuegrowth during 2007. The launch of new products to existing customers and thedevelopment of catalyst applications for new markets offered a broad base ofcommercial opportunity with customers world-wide. The highlight of this was thesigning in November 2007 of Acta's first revenue earning development contractwith a global manufacturer, and also with Sumitomo Corporation, our Asianpartner. Sumitomo Corporation and Acta strengthened their partnership in July 2007 whenSumitomo invested £4.6m in Acta and, at the same time, the Asian marketingagreement between the two companies was extended to ten years. This reflectedthe good commercial progress which has been made in Asia since the marketingagreement was first signed in April 2005. Good technical progress was made in all areas during 2007. Improved catalystswere launched to the fuel cell market, the ammonia electrolyser was developed tooffer a unique new source of hydrogen for the automotive industry and othercatalyst technologies were sampled by customers. All major technical milestoneswere achieved and a further seven patent applications were filed. The company also made good progress in its strategy to put operational capacityin place in anticipation of larger scale orders. A dedicated operations team wasestablished early in 2007. Effective capacity was quadrupled during the courseof the year through modest investments in new equipment, with an annualisedrevenue capacity of €4.5m achieved by year end. The recruitment and retention of top quality management and researchersunderpins the company's success. We have been delighted to add Dr HubertGasteiger as Director of Catalyst Development. Dr Gasteiger was previously headof catalyst development for General Motors' fuel cell programme and is editor ofthe Fuel Cell Handbook, the standard industry textbook on fuel cells. We alsowelcomed Jason Davies as Sales Director. Mr Davies was previously at JohnsonMatthey and Rockwood Speciality Chemicals and has extensive experience in Asianmarkets. Financial Results Acta's post tax loss for the year ended 31 December 2007 amounted to €5.5m(€4.8m in 2006), well within budget and analysts' expectations. The lossincluded €0.9m of non-cash share option expense and excluded €0.3m of grantincome which is expected to be received in 2008 for project costs incurred in2007. Revenues continued to grow sharply to €600,000 (€72,000 in 2006), including bothincreased shipments of sample products and development contract income from acommercial customer. Operating cash outflow for the year was €4.1m (€3.9m in 2006). In September,Acta raised €5.0m in a placing, such that cash at year end, including liquidinvestments, was €7.9m, with a further £2.3m from the placing to be received inApril 2008. With this extra funding, the company believes that it has sufficientfunds for its current operations into 2010. In view of the Company's stage of development, a dividend is not consideredappropriate. Outlook The current year has started well. All contract milestones have beensuccessfully delivered in the first phase of our development contract with theglobal manufacturer, with three new catalysts approaching commercialisation as aresult. We are now discussing the next steps with our customer. Two further collaboration agreements have already been signed in the portablepower market. We have additionally developed and exhibited our low cost fuelcell ranges for use in small portable power units, opening up further potentialcommercial opportunities. During 2008 we expect that further development and collaboration contracts willbe secured as a result of trials or negotiations already underway. We alsoanticipate that further customer trials will begin with a number of newproducts. Chief Executive's Statement Overview During 2007 Acta made excellent progress in delivering its core strategy ofmanufacturing catalysts for multiple applications. We successfully developed newcatalysts, accessed new markets, engaged with new customers, filed new patentapplications and brought increased manufacturing capacity on stream. Acta's catalysts are targeted to meet society's most pressing needs for futureenergy generation. Catalysts play a key role in the delivery of new technologiesfor clean, carbon-free power. The "Green Energy" catalyst market, for energyproduction and conversion, is expected to grow at 23% p.a. over the next fiveyears (source: BCC Research). However, in order to reach widespread use, thesecatalysts must be based on affordable and abundant materials and avoid the useof expensive platinum, which is currently the most widely used catalystmaterial. Acta demonstrated strong commercial traction with