Interim Results
August 28 2003 - 12:00PM
UK Regulatory
RNS Number:1396P
Antonov PLC
28 August 2003
28 AUGUST 2003
ANTONOV plc
INTERIM RESULTS ANNOUNCEMENT
For the six months ending 30 June 2003
Antonov plc, the developer of the unique and innovative automatic gearbox, the
Antonov Automatic Drive (AAD), announces its unaudited financial results for the
six months ending 30 June 2003.
Key Highlights
Financials
* Unaudited loss before tax of #1.1m (2002: #0.9m)
* Loss per share of 1.0p (2002: 1.0p).
* Cash balances were #0.9m as at 30 June 2003. A successful capital
raising was completed in April, raising #1.2m (net) to fund continued working
capital.
Commercial
* Prototype efficiency testing of the fourth-generation 6-speed AAD,
which is currently being conducted, is progressing well. We expect to be in a
position to report on this in the near future.
* In-depth discussions are being held with two major gearbox
manufacturers with a view to entering into an industrial partnership agreement
to commercialise 6-speed AAD technology.
Chairman's Statement
The first six months of 2003 has seen a great deal of change in our Company. Our
priority has been to ensure that we are properly positioned to move the business
forward from that of a developer of unique and innovative automatic
transmissions to being a supplier of technology to OEM customers and Tier 1
transmission manufacturers. The Company's focus is now to support the
development of a mass-production gearbox that we expect to be installed in a
small front-wheel-drive car in due course. This expectation does not include any
production decisions that may be made by our existing licensee Honda.
As previously announced I have relinquished my executive responsibilities to
Martin Schinzig, but am remaining as non-executive Chairman. I will also
continue to work with the Company on R&D projects on a consultancy basis.
I have full confidence that Martin has the right combination of skills,
experience and drive to lead the Company through the exciting commercialisation
phase of the AAD. With over nine years of experience at senior levels in the
automotive sector Martin brings with him the expertise that we now require,
namely that of working with an industrial partner to manage, complete and
deliver a development project on time and to budget. The commercialisation of
the AAD is Martin's primary responsibility and his sole short-term focus.
Many shareholders have recently asked what exactly the phrase "commercialisation
of the AAD" means. From the Company's perspective it means assisting industry
partners, such as transmission manufacturers, develop our technology as
represented by a prototype in to a mass-production gearbox. Such Tier 1
manufacturers have a wealth of knowledge and expertise in adapting and refining
new technology such that it is suitable for mass-production processes, ensuring
that the required build quality is achieved, cost estimates are realistic and
performance criteria are reached. We do not have this expertise and have no
desire to "reinvent the wheel". In any event our industry partner will have to
take responsibility for all these factors on behalf of their customers, the
OEM's.
We have just announced that John Dickens has decided to step down as a
non-executive Director of the Company and that we have appointed David Bovell to
the position of Finance Director. I would like to take this opportunity to
express my gratitude to John for the valuable input and advice that he has
provided both the Company and myself during his more than seven years as a
Director. David has been associated with the Company since it was first listed
in London in 1995. Indeed, he was instrumental in initiating our London
listing. Subsequent to this David has assisted the Company in most of its
periodic fund-raising efforts.
The significant Board changes made in the last six months have I believe
strengthened the executive team considerably and provided it with the right
balance of expertise and experience to undertake the challenges of guiding the
development of the AAD through to a mass-market product launch.
Roumen Antonov - Chairman
Chief Executive's Statement
Soon after joining the Company I announced a number of strategic changes in our
business that were intended to prepare it to market more effectively what I
believe is superior automatic-transmission technology. Since then we have worked
hard to emphasise our strong points, while at the same time dedicating ourselves
to understanding, explaining and eliminating our weak points. As part of this
process we have also had productive in-depth discussions at a high level with
major transmission manufacturers, learning at first hand what their current and
future expectations of Antonov are. Never before has Antonov been so well
prepared to attract a major transmission manufacturer to partner us in
commercialising AAD 6-speed technology.
