Chairman's statement

In conclusion of the measures announced over the last twelve months following a strategic review by the Board, today the Company has announced plans to progress its existing strategic objective of becoming an advanced materials and technology solutions business. It is intended that this will be achieved through the acquisition of Cronin 3D Limited and the demerger of Oxford Advanced Surfaces Limited, details of which can be found in a circular to be published by the Company today.

The remainder of the statement provides an update on the progress achieved at Oxford Advanced Surfaces Limited, in which the Company currently holds an interest of approximately 77.54%.

Strategic Review

Oxford Advanced Surfaces Limited

Oxford Advanced Surfaces Limited ("OAS") continues to make solid progress.  The business has now significantly de-risked its technical offering and has delivered a broader range of products to the market that address the preparation and processing issues faced by the users of advanced materials.

Everything you use contains materials that need to be prepared and processed and this often requires some form of painting, coating or bonding.  There is a global drive for advanced and light-weight materials which deliver excellent bulk properties but present significant preparation and processing challenges. Manufacturers now face a paradigm shift in advanced materials processing - current solutions are often ineffective, time-limited, un-scalable or detrimental to the environment

OAS provides unique, effective and simple solutions to the modern preparation and processing challenges that address these issues. Usually just one product from OAS will work on multiple materials and thus reduce the customer's need for a different preparation for each material type.

Working closely with our customers we provide technical support and evaluation products to assess the performance of our solutions for preparation and processing problems. Currently we have 32 product evaluations along with a pipeline of 47 additional opportunities.  We have also moved three of these evaluations past the technical assessment stage and they are now being assessed either by the commercial team or by the customer's end user.

Our focus continues to be on the automotive and industrial markets, however our products are specific to the materials and coatings they are designed for, rather than the end application, so we are also expanding our markets out to aerospace, defence, clean energy and marine - significant growth markets for advanced materials.

Since the last report we have launched a new website and also employed a business development executive with significant experience in our target markets. The Board of OAS is now seeking an additional round of funding to support the business through the commercialisation of its products.

Onto^TM Technology Offering

Onto™ brings a number of benefits to the customer including increased performance, simplified production processes, improved efficiency and sound environmental credentials. We can modify the surface of many hard-to-bond materials in many forms, from particles and fibres through to panels and three dimensional shapes. We are equally effective with small scale off-line processes as we are with high volume in-line manufacturing.

Onto™ products:

·    do not damage the surface or impair the bulk properties of the material

·    provide consistent results and reduce rejection rates

·    can be integrated into existing production processes

·    use standard commercial coating and curing equipment

·    provide a long usage window

·    remove bottle-necks and need for in-line processing

·    reduce manual processes and errors

·    contain no harmful hydrocarbons

·    reduce VOCs in production and consumer use

·    are effective on multiple substrates and coatings

The EP1000 and SB1000 series of Onto™ based surface treatments provides manufacturers with versatile coating and bonding solutions for engineering plastics, composites, aluminium, carbon-based materials and other difficult-to-bond substrates. We also offer evaluation products for acrylate inks and coatings (EP2000), as well as a system for the adhesion of metal deposition onto plastic films (EP3000).

Our final product range is for fibre sizing. A composite is the combination of one or more reinforcement agents (e.g. carbon fibre) and a matrix (e.g. epoxy resin). The properties of the final material are usually quite distinct from the original components. A fundamental element of fibre based composites is the bond strength between the fibre and the matrix which usually requires a sizing or adhesion promoter. There are a significant number of sizing solutions for carbon and glass fibre products, but other high-performance materials are less well served and present highly attractive markets for OAS.

Financial Results

Group income for the six month period ended 30 June 2015 was £54,000 (2014: £19,000).  This was generated through the sale of evaluation and commercial products of £15,000 (2014: £3,000) along with a further £39,000 (2014: £16,000) from grant funding. The loss before tax for the six month period was £446,000 (2014: £546,000).

Research and development costs decreased from £276,000 to £183,000 with Reactive Chemistry costs decreasing from £235,000 to £183,000 and those associated with Particle Technologies reduced from £34,000 to £nil. 

Interest from deposits for the period amounted to £2,000 (2014: £12,000).  This reduction was driven by the lower cash balance and the lack of availability of attractive interest rates in the current financial market.

We continue to utilise the benefits from enhanced research and development tax credits and also seek available tax repayments under the Small and Large Company schemes.  For the period to 30 June 2015 this credit amounted to £18,000 (2014: £32,000).

The Group has £2,139,000 of cash held on instant access of which £1,790,000 remains in the Parent Company.

Outlook

The board and management team believe that the revised strategy and long term plans better positions both the PLC and OASL for future success. 

We would like to take this opportunity to thank our shareholders for their continued support. We would also like to thank our committed staff who continue to work tirelessly to progress our technology to commercial success.