Acta Releases Prelim Results

Preliminary Results for the year ended 31 December 2008

Acta S.p.A ("Acta" or the "Company"), the catalyst technology development company, today announces its preliminary results for the twelve months ended 31 December 2008.

2008 Highlights

• First stage development contract completed and second stage commenced with a global
manufacturer and with Sumitomo Corporation
• Completion of technical milestones and customer launch of six new and improved catalysts
across Acta’s target applications
• Development of world’s first prototype high pressure hydrogen, membrane-based, non-noble
metal water electrolyser
• Development of world’s first prototype platinum free 100W ethanol fuel cell power generator
• Performance improvements in catalysts for ammonia decomposition by cracking and
electrolysis
• Commercial and technical progress in catalysts for zinc-air batteries
• 11 new patent applications filed. 32 new NDAs signed.

2008 Financial Results

• Revenues increased to €625k (2007: €600k)
• Reduced loss before tax of €5.2m (2007: €5.5m), better than expectations
• Operating cash outflow of €4.3m (2007: €4.1m)
• Year end cash of €6.4m, provides available funds to end of 2010
• £2.3m investment from strategic partner, increasing Sumitomo Corporation's holding to 9.8%
• Completion of €2.1m FIT grant project (100W direct ethanol fuel cell generator)
2009 First Quarter Progress
• Approval of €12m government grant-funded Hydrostore project with ENI and ENEL, providing
Acta with €750,000 grant over three years
• Second stage development contract with global manufacturer delivered on time with promising results
• High pressure water electrolyser and ethanol fuel cell generator successfully demonstrated at Fuel Cell Expo 2009
• Positive commercial interest in high pressure water electrolyser demonstration units
• Continuing customer interest in ammonia waste treatment and zinc air batteries

Robert Drummond, Chairman of Acta, said:

“In 2008 Acta has responded to the deteriorating economic environment by increasing its focus on near-term revenue opportunities and reducing non-core costs to preserve cash. This has been successfully achieved, and has ensured that Acta now has cash resources until the We are committed to developing those catalyst applications which show technical merit and strong commercial potential, and which we can exploit in partnership with major industrial companies. We thank our industrial partners for their continued support and encouragement, and we look forward to demonstrating greater visibility on our product portfolio and revenue potential during 2009.”

For further information please contact:

Acta S.p.A
Paul Barritt, Chief Financial Officer Tel: +39 050 644281
Charles Stanley Securities Tel: +44 (0)20 7149 6000

Nominated Adviser
Russell Cook / Freddy Crossley end of 2010.

Chairman’s Statement

I am pleased to present the full year results for the year ended 31 December 2008 and to provide this statement on our new developments.

Overview

2008 saw the continuation of our important development contract with a major Asian manufacturer and Sumitomo Corporation, our Asian distributor and strategic partner. We also completed the second stage of the investment from Sumitomo, taking them to a 9.8% shareholding in the Company.

We have been pleased with our progress in ammonia catalysts (electrolysis and cracking) and water electrolyser technology, and we believe that these will be key applications for the future.

During 2008 Acta continued to make strong technical progress, filing 11 new patent applications in areas including catalysts for oxygen reduction and ammonia electrolysis and cracking. The expansion of our laboratory facilities and the recruitment of two leading scientists from the Max Planck Institute during the first half of 2008 gave us new capabilities particularly in the development of ammonia catalysts.

Our commercial progress was once again evidenced by a significant number of new Non-Disclosure Agreements signed during the year, and we have continued to engage with major industrial producers to develop catalyst applications to meet their environmental, technical or commercial needs. Our prototype water electrolyser technology has been well received, and is now the subject of an important government grant-funded project that we are undertaking together with Eni and Enel, two of
Italy’s largest industrial groups.

During the Summer of last year it became clear to us, from speaking with our major customer, that the economic downturn was likely to impact our ability to generate increased development revenuesduring 2008 and 2009. The Company responded rapidly to this change of outlook, and has successfully implemented cost savings across all non-core activities, as well as cutting investments that would otherwise have been incurred to deliver the contract. This prompt response has protected the Company’s cash position while not impacting our key research and development activities or our level of commercial engagement.

