30 April 2019 – final results

The water saving technology group has announced its results for the year to 31 December and these have revealed 62% increase in revenues to £3.5m (2017: £2.2m) although the group remained loss-making, recording an adjusted loss-before tax of £21.5m (2017: £29.8m).  The group was debt free at the end of the period and had cash balances of £16.0m at the end of the year compared with cash balances of £25.1m the year before. Due to the fact that the group remains loss-making, cash balances had fallen to £10,8m at 31 March.  It is clear that further equity will be needed in 2019 and the company has confirmed this.  Despite the fact that the company remains loss-making, the lion’s share of the development of the group’s water saving technologies has now been completed and the group has signed a number of important licensing agreements which should generate substantial royalties over time.  The agreements cover the largest OEMs in China and India which will manufacture and sell machines incorporating the group’s technology.  The group raised £15.8m before expenses in December and although the cash burn in the current year is expected to reduce, another fund raising will take place in 2019.  We continue to believe that these shares offer significant potential for investors who are happy to take some risk given future water shortages which seem increasingly likely.  We therefore rate the shares as a SPECULATIVE BUY.