Cleantech firm ITM Power (LON:ITM) today announced a new trial programme for its hydrogen fuel cell at a distribution centre for retail group Marks and Spencer.

The trial will see ITM’s HFuel technology being used to generate hydrogen on site, for use in hydrogen powered vehicles. These vehicles will replace part of the battery-powered fleet at the distribution centre.

The trial will last for six weeks. And it is part of a Marks and Spencer initiative to deliver zero emission vehicles with superior performance and a two minute refuel time, ITM explained. 

According to ITM this is the first trial of its kind in the UK.

"The involvement of companies such as M&S is essential to developing commercially viable hydrogen solutions for the materials handling industry,” said chief executive Graham Cooley.

“We are extremely pleased to be conducting this trial with M&S who continue to lead the way for sustainable technology deployment."

ITM says that this application in the global materials handling market is a key early adoption market for hydrogen with fuel cells, and the technology is already able to offer superior performance to battery powered systems.

Shares tumbled 21% to 180p after it said its operations management division had taken a £40 million hit.

A review showed additional work was needed on safety systems for eight nuclear reactors under construction in China. 

At Invensys Rail, the firm said reviews of a small number of contracts would cost it an additional £20 million. The controls business has also been hit by weak appliance markets in North America. 

Overall, reported operating profit for the full year to March will be “significantly below last year” when the engineer posted operating profits of £262 million. 

“The performance of the substantial majority of the group continues to be in line with management expectations,” it added. 

The group has three core divisions: Rail, which specialises state-of-the-art software-based signalling, communication and control systems; Operations Management, which supplies safety and control systems to oil refineries, fossil fuel and nuclear power plants; and Controls, which makes products for heating, air conditioning/cooling and refrigeration appliances. 

Separately, the group added it had been appointed Primary Contractor in the Scotland, Central West and Wales & West areas on a number of signalling framework contracts. 

Net cash at end December was £159 million.

ITM is to work with Cheetah to optimise existing petrol outboard motors to run on hydrogen to reduce emissions and fuel costs, as well as to improve fuel security. The resulting vehicle will be taken through the appropriate process to be marketed as a product alongside ITM’s refuelling equipment.

Cheetah has built more than 300 catamarans during the past 20 years and is well regarded in Europe.

The new catamaran is part of the Isle of Wight’s EcoIsland project. ITM pointed out that island energy systems represent a key market for on-site hydrogen fuel production since islands have high fuel prices and difficult fuel logistics.

Most island systems use significant numbers of marine vehicles, which constitute an existing global market for outboard engines of around 800,000 units per annum. Yet, emissions are an important focus for the industry due to restrictions on use in the sensitive environment near shorelines.

“This is a great opportunity for ITM Power to help expand the range of hydrogen vehicles available in the EcoIsland project,” said Dr Graham Cooley, ITM’s chief executive officer. “Cheetah Marine is a very exciting partner and together we hope to develop a product for the global marine market.”

Shares in ITM were up 4.8 per cent at 43.75 pence each in early trading today.

Shares in digital set-top box maker Pace (LON:PIC) fell 13.8 per cent to 52 pence during morning trading  after the company warned it would suffer lost profit due to issues with the supply of the hard disk drives from its supplier in Thailand.

“In common with the broader consumer electronics industry, the immediate impact to our business of the Thailand flooding is significant, requiring diligent management,” said Neil Gaydon, Pace’s chief executive officer. “Looking beyond this short term supply chain issue, the strategic review gives us a clear roadmap to increased operating profit and enhanced quality of earnings.”

Pace said that, including the impact of the hard disk drive supply issues, full-year group operating profit is expected to be around US$141 million on revenues of US$2.3 billion. The impact of the supply issues on 2011 operating profit is expected to be roughly US$9.5 million.

Meanwhile, a consequent impact to cash through lost profit and increased working capital means that net debt at the end of the year is now expected to be between US$320 million and US$330 million.

