24 Sep 2008 07:00
24 September 2008
Acta S.p.A
Interim Results for the six months ended 30 June 2008
Acta, the AIM-listed catalyst developer, today announces its interim results for the six months ended 30 June 2008.
Results Highlights
Revenues increased to €360,000 (1H 07: €212,000)
First stage of development contract with major Asian manufacturer completed on time
£2.3m second subscription by Sumitomo Corporation
Repeat orders from Asian manufacturers and technical institutes
8 new customers gained, and 17 Non Disclosure Agreements signed
5 new patent filings, plus 3 after period end
Business Outlook:
Reduction in revenue outlook following slow-down in R&D expenditure by major customer. Cost reduction programme initiated to mitigate impact
Continued commercial and technical progress expected in core applications
Product development focused on near-term revenue opportunities
Development contract with major Asian manufacturer moving to next stage
Completion of €2.1m FIT Lombardia grant project (direct ethanol stack prototype)
Robert Drummond, Chairman, said today:
"Acta has had a successful half-year, and has continued to meet its commercial and technical milestones. We are particularly pleased with our progress into new industrial applications, which we are pursuing in collaboration with major potential customers. Meanwhile, the completion of the first stage of our development contract with Sumitomo and a major Asian manufacturer has allowed Acta to develop and launch six new catalysts across four applications. We are hopeful that the second stage of the contract will commence by the year end.
"Macro-economic support for the renewable energy, environmental, and energy security sectors continues to increase, and this underpins our confidence in the future. However, the current business environment is challenging, and we foresee a reduction in our revenue outlook over the short to medium term due to a slow-down in R&D expenditure by our major customer. As a result, we are responding with a programme to reduce our non-core costs, and to dedicate our resources to our key commercial and technical activities. In particular we are focusing our product development programmes on those applications where we have near-term revenue opportunities directly with major industrial end users."
For further information please contact:
| Acta S.p.A: | |
| Paul Barritt, Chief Financial Officer | Tel: +44 (0) 20 7360 4900 |
| Smithfield Consultants: | |
| Katie Hunt / Will Henderson | Tel: +44 (0) 20 7360 4900 |
| Numis: | Tel: +44 (0) 20 7260 1000 |
| Nominated Advisor: Simon Blank Corporate Broking: David Poutney / Alex Ham |
- Ends -
Notes to Editors
About Acta
Acta develops and manufactures unique patented catalysts which have been launched to the renewable energy, automotive, battery and industrial markets. Acta is also developing other commercial opportunities using its catalysts for industrial waste treatment.
Acta's catalysts and alkaline system know-how are at the heart of the Company's development of a new, high pressure water electrolyser technology which has demonstrated low cost, platinum free, high pressure hydrogen generation. Combined with a platinum free fuel cell, the system offers a solution to the problem of how to store surplus energy produced from large scale, intermittent renewable energy sources (eg wind farms).
Acta's catalysts are also undergoing customer tests in applications such as ammonia treatment (removal of ammonia from an industrial waste stream, and use of ammonia as a hydrogen carrier for automotive and industrial applications), and zinc-air batteries (a high performance and environmentally friendly battery technology), as well as fuel cell and other applications.
Chairman's Statement
I am delighted to report that Acta has enjoyed a successful six months, meeting its commercial and technical targets for the period. Revenues were up by 70% as a result primarily of development contract revenues. We met each of the milestones for the first stage of our development contract with Sumitomo and our major Asian customer, and six new products resulting from this development work have now been scaled up and launched to the market. The second stage of the Sumitomo investment was completed on time, and the business continues to be funded to mid-2010.
As announced on 5 September 2008, the challenging business environment has led our major customer to reduce its R&D expenditure, and to shift the emphasis of its research towards technologies that are closer to market. As a result, we have reduced our revenue outlook over the short to medium term, and have taken appropriate action to contain our costs. This includes suspending the investment and costs that would have been incurred from proceeding with the development contract as originally intended, as well as reducing external services and other non-core costs.