its growing range of catalystsin 2007. This commercial progress was reflected across the broad range of ouractivities: •Revenues increased by 730% to €600,000 •Catalyst shipments trebled •Sales of 3 new product ranges €21 new Non Disclosure Agreements signed The £4.6m invested by Sumitomo Corporation, our strategic partner in Asia hasthe special significance of confirming the commercial potential of Acta productsin the Asian market. Acta also made good progress in meeting its goals to deliver operationalcapability to support its commercial success. A full time operations team wasestablished in January 2007 in order to meet growing numbers of customer ordersand to ensure that all products shipped to customers had been proven forreproducibility and scalability. During the year a modest investment in newequipment to eliminate production bottlenecks quadrupled capacity to anannualised revenue of €4.5m. Acta's experienced management team has consistently met its business targetswhilst spending less cash than expected. This trend continued during 2007, withcash burn lower than analyst expectations at €4.1m. Acta's markets remainlargely immune to the volatility affecting the general global economy, butmanagement remain committed to maintaining a tight control on expenditure. Operating Review The global catalyst market for energy and environmental catalysts was worth$13bn in 2007 and is forecast to grow at 7% per annum to 2012 (source: BCCResearch), driven by strong growth in both environmental treatment catalysts andprimary energy production catalysts. The removal of expensive platinum metalfrom catalysts wherever possible will be an important driver in future catalystdevelopment. Acta maintains an important commercial competitive advantage withits catalyst offering due to its extensive commercial engagement and itsdemonstrated operational capability. Acta's catalyst products have been targeted at applications within three mainmarkets which have been selected for their high growth rates and openness to newtechnologies. These markets are: •Hydrogen generation: catalysts for affordable hydrogen generation from practical feedstocks are essential to enable the hydrogen economy •Portable power: platinum free catalysts for fuel cell and battery technologies to provide affordable, clean, high energy density portable power •Waste to energy: the conversion of waste products to energy in order to reduce emissions and increase margins Hydrogen Generation Hydrogen has long been identified as the ultimate clean fuel. Hydrogen isalready in increasing use to improve efficiencies in combustion engines. It isexpected to be used in the future in conjunction with intermittent renewablepower sources such as wind and solar in order that the latter can reliablysupply an increasing proportion of the power grid's needs. Hydrogen can also beused on its own or in conjunction with ammonia to provide carbon-free, zeroemission motoring. The challenges that must be addressed in order to commercialise the hydrogeneconomy are firstly the practical manufacture, storage and transportation ofhydrogen and secondly cost reduction of both hydrogen generation and fuel celltechnologies. New catalysts are at the heart of delivering the answers to these challenges,and Acta has launched a unique range of products for hydrogen generation whichhave gained significant commercial traction: •Hydrogen from ammonia catalysts. The electrolyser catalysts generate hydrogen from ammonia at room temperature using just 25% of the electricity required to generate hydrogen from water. The reformer catalysts operate with very high conversion efficiency. •Hydrogen from bio-fuel catalysts. Acta's steam reformer catalyst produces hydrogen from ethanol with no precious metals, high efficiency and at low conversion temperatures. Acta is developing technologies to produce hydrogen from glycerol, which is a waste product of bio-diesel manufacture. •Hydrogen from water catalysts. Acta has platinum-free catalysts for water electrolysis. Acta's approach of using high performance alkaline membranes offers the important combination of high pressure hydrogen without the use of platinum. During 2007 Acta focused primarily on development of its ammonia decompositioncatalysts in response to strong customer interest. As a result, Acta announcedits first revenue earning development contract in November 2007, the first phaseof which will be successfully completed at the end of March 2008 with allmilestones met. Although much of Acta's initial activity was in support of itsmain customer, a number of additional opportunities for catalysts for ammoniahave been identified, including in waste