The firm also said that a consultation is underway on a proposed reorganisation of its Pace Europe business, which is designed to target annualised savings of around US$7 million. A corresponding exceptional charge of around US$12 million will be take in 2011 and the consultation is expected to conclude before the end of H1 2012.

Pace (LON:PIC), the manufacturer of digital set-top boxes and other TV-related smart devices, saw its shares plunge by more than 10 per cent this morning after it reported that it would be affected by the suspension of manufacturing at its main supplier of hard disk drives. Western Digital Corporation recently announced that it had suspended the production of the disk drives at its manufacturing facilities in Thailand on account of severe flooding in the country.

Consequently, Pace said that shipments of products with hard disk drives from this supplier will be negatively affected during the remainder of this year. Shares in Pace were down 10.9 per cent to 82 pence in mid-morning trading today.

Pace said that it estimates the worst-case impact on its 2011 financial year’s operating profit would be US$9.5 million, before taking into account any mitigating actions. As a result, the firm’s operating profit for the year is now likely to fall below its previous guidance of between US$150 million and US$170 million.

The firm added that it will report its interim management statement, together with an update on the firm’s strategic review, on November 17.

Shares in micro-cap engineering firm PipeHawk (LON:PIP) more than doubled in value today as it won two new contracts with a rail services group.

The group’s subsidiary QM Systems signed the deals with Knorr Bremse Rail Systems UK Ltd (KBRS). It will provide production and test facilities for KBRS that will be installed and commissioned in the first quarter of 2012. 

PipeHawk, which develops probing radar technology used in civil engineering to detect underground obstacles like utilities pipes, said the new business was worth around £400,000 and the revenue would be recognised in the current financial year.

"QM Systems has made considerable progress during the last year and has firmly established itself as a leading and innovative solution provider,” said chairman Gordon Watt. “I am very excited by these project wins which demonstrate success on all levels in terms of client satisfaction.”

“These project wins demonstrate further diversification into large scale infrastructure projects and expansion into the heavy rail industry.  QM's order book is very healthy and prospects for the foreseeable future look very bright indeed.”

At 9:20 on AIM Pipehawk shares were up 2.375 pence, 158 per cent, to change hands at 3.875 each.

Environmental engineering group Active Energy (LON:AEG) said today that the group has made “significant progress” since its acquisition of Red Line Engineering Services in April this year.

Active Energy also said it continued to make encouraging progress during the first half in building its presence in the voltage optimisation marketplace.

The firm, reporting its interim results today, said that it continues to see sales opportunities in a number of sectors “but the nature base is such that we are often subject to longer-than-normal sales cycles”.

Sales during the six months to the end of June were £839,742 (H1 2010: £2.8 million), while Active Energy’s loss before tax was reduced to £451,875 (H1 2010: £630,529 loss).

Since the acquisition of Red Line, the firm has made significant progress in restructuring the company into two main core businesses, it said. These are voltage optimisation and the provision of a comprehensive service covering the environmental requirements of companies (from consultancy and design through installation to maintenance).

Active Energy said that the demand for energy-efficient products is still growing, driven increasingly by regulation as well as the need to cut costs. “In the UK, the government’s CRC Energy Efficiency Scheme requires larger companies to purchase CO2 credits according to how much CO2 they produce and is designed to encourage a proactive approach to reducing CO2 emissions,” noted the firm.

“We continue to see high levels of interest in our voltage optimisation products and our pipeline of new business opportunities is encouraging. We are currently in negotiations with a number of potential customers for multiple units across multiple sites and are hopeful that these sales can be secured in the second half of the year,” said Gavin Little, Active Energy’s chairman.

START AUDIO

Interviewer: Hello this is Harry Norman for Proactive Investors and welcome to another Proactive audio interview.

Today is Tuesday the 9th of August 2011 and I’m talking with Gavin Little, the chairman of Active Energy Group listed on the [A 0:00:13] end to end environmental energy solutions.  Stock ticket AEG, share price 2.63 pence, market cap £5.41 million, web address active-energy-group.com.

Gavin thank you very much for joining us for this interview.

Gavin Little: Thank you.

