RNS out today, SP up 18%.








Oxonica plc - Supply Agreement
RNS Number:7127H
Oxonica plc
16 August 2006


16 August 2006

Oxonica plc
Supply Agreement

Oxonica plc ('Oxonica') a leading international nanomaterials group, today
announces that it has reached agreement with Petrol Ofisi A.S., the leading
national oil company in Turkey with sales of US$8.8 billion in 2005, to supply
its Envirox(TM) fuel borne nanocatalyst, for use in diesel fuel across Petrol
Ofisi's nationwide distribution network. This agreement is the first of its kind
for Envirox(TM) and is in line with Oxonica's strategy of signing commercially
significant deals with major partners to access the volume market.

The agreement provides for an initial supply of Envirox(TM) which will be used
by Petrol Ofisi to evaluate market acceptance of the new enhanced fuel within
its national market and is expected to generate sales for Oxonica worth US$12.7
million this year. Following the marketing evaluation, Oxonica expects to be in
a position to indicate likely levels of ongoing demand in Q1 2007.

Envirox(TM) has been shown in field trials to reduce fuel consumption in diesel
engines with savings of 5 to 10% with commensurate reductions in carbon dioxide
(CO2). Envirox(TM) has also been shown to reduce particulate emissions by up to
15%.

In addition, Oxonica will be announcing on Wednesday 16 August the launch of a
collaboration with Petrol Ofisi and Oxford University to develop new catalysts
for the petrochemical industry.

Kevin Matthews, Chief Executive Officer of Oxonica plc, said:

'This deal is another major milestone for Envirox(TM). The initial order
provides a meaningful increase in Oxonica's revenues for the current year and a
successful nationwide product launch by Petrol Ofisi could lead to a significant
boost to Oxonica's sales and cash flow going forward. We are delivering on the
strategy we set out at the time of the IPO last summer and today's announcement
further demonstrates Oxonica's ability to deliver innovative commercial
solutions to major customers in international markets using its expertise in
nanomaterials.'

In addition to this announcement, the Board is pleased to report that trading
for the first half is in line with current expectations. Oxonica intends to
announce interim results for the half year ended 30 June 2006 on 18 September
2006.

For further information, please contact:

Oxonica plc Tel. 01865 856 700
Kevin Matthews, Chief Executive
Richard Clarke, Finance Director

Smithfield Consultants Tel. 020 7360 4900
Sara Musgrave
George Hudson


Notes to Editors

About Oxonica plc - www.oxonica.com

Oxonica (AIM: OXN.L) is one of the leading international nanomaterials groups
with products already launched into international markets and is listed in
London on the AIM market. It was spun-out from Oxford University in 1999 and
currently employs 56 professional staff. Oxonica's mission is to focus on the
development of innovative commercial solutions for international markets using
its expertise in the design and application of nanomaterials. It owns a
portfolio of demand driven products that offer substantial benefits to the
target markets of energy, healthcare, materials and security.

The Group currently has four operating divisions: Oxonica Energy, Oxonica
Healthcare, Oxonica Materials and Oxonica Security. Oxonica has already
launched products into international markets. Lead products include:

* Envirox(TM) Fuel Borne Nanocatalyst - a nanocatalyst improving fuel economy
and reducing emissions

* Optisol(TM) UV Absorber - a revolutionary photostable UV protection system
designed to optimise the performance of quality sunscreens and anti-premature
aging products

Oxonica is also active in searching for the next generation of products and is
already engaged in developing transformational detection technologies which will
enable a new generation of ultrasensitive multiplex diagnostic tools for the
clinical diagnostic life science and security markets. In addition, the company
is developing other UV absorber technologies into polymer systems and coatings,
based on similar technologies to that used in Optisol(TM).

soultraders re your thought

Big problem -- petrol/diesel has never been able to carry a"brand". i.e its all the same to you and me diesel and cleaner diesel etc -- buy the cheapest. The marketing push to get past this as the stuff will cost more per litre.

Others follow suit unlikely i.e +5% fuel efficiency -- price 2% difference ? Hardly going to make me go to a different petrol station but could make me buy the Envirox diesel if I was in the station that sold them both

Hence trial period very important -- might have to take a December break in Turkey to see how the trials are going

Agree the possibility of a cash call, Confidant - that happens pretty frequently with these tiddlers, as you know!

By my reckoning a deal like that just done in Turkey could be worth 20 million over a full year - add a few of those together and OXN could pretty quickly be looking at profits.

Have just banged off a very tiny order right on the closing bell to get a toe in the water - I hope it gets filled today! Am trying to do some more investigating and will give serious thought to adding some more to my holding if I'm pleased with what I find out.

Confidant, I like the comment about brands but don't agree re comparisons of efficiency. The bean-counters generally go wild over a 5% saving (or even a 2% saving if the cost centre is a large component of the business, as it would be in a truck or coach co) and in such a multi-billion dollar business as the fuel industry I don't see one company letting another get away with undercutting it - or providing a more efficient, and therefore cost-saving, product - for long.

