Advanced Nanotechnology posts $3.2m loss

Welshpool-based Advanced Nanotechnology Ltd has announced an annual loss for the year ended 30 June 2006 of $3.2 million, up from last year's loss of $3.6 million.

A statement issued by the said the result was in line with the Directors' expectations and consistent with the Company's ongoing investment in its research, product development and business development activities.

The text of a company announcement is pasted below.

• Sales to customers for the 2006 financial year totalled $2.7 million, an increase of approximately 78% over the 2005 financial year sales of $1.5 million. Revenue growth is strong in both product segments;
• Gross profit up to 28.2% of total revenues, from 19.7% in 2005. This reflects an increase in the usage of fixed production overheads, an ongoing reduction in direct operating costs and an increase in finance revenue;
• Advanced Nano's Result from Operations has improved from a loss of $1.7 million in 2005 to a loss of $0.7 million in 2006;
• Operating expenses and administrative/selling overheads have reduced to $1.6 million, down from $2.0 million in 2005 as a higher proportion of total expenses have been allocated to research, product and business development expenditure;
• Expenditure on research and development, new product development, process improvement and new business development has increased to approximately $1.7 million in 2006 from $1.2 million last year and reflects an ongoing investment in the breadth of new products and process improvement opportunities available to Advanced Nano. Of this amount, approximately $1.5 million was expensed in the income statement (FY05: $1.1 million);
• Overall, Advanced Nano's loss for 2006 was $3.2 million. This represents a reduction of $0.4 million or 12% compared to the 2005 loss of $3.6 million.
• Advanced Nano's Directors believe that the revenue outlook for the 2007 financial year is encouraging.

The 2006 result was in line with the Directors' expectations and is consistent with the Company's ongoing investment in its research, product development and business development activities.

Advanced Nano's CEO, Paul McCormick, stated that during the past year, Advanced Nano has continued to achieve solid progress in developing and commercialising its nanomaterial products. Product sales have continued to grow strongly and new products were introduced to the market in 2006.

Advanced Nano's Directors believe that the revenue outlook for the 2007 financial year is encouraging.

Demand for products is expected to continue to grow strongly, and the effect of new product launches and process refinements are expected to further increase operating margins over time.

In the Personal Care segment, Directors believe that the introduction of the Company's new ZinClear-IM range, together with its ZinClear-Dry powders and new ZinClear®-S dispersions, will drive demand for this product family, particularly in the large U.S. market. Sales of the Alusion product family are also expected to continue to grow strongly.

In Industrial and Environmental, revenue will be driven to a substantial degree by sales to Oxonica. Early indications from European customers also suggest strong interest of the new NanoZ-AQ dispersions, since these water-based dispersions can help customers meet the upcoming VOC (Volatile Organic Compounds) regulations that are limiting development of traditional solvent-based paints and coatings.

Processing margins should continue to improve as a result of the Company's ongoing investment in process refinements and ongoing management of overheads and operating expenses. The Company expects gross margins to increase in future financial years as sales commence from the planned 2007 launch of lower cost products.