RCS - Time To ACT PLC - Intention to Float

Johnson MattheyAnnouncement

07/05/2024 08:15

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RNS Number : 3686N  Time To ACT PLC  07 May 2024

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(https://timetoactplc.com/)

 

Embargoed until 7(th) May 2024

 

7(th) May 2024

 

 

Time To ACT plc

("Time To ACT", "the Company" or "the Group")

 

Intention to float on Aquis Stock Exchange Growth Market

 

Time To ACT plc, an engineering business focused on technology for the energy
transition sector, is pleased to announce its intention to seek the admission
of its Ordinary Shares to trading on the Aquis Stock Exchange Growth Market
(the "AQSE Growth Market").

 

Highlights

·    A UK engineering-led group focused on the Energy Transition supply
chain

·    Two principal businesses, Diffusion Alloys (coating services, coating
technology) and GreenSpur (generator technology)

·    Revenue generating and growing topline at ~50% per annum

·    Profitable in FY23, with £1.9 million cash in the bank at 31(st)
March 2024

·    IP-rich (protected patents, know-how, processes, simulation/modelling
and transferable system skills) enabling, what the directors believe to be,
first-mover advantages and creating high barriers to entry

·    Locally embedded in Middlesbrough, UK (HQ, key management, coatings
plant, relationships)

·    Experienced Board and Management team

 

Equity fundraising and WRAP Retail Offer

Given its strong cash position, the Company's application to the AQSE Growth
Market is not conditional on it raising funds.  However, the Company is
seeking to raise up to £1 million of new money to de-risk growth and in
support of its strategy of coupling organic growth and acquisition.  In
addition, it has decided to provide existing and potential new investors with
the opportunity to participate in a placing and retail offer via the
Winterflood Retail Access Platform (the "WRAP Retail Offer").

 

The Group is being advised by Novum Securities Limited as its corporate
adviser and Oberon Capital as its corporate broker.  Retail investors
interested in participating in the offer should contact their
stockbroker/wealth manager who should contact wrap@winterflood.com
(mailto:wrap@winterflood.com) .

 

Commenting on the planned admission and fundraise, Chris Heminway, Executive
Chairman of Time To ACT said: "Today marks a pivotal moment for Time To ACT as
we embark on the next phase of our journey to address opportunities in the
energy transition supply chain. Our decision to float on the AQSE Growth
Market underscores our commitment to fostering innovation in this sector and
developing engineering-led solutions for a cleaner, greener world.

 

"It's important to highlight that Time To ACT is well funded and does not
require additional capital to list. Nonetheless, we believe that by broadening
our investor base, including amongst retail investors, through the Placing and
WRAP Retail Offer, we are providing the opportunity for new investors to
become part of our exciting journey. I look forward to updating investors on
our progress."

 

For more information, please visit www.timetoactplc.com
(http://www.timetoactplc.com) or contact the following:

 

 Time To ACT plc

                                                   Tel: +44 (0) 1642 967138

 Chris Heminway, Executive Chairman                Email: crh@timetoactplc.com (mailto:crh@timetoactplc.com)

 Gary Wallace, Chief Financial Officer             Email: gw@timetoactplc.com (mailto:gw@timetoactplc.com)

 Novum Securities Limited, AQSE Corporate Advisor  Tel: +4420 7399 9400

 David Coffman, Daniel Harris

 Oberon Securities, Corporate Broker               Tel: +44 203 179 5300

 Nick Lovering, Adam Pollock, Mike Seabrook
 St Brides Partners Ltd, Financial PR              Tel: 020 7236 1177

 Ana Ribeiro / Paul Dulieu / Isabelle Morris       Email: timetoact@stbridespartners.co.uk

                                                 (mailto:timetoact@stbridespartners.co.uk)

 

 

Introduction AND BACKGrouND

 

The Company was incorporated in England and Wales on 5 July 2011 under the
name GreenSpur Renewables Limited and renamed as Time To ACT Limited on 12
October 2019 following the acquisition of Diffusion Alloys Holdings Limited.
It converted to a public limited company on 1 November 2023.

 

The Group is an engineering business focused on technology in the energy
transition sector. It currently has two principal operating divisions;
Diffusion Alloys and GreenSpur. Time To ACT acts as the holding company for
the Group, providing strategic and operational support to the operating
companies and capital to enable their growth.