treatment, as discussed below. The focus of development and new commercial activity in 2008 will now alsoinclude a greater emphasis on water electrolysis and hydrogen generation frombio-fuels. In November 2007 Acta was awarded a €250,000 EU grant as part of aconsortium for the development of high performance electrolysers. This projectand other commercial trials are expected to show good progress in 2008. Portable Power The portable power market is a large, fast moving, rapidly growing market. Over600 million lithium-ion batteries are produced each year for portable electronicdevices in a market worth $5bn. The lead acid and alkaline battery markets forlower power applications are also very significant, if more mature. Fuel cells are expected to play a key role in future portable power supplybecause of their high potential energy density and the ability to instantlyrecharge with the supply of fresh fuel. However, the cost of platinum catalystsin current fuel cell technologies makes it impossible to compete commerciallywith lithium-ion batteries. Current direct methanol fuel cells often containplatinum metal greater than the cost of the lithium ion battery they are tryingto replace. Acta's platinum free catalysts therefore offer important potentialmaterial cost savings and could allow the introduction of commercially viablefuel cells. Acta's products include: •Platinum free catalysts for active fuel cells: Acta's HYPERMEC catalysts offer high performance with no platinum. •Platinum free disposable fuel cell units for passive fuel cells: Acta has filed patents for complete low cost fuel cell units to potentially replace low power alkaline or lead acid battery units. •Electrocatalysts for zinc air batteries: Acta has supplied its cathode catalyst for trials in zinc air batteries, an existing $0.5bn market with the potential for high growth. During 2007 Acta continued to demonstrate market leadership in catalysts foralkaline membrane fuel cells ("AMFC"). Two improved catalysts were launched,improving both activity and durability. In September, Acta demonstratedperformance with hydrazine fuel up to 40% higher than previously reported bestin class. Trials continued with major electronics OEMs and also with newcustomers in the disposable fuel cell market. Trials also started with a zincair battery developer using HYPERMEC as a cathode. Already in 2008, Acta has consolidated its market leading position by signingjoint collaboration agreements with Tokuyama, the market leading membrane maker,and with CMR Fuel Cells, a leading fuel cell stack maker. These agreementsposition Acta as the catalyst supplier of choice and are expected to acceleratethe development of commercial products. Further discussions are underway withmajor customers and component makers in order to further expand Acta's customerbase and activities. The demonstration of disposable fuel cell units in variousforms has also opened a potential market for Acta catalysts as a highperformance alternative to some alkaline battery technologies. Furtherdevelopment of these units will continue during 2008. Waste to Energy The waste to energy market has been targeted as a market where Acta's existingtechnologies can be deployed to meet the needs of major industrial customers inreducing waste or increasing margins. Many of these customers are largeorganisations with emission problems to which Acta has solutions. Catalysts play an essential role in emission control, by cleaning or convertingharmful products into energy or products with an economic value. Catalysts willbe used to treat ammonia as a pollutant in waste streams and to treat the wasteproducts of bio-fuel manufacture. Acta products include: •Ammonia treatment catalyst: Acta's ammonia decomposition catalyst can convert dilute ammonia to hydrogen •Glycerol conversion: glycerol is an unwanted by-product of bio-diesel manufacture. Acta is developing catalysts to convert glycerol to hydrogen or to other products •Syngas/CO2 conversion to fuel: the conversion of either syngas from bio-fuels or ultimately carbon dioxide itself into a usable liquid fuel During 2007 Acta made its first development moves into this market. Glyceroldata was generated using fuel cells, showing encouraging performance, inparticular for passive fuel cell applications. In March 2007 Acta announced thatit had been awarded a grant from the Carbon Trust, alongside EdinburghUniversity, to investigate the conversion of carbon dioxide into alcohol. Theseactivities generated sufficient technical data to allow promising commercialavenues to be explored with a number of customers. In early 2008 Acta installed a trial ammonia electrolyser