Interviewer: What is Active Energy and what opportunities and markets is Active Energy focussed on?

Gavin Little: Well Active Energy is a leading independent provider of end to end environmental energy solutions.  It’s a small pioneering business with a market cap of around £5 million with the carbon economy agenda at the forefront.

Active Energy’s got unparalleled access to innovative technology and effective engineering capabilities.  We’re also able to deliver complex and energy efficient engineered solutions from design all the way through to installation, maintenance and customer care.

We’re also a fully independent company that ensures that our clients have access to only the best class of technologies that have passed our stringent evaluation.

That’s who we are and if you look at the markets that we’re focussed on; we’re focussed primarily on transportation for the private and public sector.  Which sounds very broad so maybe more simply put is we’re focussed on anybody who wants to reduce energy costs, CO2 emissions, maintenance costs and manage energy generally better in their company or organisation.

Interviewer: What is Active Energy’s business model and business development strategy?

Gavin Little: The business model is a logical process that delivers real benefits to a business and it’s really around the following three areas; the first is consultancy where we would evaluate your energy situation in line with your business objectives and requirements.  And then through our very professional auditing system we then propose the most effective energy measures for your business.

From that the second area is that we then recommend best in class product options to be more energy efficient and then we offer installation.  And thus we provide a complete design and installation solution for which we draw on our in house engineering expertise.  And we can also project manage every system from start to finish.

nd the third part of the logical process is the monitoring.  So once we’ve implemented the suitable technologies we can track and examine how a site or a location or a group of sites is operating and how energy’s being used.  And thus that enables us to identify inefficiencies and reveal further cost opportunities.

And then from that if you then look at this through the business development strategy it’s very simply about delivering intelligent and independent energy solutions.  As I said before to anybody who wants to reduce their energy costs, CO2 emissions and their maintenance costs.

And most of all it’s actually working with people who give us long term revenue streams.

Interviewer: Active Energy recently acquired Red Line Engineering Services.  What was compelling about this acquisition Gavin?

Gavin Little: What was very compelling about Red Line was that it’s a company that’s been trading for about seven or eight years now.  And it’s biggest and most important client was Transport for London.  And with that came the accreditation to work on all the TfL sites so let’s say London Underground.

TfL are incredibly professional and very stringent in terms of health and safety around design and consultancy and installation as you’d expect.  And once you are approved in the system that’s a very big standing one has particularly if you want to work with them or you want to work with other public bodies or even private bodies for that matter.  When they realise you’ve done work for TfL they’re very encouraged.

So then not only do we get an installation company which forms part of the new strategy we’ve also got the accreditation with TfL which we thought was very valuable.

Interviewer: So what’s happening now with Active Energy’s Voltage Master and with voltage optimisation?

Gavin Little: Well voltage optimisation is still a very important part of the market in terms of energy savings so it’s still very key to the business growth in the future.  With regards to our particular brand which is Voltage Master our own product – we have been reviewing our supply chain and we’ve been looking at innovative new products in the market.

So we are looking at how to broaden our offering of what we can do for clients.  But clearly optimisation is only one part of the overall portfolio of products we’re offering moving forwards.  It’s still important but it’s only now one element of our overall portfolio.

Interviewer: So talk us through Active Energy’s portfolio offerings to customers Gavin.

Gavin Little: Well obviously let’s start with Voltage optimisation so the first box is Power Solutions.  Power Solutions is about working with clients on how to save energy coming in on their incoming main line power. So Power Solutions is number one.

Number two is Lighting Solutions which is probably the biggest opportunity in the short term.  There is the ability in some customer’s cases to save over 80% of their costs by just changing the lighting from existing to some of the newer and more innovative technologies.

And the third area is renewable energy solutions around things like solar, wind and water.  Now the last area is probably going to happen a little bit later so we’re focussing on Power Solutions and the Lighting Solutions first.