 

It is the Directors' intention to grow the Group both organically and through
the potential acquisition of companies or businesses with complementary
technologies in the cleantech sector. Such acquisitions could be of both
established and early-stage businesses, as well as intellectual property which
would benefit the Group and its strategic aims.

 

Diffusion Alloys

 

Diffusion Alloys has been supplying diffusion coating services for over sixty
years.

 

A diffusion coating is an intermetallic layer that protects metal components
from degradation at high temperatures and in highly corrosive environments.
Diffusion coatings are relatively thin (approximately 25µm-250µm) and
diffuse both inwardly into the surface of the base material and outwardly,
forming a protective metallic layer at the surface.  Formed at high
temperatures in a coating chamber, diffusion coatings can provide significant
extension of life and remain commercially superior to super-alloys in high
temperature environments where corrosion protections helps to determine a
system's performance and life expectancy.

 

Diffusion coatings were first commercialised in the 1950s and initially found
only niche applications, prior to an increase in demand for gas turbines
(stationary and aero engines) in the period from 1970 to 1990. Diffusion
coatings have historically been commonly applied to high-value turbomachinery
components (such as gas turbine components) and within the process industry to
protect again corrosion mechanisms such as metal dusting and coking.

 

The Directors believe that Diffusion Alloys is one of only a small handful of
companies offering specialist expertise in diffusion coatings as many large
competitors appear to offer diffusion coatings only as a sideline to their
more mainstream coating services.

 

During the period 2015 - 2023, Diffusion Alloys undertook a strategic shift
which initially involved spinning off the legacy gas turbine business and
focusing on clean technology applications. When the legacy business was unable
to continue in operation, the former Hatfield site was closed and several key
furnaces were relocated to an expanded Middlesbrough site whilst retaining
critical diffusion coating expertise for the growing demand from clean
technology customers.

 

Following the site move, the corporate mindset has been revised from being "a
coatings plant supported by a technical team" to becoming "a technical
coatings capability supported by a plant". This not only changes the manner in
which the business approaches its customers but has also enabled the
development of an asset-light service offering.

 

Diffusion Alloys has two revenue streams; coating services and coating
technology.

 

Coating services encompass a range of diffusion coatings aimed at enhancing
the properties of the components for improved performance and durability. This
service involves plant-heavy work, supplying to volume customers.  Services
are categorised as either "Large Parts" or "Small Parts", predominantly
determined by the size of the components that are coated.

 

·     Large Parts use a gas-powered furnace that can house parts up to
18.5m in length.

·     Small Parts use one of several electrically-powered furnaces with a
maximum part size of roughly 1.5m in length.

 

Coating technology focuses on selling the Company's know-how and cultivating
early stage revenue opportunities that include compound sales, early-stage
coating development work, licensing, equipment sales and laboratory services.

 

The Directors believe that Diffusion Alloys has three principal selling
points:

 

i)       Proven process know-how in the coating of both small and
large-scale components;

ii)      A dominant market position in the coating of large-scale
hydrogen components and comprehensive and advancing references across the
emerging Solid Oxide industry; and

iii)     A business model offering traditional asset-heavy coating
services as well as the sale of asset-light coating technology and the
development of a new proprietary diffusion coating process which is intended
to materially reduce the capital cost and energy usage of high temperature
furnacing.

 

With its new cleantech-focused approach, the Directors believe that Diffusion
Alloys has established a strong international position in the protection of
parts against:

 

i)       Catastrophic metal degradation in critical blue hydrogen and
other syngas processes;

ii)      Severe life-curtailing degradation mechanisms in Solid Oxide
fuel cells and electrolysers;

iii)     High temperature corrosion and wear from liquid-lead and Lead
Bismuth coolants used in both nuclear fission and fusion Gen4 applications.

 

An important early validation of Diffusion Alloy's cleantech technology and
market opportunity was received in the form of a supply-chain partnership
agreement with Johnson Matthey plc concluded in February 2023. Johnson Matthey
are the market leaders in synthesis gas ("syngas"), a mixture of carbon
monoxide (CO) and hydrogen (H(2)) and have a circa 40% global market share of
grey H(2) catalysts. As of June 2023, Johnson Matthey had a pipeline of over
35 Blue Hydrogen projects. Under this agreement, the two organisations have
joined forces to scale-up production and address the increasing demand for low
carbon hydrogen used to reduce global carbon emissions. They will share their
complementary areas of expertise and ensure a robust supply chain for the
coated components deployed in Johnson Matthey's low carbon (blue) hydrogen
offering which enables the production of hydrogen with up to 99% carbon
dioxide (CO₂) capture and has already been chosen for several significant
projects around the world.