with a majorinternational chemical company to investigate options for waste treatment.Commercial progress has also been made with regard to potential developmentprogrammes in the bio-fuel industry. Further commercial progress is expectedduring 2008. Chief Financial Officer's Report Acta achieved good financial progress in 2007, strengthening its financialresources through a capital increase, and commencing its first commercialcontract, while keeping strong control of expenses and cash flow. £5.75 million was raised through our secondary fundraising in September 2007,supported by Sumitomo who invested £4.6m to become a 10% shareholder in Acta.Upon completion of their second stage payment in March 2008, this investmentwill give the Group the funds to finance its activities through into 2010 atcurrent utilisation rates. Revenues grew strongly to €600,000 (2006: €72,000) on the back of increasingorder volumes, particularly in relation to ammonia-related products. While stillmodest in size, the growth rate continues the commercial momentum achieved in2006. Further revenue growth is expected in 2008 from sample sales anddevelopment contract fees. Costs rose during the year to €6.2 million after share option expenses (2005:€5.1 million), primarily due to increased staff numbers and grant project costs.The Group continues to progress well in its two Italian grant-funded projects,which are due to conclude during 2008. Total grant receipts amounted to €656,000during 2007 (2006: €48,000), comprising €365,000 in grant income (€2006:€48,000) and €291,000 in a low interest rate loan (2006: Nil). First receipt offunds from the new European grant is also expected during 2008. Capital expenditure was reduced to €451,000 in the year (2006: €1.1m), which wasinvested in technical and scientific equipment, plus registration andinternationalisation of patents. Capital investments will increase again in2008, while remaining prudent, as we prepare for commercialisation. Net cash flow, including the capital increase, was positive, increasingavailable funds by €900,000 to €7.9 million. Excluding the capital increase, netcash outflow improved slightly to €4.1 million in the year (2006: €4.2 million). The continuing rise in the price of platinum, which reached $1,500 per ounce atthe end of 2007 and has since risen to over $2,000 per ounce, has reaffirmed ourbelief, echoed by our customers, that for any new environmental, portable poweror renewable energy application to be commercially successful, the catalyststhat it relies on must be platinum-free (or virtually so). For example, a 50%platinum catalyst contains over $31,000 of platinum metal per kg, compared to acost of less than $1,000 for Acta's fuel cell catalysts. Our leadership in thisarea underpins our confidence in the long term future of the Group. Outlook Acta continues to make significant progress with commercial opportunities in atargeted range of markets and applications. Commercial activity is at itshighest level and the company is prioritising the deployment of its resourcestowards the most promising targets. Continued commercial engagement and revenuegrowth is expected during the year. Acta's previously announced major development contract has made good progressand all the milestones for the first phase have been delivered on time. Underthe terms of the contract new catalysts developed can be sold to the open marketand these will be scaled up on the pilot plant during the second quarter.Discussions are underway concerning Acta's next activities for this customer. The key milestones for 2008 are as follows: •Increased product sales and development revenues to drive revenue •Commence customer trials and/or development contracts in the hydrogen generation and waste to energy markets •New or improved catalysts in targeted technical markets •New grant funding for commercially promising development projects •File patent applications to enhance Acta's intellectual property portfolio •Expand development facility with two new laboratories •Expand development team to build on existing reformer technology •Expand operational capability to ensure scalability and reproducibility of all products •Target annualised revenue capacity of €6m by December 2008 Consolidated Income Statement Year ended Year ended December 2007 31 December 2006 •'000 •'000 Revenue 600 70Other operating revenue 0 2 ------------ ------------ 600 72 Raw materials and consumables used (290) (142)Personnel expense (3.506) (3.088)Depreciation and amortisation expense (326) (269)Other operating expenses (2.097) (1.625) ------------ ------------Loss from operations (5.619) (5.052) Financial income 172 242Financial