So that’s on the product side and then on the consultancy side we can carry out environmental consulting solutons around evaluation and identifying, recommending and designing new ways to save money, energy and Co2 emissions

You then have the engineering side which is around installation and then you have the third bit which is the maintenance side which is around maintenance and monitoring of the systems once they’re in.

So product on one side and then consultancy and managerial services on the other.  So those are the two product offerings .

Interviewer: What do you and your team bring to the challenges of developing Active Energy in to a profitable business?

Gavin Little: I think the most important thing for me that was brought on day one was the people we took on board. We arrived with a new team to compliment the existing two directors of Active Energy.

I’d also like to believe we have the right people in the right roles and the right behaviours.  And with the right backgrounds and experience as well

And I would hope that the track record of those people coming in can be judged from what they did in their previous companies.  And if they can replicate that in Active Energy then we’re doing pretty well.

The other big thing with these people that we’ve brought in is the integrity that they had within the companies they worked in before but also the relationships they had with some of the big clients that we’re going after.  And the integrity piece for me is very important when you’re offering a best in class solution because we need to be truly independent and only offer the very best products for that particular client’s needs.

Interviewer: On May the 10th Active Energy Group raised 1.62 million net through a share placing.  Where does this leave Active Energy’s financial situation going forward?

Gavin Little: Well at the time of the deal when we bought Red Line in to Active Energy and I took over as chairman, the Active Energy Group had a pretty good balance sheet.  In fact there was a clean balance sheet, there was no debt and if you asked an analyst at the time how much money was in the bank he or she probably would have said around £700,000 which they would have probably been correct.

So if you take that plus the money we raised and you look at out overheads which is running at 100 to 110 thousand a month.  We could see that we were pretty much in good shape to basically put in the new business model.

Interviewer: What can investors expect from Active Energy over the next 12 to 18 months?

Gavin Little: Well I think the most important thing now is to move from sentiment which obviously we had when we raised the money to fundamentals.  

So we need to get the new business plan in place firmly and we’ve got the team on board to support that.

What I’d like to try and generate over the next 12 to 18 months is 2 or 3 large strategic partnerships with clients where we can really start to do long term revenue generating business.

Also I’d like to see the company finally back in to profit.  The bottom line and my key role obviously is to return shareholder value.  So it’s about growing the business top line and bottom and ensuring that those shareholders that have invested in us or who intend to invest in us – because the share price is pretty low right now see a return on their money and see their money working hard in a business that can hopefully do very well.

Interviewer: You have said that the voltage optimisation industry needs to learn some lessons what would you like to say about that?

Gavin Little: I think the voltage optimisation market has matured somewhat in terms of people’s approach.  

But I think there historically has been a view that one box fits all and there are many companies that will say their box is better than somebody else’s and say it will save certain amounts of energy.  And perhaps it wasn’t the right box and it didn’t save the energy it was said it was going to save.

There are many reasons for that but I think there’s a credibility required for the industry now to only put in product that really works in the right places.

Now that’s why I’m very excited by why Active Energy can now sit in the market recommending the best products out there.  Because for some buildings you may only require the optimisation for lighting only, in other buildings you may want it for lighting and 24 hour refrigeration.  Now that requires a very different sort of box in both those occasions rather than the same box pretending to do the same thing.

So I think as the industry matures and our clients get much more understanding about what optimisation is I think we just need to make sure we’ve got the right product on offer and we’ve made the right recommendations.

Interviewer: You said that new technologies in lighting can produce dramatic savings, would you like to say something about these technologies Gavin?

Gavin Little: Yes absolutely I mean for me it’s a very exciting time.  One of the things I get very excited about is that I finally actually have people in the company who can tell me what’s the best light bulb to put in to my house.

As a very simple example; there is a plethora of product out there whether it be fluorescent, LED, next generation lighting and all of them claim to do something.  And a lot of people out there and I’m now talking big companies – their engineering directors, finance directors really would like to understand what is the best product on the market and what can that give me?

So I can give you an example of one lighting product that we’re working with right now which is a replacement for an awful lot of lighting that exists on many public services.  And that product will last five years rather than the existing one year and can generate 25% energy savings over the existing products.