Subsequently in November our major customer confirmed the next phase of the development contract, which was delivered at the end of February 2009. We continue to work closely with this important manufacturer, together with Sumitomo Corporation, and are confident that this relationship will bring substantial commercial opportunities to our business in due course.

Financial Results

Acta’s post tax loss for the year ended 31 December 2008 amounted to €5.2m (€5.5m in 2007), better than expectations. The loss included €0.5m of non-cash share option expense and excluded €0.6m of grant income which is expected to be received in 2009 to 2010 for project costs incurred in 2007 and 2008.

Revenues grew modestly to €625,000 (€600,000 in 2007), reflecting lower sample and component sales but higher development revenues, as the Company progressed from initial samples to deeper engagement with its key customers.

Operating cash outflow for the year was €4.3m (€4.1m in 2007). In March, Acta completed its fund raising with Sumitomo Corporation, providing an additional £2.3m to the Company. With this extra funding, together with the recent cost reductions, the company has sufficient funds for its current operations until the end of 2010. An improvement in revenues above the modest levels that we have prudently assumed would extend the Company’s cash horizon into 2011.

In view of the Company’s stage of development, a dividend is not considered appropriate, and is not permissible under Italian law due to our accumulated losses.

Outlook

2009 will see the Company benefitting from the lower cost base that we have established and a greater focus on near-term revenue opportunities.

We will continue to pursue commercial and technical developments in ammonia cracking, zinc-air batteries, and ammonia waste treatment applications, and we envisage that these opportunities will show good technical progress during the year, with a view to commercial engagements in 2010. We will also be scaling up our noble metal free, high pressure hydrogen water electrolyser to an industrial prototype and pursuing this promising technology with our industrial partners.

The development relationship with our major customer remains strong, and we envisage entering a further phase of work on the development contract during this year. We will also continue to pursue grant funding opportunities in the sector together with significant partners, where such projects offer value to our technical and commercial strategy.

Chief Executive’s Statement

Against the background of economic turbulence, global environmental issues continue to make themselves heard, and the latest research from the International Scientific Congress on Climate Change (Copenhagen, March 2009) indicates that sea levels are set to rise, due to global warming, at a faster rate than had already been feared. Society needs practical, economically viable solutions to the problems of developing clean and renewable energy sources, and to reducing the emission of greenhouse gases and other pollutants.

Catalysts will play a key role in the world’s industrial response to these problems, and Acta’s strategy is to continue to address its catalyst technologies to the key sectors of renewable energy, transportation, waste management and portable power.

Commercial Progress

During 2008 Acta successfully completed the first phase of its development contract with a global manufacturer and with Sumitomo Corporation, our Asian distributor, and in November announced the continuation of this contract into a second phase. This contract has been a significant revenue source during the year, and we are encouraged that we have continued to work with this major customer despite the upheavals witnessed in their sector.

We have continued to develop our applications with customers in the fields of ammonia waste treatment and zinc-air batteries, in order to extend our promising lab results to meet the technical needs of our customers’ particular industrial applications. This is a lengthy and demanding process, and we are encouraged by the continuing feedback from our partners with regard to the commercial potential that they see in our technologies. We look forward to making further disclosure on these developments as we enter pilot programmes with our customers in due course.

The further expansion of our commercial engagement was seen in the signing of 32 new Non- Disclosure Agreements with customers and research institutes, taking the total number of signed NDA’s to over 100. On 23 July 2008 we also announced the launch of six new catalyst products across each of our areas of activity, bringing enhanced performance levels to our catalyst product range.

Our commercial strategy is to pursue our key applications in collaboration with major industrial companies, to ensure accurate customer feedback and rapid access to substantial markets. We are confident that our progress in these areas will bring clear revenue visibility by 2010.

Technical Progress

Acta achieved significant technical progress during 2008, and the announcement of new catalysts for a range of Acta’s applications completed a number of technical milestones. The launch of noble metal-free catalysts for water electrolysis was particularly pleasing and opened the possibility of low cost, high pressure electrolyser units for existing hydrogen applications and access to the growing market for energy storage from renewables.