expenses (40) (18) ------------ ------------Loss before tax (5.487) (4.828) Current tax credits 3 0 ------------ ------------Loss for the period (5.484) (4.828) ------------ ------------ Attributable to:Equity holders of the parent (5.404) (4.779)Minority interest (80) (49) ------------ ------------ (5.484) (4.828) ------------ ------------ Basic loss per share (euro) (0,15) (0,13) Consolidated balance sheet Year ended Year ended 31 December 2007 31 December 2006ASSETS •'000 •'000Non-current assetsProperty, plant and equipment 1.861 1.754Goodwill 11 11Intangible assets 878 858 ------------ ------------Total non-current assets 2.750 2.623 ------------ ------------ Current assetsInventories 74 74Available-for-sale financial assets 3.494 0Trade and other receivables 967 792Cash and cash equivalents 4.442 7.049 ------------ ------------Total current assets 8.977 7.915 ------------ ------------Total assets 11.727 10.538 ------------ ------------ EQUITY AND LIABILITIESEquity attributable to equity holders of theparentShare capital 234 216Capital reserves 22.380 16.686Retained losses (13.762) (8.358) ------------ ------------ 8.852 8.544Minority interest 120 52 ------------ ------------Total equity 8.972 8.596 ------------ ------------ Non-current liabilitiesEmployee benefits 62 32Long-term provisions 89 89Long-term borrowings 926 596 ------------ ------------Total non-current liabilities 1.077 717 ------------ ------------ Current liabilitiesOther financial liabilities 57 57Short-term borrowings 48 70Trade and other payables 1.573 1.098 ------------ ------------Total current liabilities 1.678 1.225 ------------ ------------ ------------ ------------Total liabilities 2.755 1.942 ------------ ------------ ------------ ------------Total equity and liabilities 11.727 10.538 ------------ ------------ These financial statements were approved by the Board of Directors on 18th March2008. Statement of changes in equity Share Reserve Retained Minority Total Capital Capital Earnings Interest •'000 •'000 •'000 •'000 •'000 ------- --------- -------- -------- -------- At 1 January 2006 216 15.908 (3.578) 100 12.646 ------- --------- -------- -------- -------- Share-based payment - 778 - - 778 Loss for the period - - (4.780) (48) (4.828) ------- --------- -------- -------- --------At 31 December 2006 216 16.686 (8.358) 52 8.596 ------- --------- -------- -------- -------- At 1 January 2007 216 16.686 (8.358) 52 8.596 Issue of share capital 18 4.933 - - 4.951 -Share issue expenses - (131) - - (131) -Net change in fair valueavailable for sale (6) (6) Share-based payment - 898 - - 898 Loss for the period - - (5.404) (80) (5.484) Minority contribution - - - 149 149 ------- --------- -------- -------- --------At 31 December 2007 234 22.380 (13.762) 120 8.972 ------- --------- -------- -------- -------- Consolidated cash flow statement Year ended Year ended 31 December 2007 31 December 2006 Cash flows from operatingactivities •'000 •'000 Loss from operations (5.619) (5.052) Adjustments for:Depreciation 218 159Amortisation of intangible assets 126 110Gain on sale of property, plantand equipment (18)Expense recognised in profit orloss in respect of share basedpayments 898 778Income tax credit 3 0 Movements in working capital(Increase) decrease in trade andother receivables (175) (92)(Increase) decrease in inventories 0 (60)Increase (decrease) in trade andother payables 475 298Increase (decrease) in provisionfor employees' benefits (TFR) 28 22Increase (decrease) in deferredgovernment grants 0 (47) Cash outflow from operations (4.065) (3.884) Interest paid (40) (18) ----------- -----------Net cash from operating activities (4.105) (3.902) ----------- ----------- Cash flows from investing activitiesInterest received 172 242Payments for property, plant andequipment (354) (1.028)Proceeds from sale of property,plant and equipment 50 0Acquisition of available-for-saleinvestments (3.500) 0Payments for intangible assets (147) (102) ----------- -----------Net cash used in investingactivities (3.779) (888) ----------- ----------- Cash flows from financing activitiesProceeds from issue of sharecapital 4.951 0Proceeds from minority interest 149 0Payment for share issue costs (131) 0Proceeds from borrowings 291 565Repayment of borrowings (16) 0Proceeds from new finance leases 128 0Payment of finance leaseliabilities (95) (10) ----------- -----------Net cash inflow from financingactivities 5.277 555 ----------- ----------- Net increase in cash and cashequivalents (2.607) (4.235) 7.049 11.284 ----------- ----------- 4.442 7.049 ----------- ----------- This information is provided by RNS The company news service from the London Stock Exchange