We know that the breakthrough to volume production of the 6-speed AAD will not
be achieved through our efforts alone. As I have said previously, we need a
partner who is able to assist us in the transition to mass production of the
AAD. Accordingly I have made the finding of an industrial partner the Company's
primary short-term focus.
We are currently evaluating the potential of entering into a partnership
agreement together with both a German and Japanese gearbox manufacturer. The
content concerns the possibility of the AAD's manufacture and its cost, and also
the way in which our gearshifts are accomplished and controlled. We have been
able to demonstrate to these leading manufacturers that in our next generation
of prototype the shift quality, which is already good, will be even better and
that the AAD's manufacturing cost could be lower than they are currently
forecast to be. I cannot be more precise at this time, with respect both to
content and deal structure, because these talks are at a sensitive stage, but I
can say that the discussions are in-depth and serious.
Customer update
At the present time Antonov have three active licencees. The licences granted
are production licences that allow our customers to manufacture gearboxes for
installation into motor vehicles that will go on sale to the general public.
* HONDA - During the last ten years Antonov and Honda have collaborated
closely. We have produced several prototypes for them and Honda now have an
in-depth understanding of our technology and its potential and no longer
requires any technical input from Antonov with respect to the four-speed AAD.
Honda has reported that that they are actively continuing with development of a
four-speed AAD and also that they are investigating other applications for this
technology. Honda traditionally maintains a high degree of secrecy about the
timing of any market launch of a new product and this will also be true for any
product containing Antonov technology. We are however hopeful that Honda will
launch a new product containing our technology in the near future.
* NEUE ZAHNRADWERK LEIPZIG (NZWL) - Antonov are together with NZWL
pursuing a number of potential customer applications for the AAD. In this regard
NZWL have made the significant investment commitment that is required in order
for them to produce a production version of the AAD.
* SOCIETE INDUSTRIELLE DE TAILLAGE ET DE MECANIQUE (SITMA) - This
licensee is not a mass-market manufacturer of gearboxes. It is however able to
efficiently manufacture small series of up to 10,000 units per annum. This will
facilitate the AAD being fitted into niche-market cars such as the
high-performance sports-car market, an area where Antonov have already had a
number of approaches for a solution. We are working closely with SITMA to
address the needs of niche-market motor car manufacturers.
With regard to potential customers we are in active and ongoing technical
discussions with five major OEM's and three tier 1 manufacturers. Discussions
are also being held with a number of smaller niche manufacturers for
applications such as high performance sports cars.
Technical update
Studies carried out to date show that the production price of the six-speed AAD
will be lower than the price of existing solutions. However, independent
production-cost estimates have not yet validated the Company's target price of
Euro 650. We will be looking to benefit from an industrial partner's manufacturing
expertise to help configure the designs for price minimisation. Similarly,
further work is needed to optimise the AAD's design for reduced weight. The
current AAD prototype at 72 kg is still lighter than any other six-speed
automatic of which the Company is aware. We estimate that with volume-production
techniques, such as the stamping of key components, a weight of 55 kg should be
achievable.
Antonov continues to make progress in reducing the length of the unit. In a
transverse-engine car a transmission's length translates into width, which in
small cars is tightly constrained between frame rails. Accordingly, a design
becomes more attractive to car manufactures as its length becomes shorter.
Although the length of the current prototype is 310 mm, the design has now been
reconfigured to reduce the overall length of the six-speed AAD to the original
250 mm target.
We are confident that both the weight and length challenges will be met and
expect that the next prototype will meet or exceed all the above mentioned
targets.
In June 2003 we reported the results of tests carried out by independent testers
UTAC on a 1.4 litre Opel Corsa fitted with the current prototype 6-speed AAD,
which were compared with the performance of the same model fitted with the
manufacturers standard automatic gearbox. The results, which were as expected,
showed fuel consumption slightly higher than the comparison vehicle. The reasons
for the prototypes performance are the fact that it is a prototype was not
specifically designed for a 1.4 litre Opel Corsa - is not fully integrated into
the car's engine-management system - does not have an oil pre-heating system -
and is not manufactured in an optimal manner. Their is thus room for
substantial improvement, which we are working to achieve.
