20 September 2016 – second interim results
Following the change of year end to 31 December from 31 July, the group has announced interim results for the six month period to 30 June. Although revenues increased to £807k from £325k in the first half of 2015, the figures are largely irrelevant given the early stage of the group’s development. Of more importance is the progress that the group is making and it is therefore pleasing to see that it installed 116 commercial washing machines during the period which utilise the group’s innovative technology taking the installed estate to 278 machines. The group is in talks with industry leaders to accelerate the rate of growth. The group continues to make progress in investigating the consumer laundry market. The group has also found a use for its technology in the leather processing market with trials being undertaken with a leading European tannery. Although a loss of £6.1m after tax was reported for the period, of more relevance was the cash outflow of £10.4m. The group had no debt at 30 June and cash balances of £39.4m and this will be needed as the cash outflow is expected to increase as the group steps up its development programme. In our view, the group has developed an exciting technology and although the shares are clearly not without risk there is significant upside potential. We therefore believe they justify a recommendation of SPECULATIVE BUY.