Also, given that fuel prices are now compared on the internet by people wishing to get the cheapest possible tankful, I think the pressure on vendors is greater than ever to drive prices - or at least the overall cost of fuel usage, down.

If Envirox is really as good as has been shown in the trials, then I guess the enhanced fuel - or copycat versions if competitors manage to get in on the act - would become the industry standard just as low-sulphur products have. I like the fact that Envirox reduces particle emissions too - could see governments pushing it for the sake of the environment.

Looks exciting Soul, I'll keep reading the thread for any more info you can find - product looks Interesting but I assume their must be some competitors out there ?
Also can the Envirox be adapted to be used with Biodiesl ? as I see Biodiesel being introduced very soon around the world for a considerable discount to normal fuels which could replace the need for Envirox IMO, your thoughts#?

Intersting point, GDP. (EDIT, actually that's a very, very good question). I'm not sure of the economic case for using Biodiesel as against fossil fuel - I have a feeling that in a low-oil-price scenario Biodiesel becomes too expensive and it is government-backed tax breaks and similar initiatives that enable it to succeed.

Is biodiesel on its own more fuel-efficient?

As I understand it, European biodiesel is going to be a blend containing approx 95% fossil diesel and 5% bio - in which case you could still derive an advantage from using the additive. One would have to look into the chemistry of the nanotechnology, as it may be that it confers an advantage even when using pure biodiesel, but I think that the days of the majority of people fuelling their cars on chip fat or rapeseed oil are still some way off.

Further to previous: I am trying to make contact with OXN and will put the question to them unless I find some info that settles the issue beforehand.

I wasn't fast enough - my trade got booted out of the system as the MM couldn't fill the order. Something like 70% of the stock is owned by major shareholders, so I wonder if liquidity may be an issue - almost certainly if they couldn't fill the tiny order I placed!. Still, at least I can sleep on my decision to purchase!

FYI - What is Envirox?

READ IT HERE

Panmure Gordon Price Target 200p

Agree with you point soultraders on truck and coach companies

Stagecoach have been using Envirox on their buses for a year or so. Question is perhaps why the deal was made in Turkey and not with one of the UK retailers -- especially perhaps Tesco who don't produce the stuff so don't have a conflict of interest. If we get to know that and also how the Philipinnes sales are going then it could be even more interesting

Good morning Confidant. Is that price target new today?

Clearly it is - just seen on FT.com:

The news prompted Panmure Gordon, the broker, to forecast that Oxonica would report profits during 2007 and see sales rise to 21.4m by 2008.

Kevin Matthews, chief executive of Oxonica, said the deal would provide a "meaningful increase" in current year revenues.

There is also an interesting little presentation by the UK distributor, Rozone, which provides a range of fuel-related products and services.

CLICK HERE

with RSI at 70, sp is looking quite heavily overbought ...... would not be surprised to see it retracing until RSI comes back to below 50

Depends upon how good the newsflow is going to be.

I just spoke to Kevin Matthews at Oxonica, who very kindly returned the call I made yesterday.

He said (and I summarise) that there have been no problems with Envirox in the US as such, but that the EPA did ask for OXN to carry out more engine testing in the US. The new data were submitted to the EPA in May; the EPA's deliberations typically take 6 months, so that an answer should be forthcoming by the end of the year.

Although no problems are anticipated, nanotechnology is a new area for which regulation still has to be drafted and it is likely that the EPA will require further work to be undertaken regarding the environmental impact of the nanoparticles (as opposed to that engines using the modified fuel, which is the subject of the current application). Mr. Matthews reckons that the whole approval process could take, from here, another 12-18 months.

As far as Envirox's compatibility with other fuels is concerned, it should confer similar benefits. Biodiesel produces more carbon than does fossil diesel, so that in theory the product is even more useful in biodiesel blend. No tests have been done for pure biodiesel; Mr. Matthews pointed out that this is not a large area of concern at present.

Similar products could eventually be developed for petrol; however, due to the higher carbon/soot output of diesel, Envirox is a diesel-specific product.

Finally, I asked about the potential divestment of Envirox should it become a major money-spinner. Mr. Matthews stated that divestment is not a priority, although understandably the company would take offers seriously if the price was right.

Shareholder register tight --- 70%+ held in secure hands. Noticeable Stagecoach Bus Holdings has a 5% - did they get this as part of the deal to take the product ? or because they liked the product so much they bought the company?

Overall this looks v good and the lack of interest and free float just makes it look better. Profitability next year I think is a year ahead of schedules

Important will be progress on trials they say were going on at the Final results stage -- the Sept interims should be interesting

cynic

RSI ??? YOu have to be kidding -- look at the share over anything more than last 5 days. Plus realise there is less than 30% of stock outstanding and the mm's look short. Where's the seller coming from -- no mutual funds here ? All holders long term. Vols on the way down lucky to be 3% of total share cap.
Try and buy them and you'll be lucky to get a quote in 2000

picked up the RSI from the charts on site here ..... not my guesswork!

not doubting the RSI score just the relevance here

well if you can't see the relevance, i am afraid i cannot help you