Mycelx Technologies' confident of cash breakeven despite halved sales

Mycelx Technologies, which supplies water treatment technology to the oil and gas sector, lost more than half its revenues in the first half of the year due to the low price of oil, although several new contracts leave it well positioned to hit full year targets

While management believes the volatile market conditions are likely to continue throughout the rest of 2016 "and beyond”, it is confident that the company is "well positioned" to meet those challenges thanks to existing revenue streams, new contract wins and cut costs.

Management are confident of achieving the target of being operationally cash positive in the full year.

For the six months ended 30 June, revenue fell 55.2% to $3.9m, due to oil price volatility and market dislocation, although this was expected by the company, which improved margins to 53.5%, from 51.9% in the same period last year.

Equipment sales and leases decreased 35% to $1.3m, with revenue from consumable filtration and services fell as last year's numbers benefited from two turnaround petrochemical plant projects which were not repeated this year.

Cost cutting measures resulted in total operating expenses falling by 41.4% to $3.4m with the largest savings coming from reduced selling, general and administrative expenses, which included a reduction in staff costs of $1.1m.

Loss before tax increased by 7.7% to $1.4m and basic loss per share remained flat at 8 cents.

Mycelx ended the period with $5.7m cash and cash equivalents, with the net cash position remained at $3.7m.

The AIM-listed company won several contracts during the period in the Middle East, Africa and US, including a two year $5m contract with Saudi Arabian chemical manufacturer SABIC, a commission of a third system at a US terminal operator to treat water into the Houston ship channel, and deployed its RE-GEN system offshore in Nigeria.

Oil field service company Schlumberger, entered into a sales and marketing agreement with the company to be the sole distributor of Mycelx's entire product range in the upstream market. The company plans to utilise the agreement to promote its RE-GEN media product.

Chief executive Connie Mixon said: "The oil and gas and petrochemical industries continue to integrate MYCELX technology into their critical, real-time processes. This is confirmation that our technology has its role in achieving sustainable water treatment for years to come.

“Now with the support of Schlumberger in upstream and leveraging off our existing footprint with leading downstream operators, Mycelx is well on its way towards its ultimate goal of becoming the industry standard for water treatment."

Shares in the company were up 12.07% to 3.50p at 0852 BST.