 

The Directors believe that Diffusion Alloys' value comprises its processes,
chemical and metallurgical know-how, which can be seen in its expertise in the
coating of small/complex components and in its capacity for large-part
coating. It is also developing a new, proprietary diffusion coating process
which is intended to materially reduce the capital cost and energy usage of
high temperature furnacing.

 

The Directors believe that Diffusion Alloys' competitive advantages include:

 

·     Proprietary diffusion coatings;

·     Experienced technical team working in parallel with customers to
develop a solution bespoke to requirements;

·     Track record in diffusion coating of small and complex components;

·     Rare capability for coating long tubes (in the UK). Expertise in
diffusion coating at this scale;

·     Re-alignment of company assets to reduce complexity and deploy
greater resources to technological and process development;

·     Focused research and development ("R&D") projects in place that
build on its capabilities for cleantech applications and seek to reduce
capital intensity;

·     First mover advantage with major competitors seemingly slow to
realise the opportunity.

 

The Directors believe that Diffusion Alloys is the only credible diffusion
coater in the world for blue hydrogen components, specifically gas heated/heat
exchanger reformers tubes and internal support structures. Within the green
hydrogen sector, Diffusion Alloys is already coating in volume for a leading
European vendor and is in pre-commercial discussions with a number of other
manufacturers.

 

GreenSpur

 

GreenSpur is an intellectual property creator and generator designer that has
developed a credible solution in renewable energy applications to the Rare
Earth magnet problem.(1)

 

Magnets constructed using Rare Earth elements (typically Neodymium or Samarium
Cobalt) are a fundamental component in electrical generators and electric
vehicle ("EV") motors which are critical to delivering the clean energy
transition.  Yet the world is at risk of not being able to produce or access
the electrical power it needs as a result of growing supply chain constraints
in the sourcing of Rare Earth elements needed for these magnets.  While China
controls around 60% of the world market for Rare Earth elements, industry
sources claim that it also produces around 90% of the world's Rare Earth
magnets.  Market concerns about this concentration range from supply/demand
imbalances and shortages in the supply volume to the "weaponisation" of Rare
Earth elements and Rare Earth magnet supply.

 

GreenSpur's generator design eliminates the need for Rare Earth magnets and
copper coils without any loss in electrical performance, making this
technology the conduit between any type of Rare Earth-free magnet and the
renewable energy market.

 

GreenSpur's direct drive generator design is based around an axial flux
architecture, as opposed to the more conventional radial flux architecture
used in most motors and generators in the wind market. This technology
demonstrates a new approach to electrical power generation overcoming historic
manufacturing and design issues with axial-flux which some competitors
(including wind industry original equipment manufacturers ("OEMs")) have
previously been unable to solve.

 

In conventional radial flux generators, the rotor (rotating part of the
generator) and stator (stationary part) are concentric cylinders, with
magnetic flux flowing in between them.  The flux lines flow to and away from
the axis of rotation of the generator along "radial lines".  In an axial flux
generator, the rotor and stator are arranged as discs along the axis of the
machine, and the magnetic flux flows parallel to this axis as "axial lines",
as shown in the right-hand diagram below. The advantage of the axial flux
topology is that it allows the exploitation of the space envelope and so to
increase the quantity of magnets to achieve the desired output.

 

 

 

 

Arrangement of magnets in radial (left) vs axial (right) flux architecture

 

The GreenSpur design is modular, with each module containing a rotor, into
which the magnets are embedded, sandwiched between two stators into which the
coils are placed and in which the current is induced. The design uses ferrite
magnets which are widely available and inexpensive, with several advantages
over Rare Earth magnets:

 

·    Neodymium Rare Earth magnets can only operate up to 80°C, whilst
ferrite magnets can operate up to a maximum 250°C and, therefore, require
less cooling infrastructure.

