Interim Results
Corac Group Plc
RNS Number : 7234Z
28 September 2009
CORAC GROUP PLC
PLACING AND INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
Corac Group plc ('Corac'), the intellectual property, engineering and licensing group, specialising in
compressor technology, announces its interim results for the six months ended 30 June 2009.
Operational Highlights
- Appointment of Phil Cartmell as Chief Executive Officer with immediate effect.
Downhole Gas Compressor ('DGC')
- Increased industry recognition through marketing and relationship with Baker Hughes
- Successful testing in Cumbria ahead of field trial
- Technical milestones achieved
- Increased interest from large Oil & Gas operators to join JIP
Industrial Air
- Shipped several machines to Austria
Financial Highlights
- Revenue increased to £0.9 million (2008: £0.5 million)
- Loss after tax of £1.3 million (2008: £1.3 million loss)
- Cash and short term deposits of £2.7 million (2008: £3.6 million)
- Successful placing to raise £1 million (net) in February 2009
- Placing to raise £4.7 million (net) announced today to accelerate commercialisation of
technology
Commenting on the future, Chairman, Gerry Musgrave, said:
“We have made solid progress on the DGC, with good technical results from testing in Cumbria. We
are confident that the field trial in Italy will be successful and are encouraged by the new enquiries for
the DGC as well as by the increased financial resource provided by investors to roll out the technology
more rapidly in the market.”
For further information:
Professor Gerry Musgrave Corac Group plc Tel: 01895 813463
Geoff Nash/Marc Young – Corporate Finance Brian Patient – Sales Tel: 020 7600 1658
FinnCap Richard Darby/Ben Romney Buchanan Communications Tel: 020 7466 5000
CHAIRMAN'S STATEMENT
Introduction
There has been solid progress during the first half, particularly in relation to our Downhole Gas
Compressor („DGC.) testing at Spadeadam in Cumbria. We continue to develop our existing areas of
business as well as exploring new applications for our technology, resulting in further patents being filed
for liquefied natural gas processing applications.
Our unique technology is gaining increased recognition in the industry through our own marketing as well
as through our relationship with Baker Hughes and we are benefiting from new customer enquiries in the
Oil & Gas industry requiring compressor solutions. As the world leader in this specialist field,
identification of multiple development opportunities are helping to move us forward towards
commercialisation of the technology.
Financial Review
Revenue for the six month period to 30 June 2009 increased to £0.9 million (2008: £0.5 million), the
increase principally being in respect of the DGC field trial. Revenue for the period under review exceeds
that for the whole of 2008 and it is anticipated that revenue in the second half will be broadly similar to
that of the first half of the year.
Total cost of sales and R&D expenditure amounted to £1.8 million (2008: £1.4 million), reflecting
continued investment in the DGC field trial and our Industrial Air products. Loss after tax amounted to
£1.3 million (2008: £1.3 million loss), which is in line with our internal forecasts. Cash and short term
deposits at 30 June 2009 amounted to £2.7 million (2008: £3.6 million) which includes £1.0 million
raised through a Placing of 7.7 million shares in February 2009 at the then market price of 13.05 pence
per Ordinary Share.
Placing
The Company is pleased to announce today a placing of 14,131,820 Ordinary Shares with M&G
Recovery Fund („M&G.) at a price of 35 pence per share (“the Placing Shares”) to raise approximately
£4.7 million (net of expenses). These additional funds will strengthen the balance sheet and enable the
business to grow and realise its potential more quickly while mitigating the risks of commercialising our
technology.
Application has been made to admit the Placing Shares to trading on AIM and Admission is expected to
occur on 1 October 2009. The enlarged issued share capital of the Company immediately following
admission will comprise 108,343,977 Ordinary Shares with voting rights.
Operational Highlights
During 2009, we have been working hard towards the deployment of the first field trial DGC unit for Eni
SpA („Eni.), one of our Joint Industry Programme („JIP.) partners. The Eni compressors have been on test
at our Spadeadam loop facility where they have been performing at full speed and power. The topside
power electronics have completed all their functionality and “soak tests”, and further testing has to be
performed by all contractors including Corac before a test of the complete system can be undertaken.
As stated in my 2008 full year report, this is the first time complex technology of this kind has been
deployed in a gas well. We are mindful of the inevitable hurdles that involve not only ourselves but other
field trial contractors. There are further important aspects of the systems that have to be produced by
Corac and other contractors before a full systems. test can be undertaken. The site in Southern Italy
requires many multidisciplinary contractors to be organised and permissions granted. The project
management of the field trial is therefore complex and issues could still arise which may unfortunately
delay the trial.
As a result of many presentations being made to senior management of major Oil & Gas operators and
through industry publications on DGC leadership (SPE 121815, Downhole Gas Compression: World’s
first installation of new Artificial Lifting System for gas wells, 2009, by Eni SpA and Corac Group plc) a
number of projects have been agreed in principle and are subject to contract. Several large companies that
declined to join the JIP several years ago have now acknowledged our significant technological
breakthroughs and are reconsidering their position.
Our industrial air machines continue to perform well in the market with some achieving over 5000 service
hours at required energy efficiency. This demonstration of reliability is encouraging and we are well
placed to take advantage of any recovery in the Industrial Air market, which has experienced a severe
downturn during the global recession. Despite this, our joint development programmes, including design
refinement and efficiency verification, with Leobersdorfer Maschinenfabrik GmbH and Fu Sheng
Industrial Co. have been maintained and we have shipped several machines this year to Austria. We are
now being asked to quote for larger batch sizes from Taiwan.
Board Changes
The Company is also pleased to have announced today the appointment of Phil Cartmell as the
Company.s Chief Executive. He has had a highly active career in business, having formerly been Chief
Executive of Vega Group PLC between 2001 and 2008 where he grew the company into a leading
European aerospace and defence business. In February 2008, Vega Group was acquired by Italian multi-
national, Finmeccanica, for a substantial premium. Phil has a number of other Directorships, including a
Non-Executive Directorship of Trafficmaster PLC. I and the rest of the Board welcome him and look
forward to this new era.
Summary
The gas recovery capability of the DGC provides the Company with a great opportunity to succeed and
grow in the current environment. Our technology is proven in the Industrial Air market as more units are
being shipped for a variety of applications. The technical milestones of the DGC have been met so far and
we have confidence in the success of the Eni field trial. We are encouraged by new enquiries for the DGC
and by the increased financial resource provided by investors to roll out our technology more rapidly in
the market.
Professor G Musgrave
Executive Chairman
28 September 2009
Please click here for the full report (PDF file).