A further significant technical achievement during the year, completed early in 2009, was the development of a prototype alkaline membrane water electrolyser stack. This noble metal-free system produces hydrogen at 30 bar pressure (tested up to 100 bar) from intermittent energy sources, without the loss of energy typically incurred by compression. The hydrogen may then be burnt as a fuel, or in an internal combustion engine, or re-converted to electricity through a fuel cell when
required to meet grid demand.

The prototype electrolyser stack will be further developed under the €12 million grant-funded Hydrostore project, led by Eni S.p.A., the major Italian energy company, in collaboration with Enel S.p.A., Italy’s largest power company and the second largest utility company in Europe. Total project funding of €5.3m, of which Acta, the second largest beneficiary, will receive €750,000 over three years, was granted by the Italian government in January 2009. The purpose of the project is to improve methods of generating and storing hydrogen from intermittent power sources for stationary and mobile applications, at a cost that is competitive with high pressure hydrogen cylinders. The prototype was demonstrated at the Fuel Cell Expo in Tokyo, in February 2009, where it attracted considerable commercial and technical interest. The Company believes that it will be able to sell the prototype units to a number of interested parties, and during 2009 will be working to build an industrial
scale demonstrator (1kW).

A further technical milestone achieved in the year was the completion of the €2.1 million FIT Lombardia grant funded project by Acta’s subsidiary company, Idea Lab. This project has financed the development of the world’s first platinum free 100W direct ethanol fuel cell generator, which was also demonstrated at the Fuel Cell Expo in February 2009. The prototype passed its technical inspection visit in late 2008, and the financing resulting from the project is expected to be received during 2009 and 2010.

Acta also continued its developments of advanced catalysts for hydrogen production from ammonia cracking, for ammonia waste treatment, and for zinc-air battery applications. As a result of these and other developments, Acta filed 11 new patent applications during the year, bringing its patent portfolio up to a total of 36 applications across 24 fields of invention.

Market Review

It is estimated by BCC that the market for primary energy and environmental catalysts will grow to a value of $19 billion by 2012, with a growth rate of 7% per annum. This large and rapidly developing market is driven by environmental and energy security concerns, and is underpinned by a strong increase in environmental awareness and social desire for change that is now being championed by US President Obama.

Other independent analysis indicates a market for hydrogen generation technologies of $12 billion by 2020, incorporating applications for intermittent energy storage, automotive use, and biofuels. In addition, we foresee a power generation market of $8 billion by 2012, including electric vehicles, zincair batteries, fuel cells and distributed energy generation. Finally, in the industrial catalyst sector, BCC predicts a market of $2 billion for green processing catalysts by 2012, to which we would add a potential market of up to $1 billion for industrial and agricultural ammonia waste treatment, based on
our analysis of the addressable market in the USA.

We continue to review other large market opportunities, such as chlor alkali process catalysts, and will pursue these where we believe that our catalysts have technical merit and where we can address the market through significant commercial partnerships.

Operational Review

Technical resources were strengthened through the expansion of the laboratory facilities during the first half of 2008 and the recruitment of a new research team, headed up by two leading scientists from the Max Planck institute, one of Europe’s most advanced scientific institutes.

We continued to invest in technical equipment, completing two new laboratories, and production facilities, to bring our operating capacity up to the level required for our expected level of activity over the next two years. Investments in technical equipment in 2009 are expected to fall, due to the completion of the FIT research project and the installation of sufficient facilities over the last two years.

Additional technical staff may be recruited where needed due to capacity or expertise requirements. At the end of 2008 Dr Hubert Gasteiger left Acta to take up the position of visiting Professor at the Massachusetts Institute of Technology (MIT) in the USA. Hubert made a significant contribution to the knowledge and authority of our technical teams during his eighteen months with the Company, and helped to establish an effective technical workgroup management structure. Hubert has
remained in touch with the team to give his continuing support, and we wish him the best for his new appointment.