·    Ferrite magnets are ~£0.40 per kg, whereas neodymium Rare Earth
magnets are ~£50 per kg(2).

·    Ferrite magnets are more widely available and therefore less
susceptible to geopolitical risks

·    Ferrite magnet production is more environmentally friendly and can be
manufactured from the waste of steel production, whereas Rare Earth elements
are mined specifically for magnet production with 1 tonne of Rare Earth
elements producing 2000 tonnes of toxic waste.

·    Ferrite magnets are more corrosion resistant in wet environments

·    Ferrite magnets can withstand higher temperatures than Neodymium Rare
Earth magnets

 

 

To date GreenSpur has built three prototype generators - a 2kW proof of
concept, a 3-stage 75kW demonstrator and a single 250kW stage of a 1MW
generator. The Group has 11 patents granted or pending as set out in the table
below. It is the combination and linkages of these patents, together with
proprietary electro-magnetic and additional modelling, that creates what the
Directors believe is a catalyst for the use of Rare Earth-free magnets in wind
and renewable energy generation.

 

 

The Directors believe that GreenSpur's architecture has three principal
selling points:

 

i)    Rare Earth-free and copper-free, thereby alleviating the risk from
the supply of Rare Earth magnets being controlled and even weaponised by the
largest producers and supply shortages and price spikes of copper (for use in
traditional coil windings);

 

ii)   Very versatile as (a) it can be scaled either radially in a single
stage or axially with multiple stages as proven with the three prototype
generators scaling both axially and radially, and (b) it can be configured to
work in any size, any application and with any magnet and any drive train; and

 

iii)  Lowest cost per kW as a result of using inherently cheaper materials
than a conventionaldesign - ferrite magnets and aluminium coils as opposed to
neodymium magnets and copper coils.

 

The Directors believe that these key features will position GreenSpur to take
advantage of the next-generation (20MW+) mid-speed geared permanent magnet
synchronous generators for offshore wind turbines. It is anticipated that the
addressable wind turbine market will reach US $129bn by early 2030s. The
European Green Deal aims to make Europe climate neutral by 2050. To reach this
target, WindEurope calculates that  450GW of offshore wind will be required
and that annual installation rates will need to increase from today's 3GW per
year to over 20 GW per year in 2030(3).

 

 

 

 

 

It is also increasingly apparent that there is growing concern around there
being sufficient supply (and hence the cost) of copper needed to meet the
demand for electrical windings. The Directors believe that the Group's
aluminium coil design and coil winding capabilities will therefore be
increasingly sought after.

 

GreenSpur's design is suitable for both vertical and horizontal axis designs,
with a particular advantage for vertical-access wind turbines (VAWT).

 

 

 

Source: www.centreforenergy.com/ (http://www.centreforenergy.com/)

 

The monetisation model for the Group's intellectual property is through
selling design services principally to wind turbine designers but the
Directors also intend to sell to other market segments such as new magnet
researchers. To date, GreenSpur has secured two initial design services
contracts.

 

The technology is designed initially for application into the multi megaWatt
offshore wind industry.  As such, GreenSpur's competitors are designers and
suppliers of established generator topologies for that market offering radial
flux permanent magnet generator technology.  Suppliers include wind turbine
OEMs as well as outsourced suppliers of motors and generators such as ABB,
Flender, CRRC, Weg and others.  GreenSpur also competes with other design
services businesses such as The Switch or more generalist simulation and
modelling companies such as Ansys and Dassault Systemes. This technology is,
however, in the Directors' opinion, innovative in the sense that the Directors
know of no other businesses attempting to design a Rare Earth-free generator
solution or that have successfully overcome manufacturing and design
constraints that have prevented the upscaling of axial flux architecture.

 

Energy Transition

 

An energy transition (otherwise known as an energy system transformation) is a
significant structural change in supply and demand within an energy system.
A previous energy transition took place during the industrial revolution and
involved a move away from wood and other biomass as fuel to coal and oil, and
more recently, natural gas. The energy transition which is currently underway
is a transition to clean and renewable energy, driven by the recognition that
greenhouse gas emissions must be drastically reduced if the world is to meet
its Net Zero commitments and mitigate the process of climate change. This
transition involves phasing-down the use of fossil fuels and re-developing
whole systems, including transportation and heating, to operate on low carbon
electricity.