Despite this headline change, our technology continues to progress well, and we are increasing our focus on those applications where we have good commercial engagement with major industrial end users or other near-term revenue potential. These include water electrolysis for renewable energy storage, alkaline fuel cells, industrial ammonia waste treatment, and advanced battery technologies.
Commercial Progress
A major success of the first half has been the delivery of the development contract announced in November 2007 between Acta, Sumitomo Corporation (our Asian distributor and significant shareholder), and a major Asian manufacturer. The contract was delivered on schedule with successful technical results, and we are hopeful that the second stage of the contract will commence by the year end.
As previously indicated, a reduction in the R&D expenditure by the same customer has led to a reduced scope of the next stage of the contract compared to that originally anticipated. Although this reduction has had a significant impact on our short to medium term revenue outlook, we are encouraged that the continuation of the commercial discussions represents a technical validation of our technology. In addition, the shift by our customer to near-term solutions, including batteries, offers the potential to shorten the time to market for our zinc-air battery catalysts.
Acta has seen strong interest in its water electrolysis technologies, where it has developed a prototype alkaline membrane water electrolyser. This electrolyser, when fully proven, will offer the benefits of high efficiency, low cost, platinum free, high pressure hydrogen, and will offer an ideal solution to the problem of how to store surplus energy produced from large scale, intermittent renewable energy sources (eg wind farms). Acta is collaborating on this technology with a major European utility company, with whom a joint grant application has been filed.
During the first half we received strong commercial interest in Acta's ammonia electrolyser catalyst, which can be used to break down ammonia to remove it from industrial waste water. We believe that this application may have outstanding commercial potential and trials are continuing with a major industrial partner to establish the technical and commercial feasibility.
Interest has continued also in our fuel cell market activities, where partnerships are under discussion in hydrogen-air and liquid fuel systems.
Technical Progress
During the first six months of 2008 Acta has launched two catalysts for hydrogen generation from ammonia by reforming (using catalysts and heat to break down ammonia into hydrogen and nitrogen). Both catalysts offer excellent performance in comparison to currently available products, and have been developed in partnership with potential customers who are conducting trials during the second half of the year.
In addition, Acta has developed two further ammonia electrolysis catalysts, for room temperature hydrogen generation from ammonia, and for ammonia waste treatment. Laboratory trials for ammonia waste treatment at a major industrial customer have been progressing well.
Intellectual Property Development
Acta filed five new patent applications in the first half of the year, and a further three after the period end, including four applications for a European patent extension (PCT). The Company's intellectual property portfolio now contains patent applications covering 21 separate intellectual property claims.
Operational Progress
Acta has strengthened its technical capabilities during the period by creating two new technical laboratories through an internal refurbishment and reallocation of office space, together with the recruitment of new technical staff led by two experienced scientists from the Max Planck Institute. This team will specialise in ammonia cracking and related technologies. Recruitment during the period increased the group headcount to 42 at the end of June 08 (up from 35 at the end of June 2007). The cost reduction programme that we have initiated will not decrease our current operational capabilities.
Financial Performance
Acta incurred an operating loss of €3.1 million in first half (1H 07: €2.5m), as expected. Revenues during the six months to 30 June 2008 increased by 70% to €360,000, compared to €212,000 in the six months to June 2007. These revenues came mainly from our development contract with Sumitomo Corporation and a major Asian manufacturer, announced in November 2007.
Grant income of €119,000 was also recognised against costs in relation to the €250,000 WelTemp project, awarded in 2007 as part of the European FP7 grant programme. No income was recognised in the period on the €2.1 million FIT project (development of a prototype direct ethanol fuel cell stack) which is expected to conclude in the second half of 2008; or the €0.6 million FISR project (development of inorganic and hybrid catalysts for fuel cells): income is expected to be recognised from these projects during the second half.
Operating losses, including non-cash accruals for stock option costs, amounted to €3.1m (1H 07: €2.5m). The higher loss reflects increased costs of personnel and facilities, following the strengthening of the commercial and technical management team and staff, together with the increased costs of the final stage of the FIT project, without the offsetting benefit of the recognition of grant income in relation to these costs.