Chief Financial Officer’s Report

Acta performed well through a difficult financial environment during 2008, strengthening its financial resources through a capital increase in the first half of the year, and responding to the deteriorating economic outlook in the second half with a programme to reduce costs and conserve cash. £2.3 million was raised in March 2008 through the completion of Sumitomo Corporation’s investment at 115p per share, taking Sumitomo’s shareholding up to 10%. We are delighted to have Sumitomo
as such a significant partner in our business, and we continue to benefit from their commercial and financial support.

Revenues grew by 4% to €625,000 (2007: €600,000), primarily from increased development contract revenues. We expect revenues to remain at a comparable level during 2009 as we further develop our catalyst and system applications, and we anticipate moving into commercial revenues in 2010 and beyond.

The Group completed the FIT Lombardia grant project in 2008, and continued to work on three other grant-funded projects during the year (FISR, WelTemp and Carbon Trust) with a total value of €1.1 million. Total grant receipts in 2008 amounted to €132,000, all of which consisted of grant income received in relation to the WelTemp project (2007: total grant receipts of €656,000, of which €365,000 in grant income and €291,000 in a low interest rate loan). Grant income is recognised in the accounts as a reduction of operating costs. We expect to benefit from the receipt of €1.4 million, of which €0.6 million will be grant income, during 2009 to 2010 in relation to the completion of the FIT Lombardia project, for which costs have been expensed during 2007 and 2008.

Costs during the year fell to €6.1 million (2007: €6.2 million) as increased materials costs and staff numbers were offset by lower share option costs and external professional fees. These costs are expected to fall further during 2009 as a result of cost reductions implemented in the second half of 2008.

Capital expenditure fell to €408,000 in the year (2007: €451,000), despite an expected increase, as we took care to reduce our investments in the light of the economic conditions. Investments were primarily made in technical and scientific equipment, plus registration and internationalisation of patents. We will continue to monitor our capital investments carefully in 2009, to conserve our cash position where possible.

Net cash outflow, including capital increase, was €1.5 million in the year (2007: €900,000 inflow including capital increase), reducing available funds at the year end to €6.4 million (2007: €7.9 million). Excluding the capital increase, net cash outflow increased to €4.4 million in the year (2007: €4.1 million). Cash outflow is expected to improve in 2009, as a result of increased grant receipts in combination with lower cost and investment levels.

In early 2009 we have received Italian government approval for the funding of the €12 million Hydrostore project, led by Eni and Enel. Acta is expected to receive €750,000 over three years from this project, which will be committed to the further development of our water electrolyser technology. The current environment of government economic stimulus has seen an increase in the resources dedicated to research and development of environmental technologies such as these, especially in
relation to climate change, and we will continue to pursue these funding opportunities where they fit with our corporate strategy.

Outlook

Acta continues to make commercial progress in its targeted markets, supported by continuing technical improvements in its key technologies and applications. While 2009 revenues are expected to be in line with 2008, we believe that this year will see increasing progress towards revenue visibility, and will place the company to enter commercial revenue streams in 2010 and beyond.

Our partnerships with our major customers remain strong, and we are dedicating our resources to pursuing those applications which show the greatest commercial promise in the near term. Our major development contract in particular continues to progress well, and we are grateful to the support of Sumitomo in this important relationship.

We also look forward to scaling up our innovative water electrolyser technology in the coming year,and pursuing the commercial interest that this prototype system has generated. The Hydrostore project is expected to commence in the second quarter, and we are optimistic that further applications for grant funding of other projects will receive approval during the year.

The key milestones for 2009 are as follows:

• Further commercial developments of ammonia applications, including ammonia waste
treatment and transport applications supported by ongoing R&D
• Development of prototype industrial scale alkaline membrane water electrolyser (platinum free,
high pressure hydrogen)
• Commercial engagement on zinc-air battery application developments
• Focus on near-term commercial opportunities, development contracts and grant-funded
projects
• Benefits of 2008 cost reduction programme seen in lower 2009 cost base and cash outflow.

Source: Fuel Cell Today