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Shares in Pursuit Dynamics slumped 79 per cent on Monday after the lossmaking British group revealed that Procter & Gamble had decided not to sign an exclusive licensing agreement to use its fluid-processing technologies.
As a result, the company said, revenues for the coming year would be “materially below” expectations.
Asked whether the development was a fatal blow, Jeremy Pelczer, interim chief executive, said that he was “not ruling anything in or out”, and added that the company was accelerating a strategic review, to be completed by the end of June.
“We need to look at the revenue expectations for the next 12 months for each division and for the business as a whole and ensure that the associated cost base is affordable,” he said.
In December, the company, which has not turned a profit since joining Aim in 2001, said that in the year to September 30 2011 it made a pre-tax loss of £15.3m, from revenues of £490,000, prompting Roel Pieper to resign as chief executive and paving the way for a one-for-eight emergency rights issue, which netted £8.8m in March.
The company simultaneously forecast that revenues would rise to “not less than £22m” this year – more than seven times their last peak of £3m achieved in 2007.
Pursuit Dynamics’s optimism was founded on a joint venture agreement signed in 2010, under which Procter & Gamble would trial the company’s fluid processing technology with a view to signing an exclusive licensing agreement.
Pursuit Dynamics gave no new details on its financial position on Monday. However, after the rights issue in March the group said it had £9.8m in cash and was spending £1m per month.
Shares in Pursuit Dynamics closed at 14¾p on Monday and have fallen 96 per cent over the past year.
● FT Comment
Since joining Aim in 2001, Pursuit Dynamics has serially over-promised and under-delivered on its ability to turn its technologies into commercially viable products. When the company presents its interim results on Thursday, it will need to convince investors that missing out on the Procter & Gamble contract – the expected revenues from which were the main reason Pursuit Dynamics could forecast a more than 40-fold increase in revenues for this year – is not terminal. Otherwise, the company’s shares will start to look overvalued at almost any price.