Half Year Trading Update and Notice of Results

 

RNS Number : 3053I
Corac Group Plc
24 July 2012
 

24 July 2012

Corac Group Plc

("Corac" or the "Company")

Half Year Trading Update and Notice of Results

Corac Group plc the innovative technology-led engineering group, serving the global oil and gas, defence and industrial markets is pleased to announce the following update for the six months ended 30 June 2012. Since the last Business Update was issued on 29 May 2012 the Company has achieved a number of successful milestones including the following:

Trading

  • Group order book stands at £16.9m as at 30 June 2012 providing good visibility for second half and longer term revenues:

- £2m of new orders signed by Hunt Graham since acquisition

  • Trading in line with the Board's expectations for the half year:

- Following the successful acquisitions completed on 5 April 2012, both new businesses have contributed positive EBITDA and the full year forecast remains in line with market forecasts

- Group net cash as at 30 June 2012 stood at £6.8m

Divisional activity

  • Successful integration of Hunt Graham and Wellman Defence with both businesses performing in line with expectations in the period of Corac's ownership
  • Wellman Defence now rebranded as Atmosphere Control International (ACI):

- Positive sea trials achieved by ACI’s Combined Oxygen Generation System, resulting in its inclusion in the Vanguard Class replacement programme

  • Good progress at Corac Energy Technology (CET):

- Strengthening of management with the appointment of Dr Melanie Rigby as MD

- Downhole Gas Compression programme now in final stage of development

- Collaboration with partners on other programmes continues to progress well

Hunt Graham

Since the acquisition, the integration process has progressed successfully whilst at the same time the operating companies have both maintained their focus on business development. An example of this focus has been Hunt Graham signing over £2m of new orders in the first three months post acquisition.

First indicators have emerged of technology transfer between the companies with joint work on Hunt Graham's heat exchanger concepts for compression systems involving engineers from Hunt Graham and Corac Energy Technologies.

Atmosphere Control International (formerly Wellman Defence)

Atmosphere Control International (ACI) is actively participating in the rapidly evolving nuclear submarine programme. Progress is also being made in technology developments with the first Combined Oxygen Generation System (COGS) passing sea trials in readiness for introduction to service in the current submarine fleet.

The new system will be introduced progressively on all submarines in the UK fleet and it has already been chosen for the Vanguard Class replacement programme. Approximately 28 units will eventually be supplied to the Royal Navy over 20 years at an approximate sales value of £40m.

We are also seeing the effects of cross-company collaboration in the marketing of the Texvent fabric ducting system. Discussions have opened with potential non-military users both in the UK and overseas.

Corac Energy Technologies

Corac Energy Technologies (CET) is pleased to announce the appointment of Dr Melanie Rigby as Managing Director. Melanie joined Corac from Gardner Denver in January and brings senior level technical and commercial experience of the compressor industry. She is a Fellow of the Institution of Mechanical Engineers and will provide the balanced leadership to take CET’s development programmes to fruition and commercial exploitation.

Downhole Gas Compression (DGC) programme

Four of the six subsystems (motors, aero, communications and surface electronics) have been signed off to a satisfactory technology readiness level. Testing on the downhole electronics subsystem continues with high temperature proving in progress. The full DGC system is scheduled to be transferred to Spadeadam in late September for final acceptance testing.

Discussions have taken place on planning the transition from single prototype machines to a small batch of systems with a common configuration that can be trialled across a gas field with wells of differing characteristics. This is part of CET's technology development plan that will reduce the bespoke nature of DGC deliveries and look towards a core system specification that will satisfy higher volume deployments, with initial estimates of a batch of five similar devices.

In-Pipe Gas Compressor (IGC) programme

CET engineers are working closely with our partners at Saudi Aramco to define a generic modular system for the IGC programme that will satisfy a broad range of operational requirements.Manufacturing requirements have been identified and with these, an indicative unit sales price for the resulting systems. The next phase of the programme will confirm the roll-out potential of IGC systems to many hundreds of similar land-based wells to reinforce the commercial opportunity that this development represents.

In parallel, work continues on the engineering study announced in June with a major oil and gas operator for a Corac On-Platform Gas Compressor which is a simple, compact and lightweight compressor with wide application on offshore platforms. Market planning for these devices is in progress and will identify the applicable share of the many thousands of operational gas platforms around the world.

Other Opportunities

Beyond the oil and gas markets, CET has received purchase orders for engineering tasks following successful consultancy assignments in the fields of waste heat recovery and low pressure blowers and has built one system that is now nearing the end of a three month testing programme. Discussions are continuing with these partners and other prospects on the development of innovative compression solutions for specific applications that suit the core technology attributes of clean process gas produced by a compact, low maintenance, high efficiency system.

Notice of Results

Interim Results for the half year ended 30 June 2012, will be announced on Tuesday 18 September 2012.

Executive Chairman Phil Cartmell commented

“The first half has been a very busy and encouraging period for Corac. We have successfully integrated the two acquisitions, both have performed in line with our expectations and there is evidence of synergies emerging for new market and technology transfer opportunities that will benefit performance going forward.

"Our intention is to build a growing British innovation led technology engineering company with technologies and customers that are leaders in energy exploitation and recovery and clean air supply in the government, energy and industrial sectors.

“Corac continues to be very busy with encouraging levels of market activity; we are planning for growth.”

 

 

ENDS

 

For further information please contact:

Corac Group plc

www.corac.co.uk

Phil Cartmell, Executive Chairman

01753 285 800

Mark Crawford, Group Managing Director and Chief Financial Officer

 

Cenkos

 

Ivonne Cantú – Nomad

020 7397 8980

Jeremy Warner-Allen – Sales

 

MHP Communications

020 3128 8100

Reg Hoare / Vicky Watkins / Naomi Lane

 

 

NOTES TO EDITORS

Corac is a UK based group of advanced technology and engineering companies that produces diverse and valuable solutions in compression systems, atmosphere control and heat exchangers for government, energy and industrial users. It has traded shares on the London Alternative Investment Market (AIM) since July 2001.