The loss was in line with budget and market expectations, and costs are expected to fall in the second half of the year as a result of the completion of the FIT project, the expected recognition of grant income, and the implementation of a programme to reduce non-core costs.
Net cash utilisation for the period, at €2.0m (1H 07: €1.7m), was well below operating losses, and cash and short term investments stood at €8.8m as at 30 June 2008 (1H 07: €5.3m). €119,000 was received in relation to grant income during the period, while investments in technical equipment, patents and other capital items amounted to €242,000. At current cash utilisation rates the Group will have sufficient funds until mid-2010.
Business Outlook
We believe that Acta is well-positioned to see continuing progress during the second half of 2008 and into 2009. Commercial discussions continue with major industrial partners in Asia, Europe and the USA, and we are confident that these negotiations will lead to further customer trials and development partnerships.
As previously announced, we have reduced our revenue outlook over the short to medium term as a result of a slow-down in R&D expenditure by our major customer. We have suspended the investments and other costs that we would otherwise have incurred to deliver the development contract as originally envisaged, and we have initiated a programme to reduce non-core costs (promotional activity, external contracts, professional fees, etc). We are also focussing our product development programmes on near-term research priorities with short, commercially promising routes to market.
Acta will continue to exploit its leadership in platinum-free catalysis and alkaline membrane systems to develop technical and commercial partnerships with major customers and supply chain partners, and will apply for further grant funding to support these developments where such projects are in line with our core technology development stream.
We remain confident of the outlook for the business over the medium and long term and we will continue to pursue our focus on affordable, practical solutions to the environmental and energy security issues that present such challenges to the long term global outlook.
Robert Drummond
Non Executive Chairman
| Consolidated income statement | ||||||
| Six months ended | Six months ended | Year ended | ||||
| Notes | 30 June 2008 | 30 June 2007 | 31 December 2007 | |||
| Unaudited | Unaudited | Audited | ||||
| €'000 | €'000 | €'000 | ||||
| Revenue | 360 | 212 | 600 | |||
| Other operating revenue | 0 | - | - | |||
| 360 | 212 | 600 | ||||
| Raw materials and consumables used | (205) | (123) | (290) | |||
| Personnel expense | (2,092) | (1,658) | (3,506) | |||
| Depreciation and amortisation expense | (193) | (165) | (326) | |||
| Other operating expenses | (931) | (768) | (2,097) | |||
| Loss from operations | (3,061) | (2,502) | (5,619) | |||
| Financial income | 129 | 69 | 172 | |||
| Financial expenses | (20) | (17) | (40) | |||
| Loss before tax | (2,953) | (2,450) | (5,487) | |||
| Current tax credits | - | 3 | ||||
|
|
|
| ||||
| Loss for the period | (2,953) | (2,450) | (5,484) | |||
| Attributable to: | ||||||
| Equity holders of the parent | (2,890) | (2,425) | (5,404) | |||
| Minority interest | (63) | (25) | (80) | |||
| (2,953) | (2,450) | (5,484) | ||||
| Basic earnings per share (euro cents) | 3 | (7.45) | (6.74) | (14.70) | ||
| Diluted earnings per share (euro cents) | 3 | (7.45) | (6.58) | (14.70) | ||
| Consolidated balance sheet | ||||||
| Six months ended | Six months ended | Year ended | ||||
| 30 June 2008 | 30 June 2007 | 31 December 2007 | ||||
| Unaudited | Unaudited | Audited | ||||