 

The Directors believe that the current energy transition will be characterised
by three stages:

 

i)       Belief - whether expressed in the form of Net Zero targets,
participation in the annual COP conferences or in the growing number of
national hydrogen strategies, the world increasingly understands the threat
posed by excessive CO(2) and methane emissions leading to climate change and
global warming;

ii)      Financing - funding the new decarbonisation infrastructure,
driven by large government wealth funds, hedge funds and private equity funds
who are increasingly seeing the opportunity as a new and emerging asset class;
and

iii)     Supply chain - establishing the supply chain needed to deliver
clean technology and renewable solutions by scaling small businesses and
establishing new industries to meet the approaching demand.

 

TTA is positioned in the supply chain stage of the energy transition.

 

 

 

The Hydrogen Market

 

The Directors believe that one of the key features of the Energy Transition
will be the emergence of the hydrogen economy. The maturation of the market is
now seen as inevitable, even if doubts remain over the timing of market
growth.

 

"Over the last five years, the hydrogen sector has undergone a major
maturation.  From a niche market, green hydrogen has emerged as a key
technology in the journey towards net zero."

 

Source: ITM Power website (itm-power.com/global-h2-strategies)

 

"To date, more than 56 countries have released hydrogen roadmaps and
strategies."

 

Source: Centre Of Global Energy Policy
(www.energypolicy.columbia.edu/publications/national-hydrogen-strategies-and-roadmap-tracker/
(http://www.energypolicy.columbia.edu/publications/national-hydrogen-strategies-and-roadmap-tracker/))
)

 

Demand growth for hydrogen will be driven by the expansion of the market from
historic applications as, primarily, a chemical feedstock into varying energy
applications.  The energy market is projected to become 15x the size of the
chemicals market (source: Johnson Matthey).

 

Hydrogen is denominated in various colours referring to its source.  In the
new hydrogen economy, the market will primarily shift from "grey" hydrogen
(produced from steam methane reforming with waste CO(2) released to
atmosphere) to "blue" hydrogen (produced from methane, but with carbon capture
and storage) and then to "green" (generated through the electrolysis of water
with renewable energy).

 

 

 

 

Source: Hydrogen for Net-Zero
(https://hydrogencouncil.com/wp-content/uploads/2021/11/Hydrogen-for-Net-Zero.pdf)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Future Strategy

 

The Group's strategy is to operate an engineering development business engaged
in advancing multiple subsidiary businesses with relevant technologies that
address opportunities within the energy transition supply chain.

 

TTA's development activity has two discrete elements, comprising:

 

i)       building asset value through intellectual property, patents,
know-how, software models, engineering teams, network, processes and vision

ii)      monetising the asset value via intelligent business models,
revenue streams, solutions selling and strategic partnerships.

 

The Group operates a centralised financial management model focused on
monitoring consolidated development spending, funding sources, cash and cash
burn rates and revenues streams.  The Group's strategic goal is to ensure
that development activity overhead is always funded by a variable combination
of commercial revenue streams, external funding and strategic partnerships.

 

Time To ACT follows six guiding principles:

 

·    Focus on the energy transition sector

·    Operate a patient-to-permanent capital model

·    Aim to assist operating companies to exceed their potential

·    Act as owner / operators

·    Have a flexible approach to revenue models

·    Work with early-stage to mature businesses

 

It is the intention of the Directors to consider the acquisition of additional
subsidiary companies that fit within this strategy. It is anticipated that any
such acquisition would be for a majority stake.

 

(1)Intellectual property created by employees/directors of GreenSpur has been
transferred to, and is owned by, the Company.

(2)Commodity prices as at 22 April 2024

(3 windeurope.org)

 (4)Hydrogen for Net-Zero: Hydrogen Council | McKinsey McKinsey &
Company, November 2021

 (5)Hydrogen for Net-Zero: Hydrogen Council | McKinsey McKinsey &
Company, November 2021

 (6)The Hydrogen Council and Johnson Matthey plc

 (7)Global Energy Perspective 2023: Hydrogen outlook | McKinsey -
www.mckinsey.com/industries/oil-and-gas/our-insights/global-energy-perspective-2023-hydrogen-outlook
(http://www.mckinsey.com/industries/oil-and-gas/our-insights/global-energy-perspective-2023-hydrogen-outlook)

 

 

 

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