So if you start to multiply that across the number of installations on a very large infrastructure it suddenly becomes a very attractive margin business.  As well as doing what we want to do which is reducing energy costs, CO2 emissions and maintenance costs.

And if you think about changing a product once a year or once every five years you think of the value of that back to a client in labour costs let alone CO2 emissions and energy saving.

Interviewer: Remember Proactive Investors is not an investment advice service.

Make sure you register at proactiveinvestors.co.uk for our weekly news letter which will keep you informed about our articles, interviews and events.

Thank you for listening.

END AUDIO

The group, which is focused on the provision of energy efficiency technologies to the public and private sectors, said that under the terms of an agreement between the two firms, monies due from SDC to the group have been waived.

Following the waiver of these balances, Active Energy Group had been left with a liability of £100,000 due to SDC, but this amount has now been paid in “full and final satisfaction of any amounts due to SDC”.

Active Energy Group said that the decision to acquire the minority interest reflects the fact that the firm has, since May 2011, in accordance with the terms of its agreement with SDC, been manufacturing the VoltageMaster voltage optimisation device at its own facility in Leeds and it expects any future demand for the product to be met from these new facilities.

This is expected to result in Active Energy Group’s greater control over manufacturing, as well as a speedier response to customer demand, as improved product offering and an improved gross margin.

This year has seen Active Energy Group embark on a strategy to reinvent itself as a one-stop shop consultant for, and implementer of, energy efficiency solutions. The firm’s expertise in voltage optimisation remains, but it also plans to supply a host of other services as well.

Precision instruments and controls firm Spectris (LON:SXS) has continued to trade strongly to the end of the first half this year, says JP Morgan Cazenove.

The firm released a trading update on Friday prompting JP Morgan Cazenove to increase by 5 percent its EPS forecast for 2011 from 103.9 pence to 109.5 pence - while maintaining its "overweight" rating for the stock.

In an interim statement in May, Spectris had said it was performing strongly, but, said the broker, this had continued to 30 June.

For the first half, group sales were up 25 percent - year-on year - to £505 million. Meanwhile, recent  acquisitions contributed around 5 percent to the y/y growth, while currency had a negative impact of  minus 1 percent.

Analyst Glen Liddy went on: "The strong demand has been broadly

based as it was in the first tertile. Healthy demand trends are present in all regions and end markets with all segments and regions expected to post double-digit growth.

"We expect some of the strongest demand to be seen in the automotive, aerospace and mining & minerals end markets."

JP Morgan Cazenove said Spectris had yet to see evidence of a weakening macro environment.

"The trading update highlights that current trading conditions have remained strong for the group. The recent growth has put volumes for the group back in line with pre-crisis levels. We expect growth to moderate towards trend in the second half as the comparables become tougher."

Spectris will release its first half results on 23 August.

The company's shares fell more than 22 percent  in early deals - to change hands at 189.4 pence.

"The board now expects that second quarter revenue growth will be less than the targeted range," said the company in an update, blaming the rapid change in the global business environment.

"Although June sales per day were stable with May, this performance reflects a marked moderation of growth rates in all global markets during June, particularly Europe and North America, and compares to the strong performance reported in Q2 last year when we delivered growth of 30 percent," it said.

"It is now apparent that significant inventory purchases were made in April and early May by industrial and technology customers to service their underlying demand following the Japanese earthquake."

In the light of the global slowdown, this inventory is now likely to take longer to be used before purchasing returns to more normal levels, said the firm.

The company pointed out that it continued to pursue growth opportunities and added that the firm's gross margins remained stable. It also continued to gain customers in-line with its target, through increased year-on year-web penetration.

It added: "As we did successfully when markets last slowed we will now accelerate and intensify the execution of our reshaping and cost reduction programmes."

"We anticipate that the benefits of these cost actions during the balance of the year will mitigate substantially the impact of the lower sales growth rates, and therefore the board continues to believe that Premier Farnell will deliver profitable growth this year, albeit marginally lower than our previous expectations," it said.