| ASSETS | €'000 | €'000 | €'000 | |||
| Non-current assets | ||||||
| Property, plant and equipment | 1,945 | 1,769 | 1,861 | |||
| Goodwill | 11 | 11 | 11 | |||
| Intangible assets | 842 | 897 | 878 | |||
| Total non-current assets | 2,798 | 2,677 | 2,750 | |||
| Current assets | ||||||
| Inventories | 64 | 69 | 74 | |||
| Other investments | 3,493 | 3,493 | ||||
| Trade and other receivables | 402 | 880 | 967 | |||
| Cash and cash equivalents | 5,316 | 5,311 | 4,442 | |||
| Total current assets | 9,275 | 6,260 | 8,977 | |||
| Total assets | 12,073 | 8,937 | 11,727 | |||
| EQUITY AND LIABILITIES | ||||||
| Equity attributable to equity holders of the parent | ||||||
| Share capital | 246 | 216 | 234 | |||
| Capital reserves | 25,739 | 17,093 | 22,380 | |||
| Retained losses | (16,651) | (10,782) | (13,762) | |||
| 9,333 | 6,527 | 8,852 | ||||
| Minority interest | 57 | 175 | 120 | |||
| Total equity | 9,390 | 6,702 | 8,972 | |||
| Non-current liabilities | ||||||
| Employee benefits | 97 | 53 | 62 | |||
| Long-term provisions | 89 | 89 | 89 | |||
| Long-term borrowings | 898 | 862 | 926 | |||
| Total non-current liabilities | 1,085 | 1,004 | 1,077 | |||
| Current liabilities | ||||||
| Other financial liabilities | 57 | 57 | 57 | |||
| Short-term borrowings | 48 | 82 | 48 | |||
| Trade and other payables | 1,494 | 1,092 | 1,573 | |||
| Total current liabilities | 1,599 | 1,231 | 1,678 | |||
| Total liabilities | 2,683 | 2,235 | 2,755 | |||
| Total equity and liabilities | 12,073 | 8,937 | 11,727 | |||
| Statement of changes in equity | |||||
| Share | Reserve | Retained | Minority | Total | |
| Capital | Capital | Earnings | Interest | ||
| € | € | € | € | € | |
| 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 value available for sale | (6) | (6) | |||
| Share-based payment | - | 898 | - | - | 898 |
| Loss for the period | - | - | (5,404) | (80) | (5,484) |
| Minority contribution | - | - | - | 148 | 148 |
| At 31 December 2007 | 234 | 22,380 | (13,762) | 120 | 8,972 |
| At 1 January 2007 | 216 | 16,686 | (8,358) | 52 | 8,596 |
| Share-based payment | 407 | 407 | |||
| Loss for the period | (2,424) | (25) | (2,449) | ||
| Minority contribution | 148 | 148 | |||
| At 30 June 2007 | 216 | 17,093 | (10,782) | 175 | 6,702 |
| At 1 January 2008 | 234 | 22,380 | (13,762) | 120 | 8,972 |
| Issue of share capital | 12 | 2,903 | - | - | 2,915 |
| Share issue expenses | - | (6) | - | - | (6) |
| Share-based payment | - | 462 | - | - | 462 |
| Loss for the period | - | - | (2,890) | (63) | (2,953) |
| At 30 June 2008 | 246 | 25,739 | (16,652) | 57 | 9,390 |
| Consolidated cash flow statement | ||||||
| Six months ended | Six months ended | Year ended | ||||
| 30 June 2008 | 30 June 2007 | 31 December 2007 | ||||
| Unaudited | Unaudited | Audited | ||||
| Cash flows from operating activities | €'000 | €'000 | €'000 | |||
| Loss for the year | (2,953) | (2,450) | (5,484) | |||
| Adjustments for: | ||||||
| Depreciation | 127 | 165 | 215 | |||
| Amortisation of intangible assets | 67 | - | 126 | |||
| Gain on sale of property, plant and equipment | - | - | (18) | |||
| Expense recognised in profit or loss in respect of share based payments | 462 | 407 | 898 | |||
| Net finance income | (108) | (52) | (131) | |||
| Current tax | - | - | 3 | |||
| Movements in working capital | ||||||
| (Increase) decrease in trade and other receivables | 566 | 28 | (175) | |||
| (Increase) decrease in inventories | 10 | 5 | 0 | |||
| Increase (decrease) in trade and other payables | (79) | 27 | 476 | |||
| Increase (decrease) in provision for employees' benefits (TFR) | 35 | 19 | 28 | |||
| Cash outflow from operations | (1,874) | (1,851) | (4,062) | |||
