Steam-based technology developer Pursuit Dynamics lost four-fifths of its value after it said that Procter & Gamble will not be taking up an option to licence the company’s technology and that means that 2011-12 revenues will be much lower than expected.
P&G initially signed a development agreement in November 2010 and the share price hit 700p soon afterwards. The agreement covered assessing the use of the technology and its effect on costs and energy use. It is difficult to say how well the technology did but P&G says that it will not pursue further evaluation or development.
The share price dived 56.25p to 14.75p, which values Pursuit at £12.7m.
The cash outflow from operating activities in the year to September was nearly £11m, after a tax credit. Cash after the recent rights issue that raised £8.88m at 100p a share was £9.8m. That suggests a cash outflow of more than £6m in six months.
Revenues were £490,000 in 2010-11 but they were expected to be much higher this year. The board approved a figure of £22m for 2011-12.
This is not the first time in the past decade that a potential licensing deal with a major customer has fallen through. It happened before with Cadbury.
A strategic review will be accelerated by the latest news. There are revenues being generated from bioenergy, food and brewing uses of the technology.
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