We are tackling the required improvements to the prototype in an ongoing
programme of mechanical efficiency testing and studies to improve the electronic
interaction between engine and transmission. The latter interaction is vital to
the successful performance of modern power trains. We expect in the near future
to be in a position to release further details about performance measurements
and improvements.
We are confident that we will be in a position to demonstrate that our
technology will substantially assist car makers in meeting the challenging ACEA
fuel consumption targets by 2008. Equally importantly in this regard, because
the manufacture of the AAD will not require massive investment in new production
facilities, the AAD will be available for installation well before the 2008
deadline, thereby giving car manufacturers the ability to demonstrate compliance
with the ACEA targets.
All of these findings support the Board's view that the strategy of close
co-operation with an industrial partner will rapidly advance acceptance of the
Company's technology and will contribute to its ongoing development into a mass
production product.
Financials
Group losses during the first six months were #1.1 million (2002: #0.9 million).
Loss per share for the period was 1.0p (2002: 1.0p). Cash balances as at 30 June
2003 were #0.9 million. This followed a successful fundraising through a placing
of 5,278,161 new ordinary shares of 5p each at a price of 24p, raising
approximately #1.2m (net) with warrants attached on a basis of two warrants for
every three shares subscribed. These monies will fund the continued working
capital of the Antonov business.
As previously reported the Company has undertaken various cost cutting measures
to reduce "cash burn". The impact of this will however only become apparent in
2004.
Martin Schinzig - Chief Executive Officer
UNAUDITED GROUP PROFIT AND LOSS ACCOUNT
For the six months ending For the year ending
30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Turnover and other revenue - 137 139
Cost of sales - - -
Gross profit - 137 139
Development costs and administrative expenses (1,049) (1,064) (2,134)
Operating loss (1,049) (927) (1,995)
Interest receivable / payable 7 (2) 18
Loss on ordinary activities before taxation (1,042) (929) (1,977)
Taxation on loss on ordinary activities (11) (15) (30)
Loss on ordinary activities after taxation (1,053) (944) (2,007)
Loss per ordinary share (in pence) 1.0p 1.0p 2.0p
UNAUDITED GROUP BALANCE SHEET
As at 30 June As at 31 December
2003 2002 2002
#'000 #'000 #'000
Fixed assets
Intangible fixed assets 1,498 1,293 1,401
Tangible fixed assets 82 92 87
1,580 1,385 1,488
Current assets
Stock and contracts in progress 83 53 78
Debtors 287 258 210
Cash in hand and at bank 937 2,027 878
1,307 2,338 1,166
Creditors:
Amounts falling due within one year 378 402 439
Net current assets 929 1,936 727
Total assets less current liabilities 2,509 3,321 2,215
Equity shareholders' funds 2,509 3,321 2,215
Weighted average number of shares in
issue
102,680,268 95,807,512 97,924,333
Notes:
1. The calculation of loss per share is based on the loss on ordinary
activities after taxation and on the weighted average number of shares in issue
as disclosed above.
2. The Interim Statements are unaudited. The financial information contained
herein does not constitute statutory accounts within the meaning of Section 240
of the Companies Act 1985. The accounts for the year ending 31 December 2002
have been filed with the Registrar of Companies. The auditors' report on those
accounts was unqualified and did not contain any statement under Section 237 of
the Companies Act 1985.
3. In accordance with the New Market Amsterdam Listing Rules the Company has
received notification from its locked-in shareholders showing that as at 30 June
2002 they collectively held 25,409,121 shares (of which 23,122,498 shares are
locked in) no change in shares over the quarter then ended. These shareholders
held options to subscribe for new ordinary shares totalling 780,000 shares as at
30 June 2003.
4. Copies of this statement are available from the Company's registered
office at 100 Barbirolli Square, Manchester, M2 3AB or from its Dutch offices at
Weena 89, 3013 CH Rotterdam.
This information is provided by RNS
The company news service from the London Stock Exchange
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