| Interest paid | (21) | (17) | (41) | |||
| Income tax paid | - | - | (3) | |||
|
| ||||||
| Net cash from operating activities | (1,895) | (1,868) | (4,106) | |||
| Cash flows from investing activites | ||||||
| Interest received | 129 | 69 | 172 | |||
| Payments for property, plant and equipment | (211) | (118) | (354) | |||
| Proceeds from sale of property, plant and equipment | - | - | 50 | |||
| Acquisition of available for sale investments | - | - | (3,500) | |||
| Payments for intangible assets | (31) | (100) | (146) | |||
| Finance leases | - | 128 | ||||
| Net cash used in investing activities | (113) | (149) | (3,650) | |||
| Cash flows from financing activities | ||||||
| Proceeds from issue of share capital | 2,915 | - | 4,951 | |||
| Proceeds from minority interest | - | - | 149 | |||
| Payment for share issue costs | (6) | - | (131) | |||
| Proceeds from borrowings | - | 291 | 291 | |||
| Repayment of borrowings | (27) | - | (16) | |||
| Payment of finance lease liabilities | - | (12) | (95) | |||
| Net cash inflow from financing activities | 2,882 | 279 | 5,149 | |||
| Net increase in cash and cash equivalents | 874 | (1,738) | (2,607) | |||
| Cash and cash equivalents at the beginning of the financial year | 4,442 | 7,049 | 7,049 | |||
| Cash and cash equivalents at the end of the financial year | 5,316 | 5,311 | 4,442 | |||
| Notes to the interim financial statements | ||||||||
| for the six months ended 30 June 2008 | ||||||||
| 1. Basis of preparation | ||||||||
| The financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. | ||||||||
| 2. Principal accounting policies | ||||||||
| The financial statements have been prepared under the historical cost convention. The same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2007. | ||||||||
| 3. Loss per share | ||||||||
| The calculation is based on information in the table shown below: | ||||||||
| Six months ended 30 June 2008 | Six months ended 30 June 2007 | Year ended 31 December 2007 | ||||||
| (unaudited) | (unaudited) | (audited) | ||||||
| €'000 | €'000 | €'000 | ||||||
| Loss | (2,953) | (2,450) | (5,484) | |||||
| Weighted average number of shares | 38,778,687 | 35,995,126 | 36,767,728 | |||||
| In accordance with IAS 33.41, the potential ordinary shares have not been treated as dilutive because their conversion to ordinary shares would decrease loss per share for the period. | ||||||||
| 4. Statement of changes in equity | ||||||||
| Share | Capital | Retained | Minority | |||||
| capital | Reserve | earnings | Interest | Total | ||||
| €'000 | €'000 | €'000 | €'000 | €'000 | ||||
| Balance at 1 January 2007 | 216 | 16,686 | (8,358) | 52 | 8,596 | |||
| Share based payment | 407 | 407 | ||||||
| Minority contribution | 148 | 148 | ||||||
| Loss for the period | (2,424) | (25) | (2,449) | |||||
| Balance at 30 June 2007 | 216 | 17,093 | (10,782) | 175 | 6,702 | |||
| Balance at 1 January 2008 | 234 | 22,380 | (13,762) | 120 | 8,972 | |||
| Issue of share capital net of expenses | 12 | 2,897 | 2,909 | |||||
| Share based payment | 462 | 462 | ||||||
| Loss for the period | (2,890) | (63) | (2,953) | |||||
| Balance at 30 June 2008 | 246 | 25,739 | (16,652) | 57 | 9,390 | |||
| 5. Board | ||||||||
| The financial information for the period 1 January 2008 to 30 June 2008 is unaudited although it has been reviewed by the Company's audit committee. In the opinion of the Directors the financial information for this period presents fairly the position, results of operations and cash flows for the period. The interim report for the six months ended 30 June 2008 was approved by the Directors on 23 September 2008. | ||||||||