Interim Results

Angle PLC 31 January 2007 For Immediate Release 31 January 2007 ANGLE plc ('ANGLE' or the 'Company') Interim Results for the Six Months Ended 31 October 2006 ANGLE plc, the intellectual property and technology commercialisation company, announces its unaudited interim results for the six months ended 31 October 2006. Key Points • Further progress with the existing controlled investments(1) portfolio. In particular, Geomerics and Synature made progress towards revenue generation. • Geomerics launched its leading edge computer graphics product and has been invited to join Microsoft's X-Box 360 Tools Program. • Synature launched its internet personalisation product, securing beta customers in social networking and internet retailing. • Measured expansion of controlled investments portfolio. Two new companies were established during the half year, Kaloptics in the field of computer animation special effects and Parsortix in the field of prenatal diagnostics. • Loss before tax £4.9 million (2005: £0.8 million) after: • expenditure on controlled investments in the half year was increased by 82% to £1.4 million (2005: £0.8 million). • operating costs to establish, develop and create value in Progeny(R) companies were increased by 43% to £1.4 million (2005: £1.0 million). • a decrease in fair value of non-controlled investments(2) of £1.9 million (2005: profit £1.2 million). • 20 year Progeny(R) Partnership signed in July 2006 with the University of Reading giving ANGLE the exclusive rights to commercialise intellectual property developed by the University. • Board strengthened with the appointment of Garth Selvey as a Non Executive Director on 8 September 2006. • ANGLE is also pleased to announce today that: • Gary Lewis, recently Chief Operating Officer of Take Two, a leading worldwide publisher, developer and distributor of interactive entertainment software and accessories, has joined Geomerics as Chief Executive. • Although not yet concluded, Novocellus' interim clinical trials analysis supports the pilot study evidence that its technology has the potential to increase the success rates of IVF treatment. • Synature has secured its first commercial contract with a leading player in the package holidays market. 1 Controlled investments are Progeny(R) companies where the Group owns a controlling equity position. Under IFRS, these are consolidated. The costs of this investment are charged to the income statement and the resultant fair value is not placed on the balance sheet. 2 Non-controlled investments are Progeny(R) companies where the Group does not own a controlling equity position and include those that have progressed to quoted status. Hance Fullerton, Chairman, commented: 'ANGLE has made further progress in the development of its Progeny(R) companies during the first half of the year and a number of the companies are now maturing. The major focus now is on realising the value created in the controlled investments portfolio.' Enquiries: ANGLE plc 01483 295830 Andrew Newland, Chief Executive Ian Griffiths, Finance Director Buchanan Communications 020 7466 5000 Richard Darby, Suzanne Brocks, James Strong A presentation for analysts will take place today at 10.00am at the offices of Buchanan Communications, 45 Moorfields, London, EC2Y 9AE. Please call Buchanan Communications for more details. Notes to Editors Founded in 1994, ANGLE is an international venture management and consulting group focusing on the commercialisation of technology and the development of technology-based industry. ANGLE creates, develops and advises technology businesses on its own behalf and for its clients. ANGLE is listed on AIM (AGL.L); further information can be found on www.ANGLEplc.com ANGLE PLC CHAIRMAN'S STATEMENT Introduction ANGLE has continued to invest in the development of its Progeny(R) company portfolio. The portfolio now comprises eleven companies, seven of which are controlled, within technology sectors ranging from medical sciences to software. We believe that the portfolio offers the potential for substantial returns on our investment. Results During the half year ended 31 October 2006, we have significantly increased the level of investment in expanding and developing the controlled investments(1) portfolio. As a result the portfolio has matured and increased in value. The loss before tax for the half year of £4.9 million (2005: £0.8 million), a loss per share of 17.5p (2005: 4.8p), is as a result of: • expenditure on controlled investments in the half year increasing by 82% to £1.4 million (2005: £0.8 million). Cumulative expenditure on controlled investments at 31 October 2006 was £3.9 million (2005: £1.0 million); • operating costs to establish, develop and create value in Progeny(R) companies increasing by 43% to £1.4 million (2005: £1.0 million); • a decrease in fair value of non-controlled investments(2) of £1.9 million (2005: profit £1.2 million); • a loss on the consulting and management business of £0.1 million, unchanged from 2005, as a result of poor performance in the UK. Progeny(R) companies During the half year, increased expenditure on controlled investments delivered progress against commercial milestones for existing portfolio companies and allowed the establishment of two new companies. ANGLE now has a portfolio of eleven companies developed using our Progeny(R) process. Our objective is to realise value from the existing portfolio of Progeny(R) companies to generate profits for the Group and provide financial resources for development of future Progeny(R) companies. 1 Controlled investments are Progeny(R) companies where the Group owns a controlling equity position. Under IFRS, these are consolidated. The costs of this investment are charged to the income statement and the resultant fair value is not placed on the balance sheet. 2 Non-controlled investments are Progeny(R) companies where the Group does not own a controlling equity position and include those that have progressed to quoted status. Board Appointment Garth Selvey was appointed to the Board as a Non Executive Director with effect from 8 September 2006. Mr Selvey is a technology industry executive with over twenty years of senior management experience. From 1996 to 2006, he was Chief Executive of Comino Group plc prior to its acquisition by Civica plc. Outlook for the full financial year We will work with our existing Progeny(R) companies to deliver further commercial progress, whilst seeking to realise value from our existing investments. Hance Fullerton Chairman 30 January 2007 ANGLE PLC OPERATIONS SUMMARY Introduction During the half year, ANGLE focused on the development of its controlled investments(1) portfolio through the establishment of two new companies and the further investment in the existing portfolio. Non-controlled investments It was disappointing that, during the half year, the value of ANGLE's quoted non-controlled investments(2) in Corpora plc and Provexis plc fell to £3.0 million (2005: £3.8 million). ANGLE holds these AIM-listed investments following their successful development under the Progeny(R) process. The market for small cap stocks has been weak during the period and the share prices of both companies have fallen notwithstanding the fact that they have announced progress in their businesses. The fair value of ANGLE's unquoted non-controlled investments, Acolyte Biomedica and NeuroTargets increased to £1.7 million (2005: £1.5 million). Controlled investments Whilst their fair value is not shown on ANGLE's balance sheet, the majority of the value of the ANGLE portfolio is within the controlled investments, which comprises majority stakes in seven companies. Expenditure on controlled investments in the first half increased by 82% to £1.4 million (2005: £0.8 million), with cumulative expenditure on controlled investments at 31 October 2006 at £3.9 million (2005: £1.0 million). In-house expenditure to establish, develop and create value in Progeny(R) companies was also increased by 43% to £1.4 million (2005: £1.0 million). New portfolio investments This increased level of investment represents a sustained effort to build value in the portfolio. During the half year, two new companies were founded: • Kaloptics is commercialising technology from New York University utilising a patent-pending kaleidoscope and software system that enables the rapid capture and recreation of photo-realistic surface images. The technology has a wide range of commercial applications in high value industries, including special effects, animation, computer gaming and medical devices. 1 Controlled investments are Progeny(R) companies where the Group owns a controlling equity position. Under IFRS, these are consolidated. The costs of this investment are charged to the income statement and the resultant fair value is not placed on the balance sheet. 2 Non-controlled investments include those that have progressed to quoted status and are Progeny(R) companies where the Group does not own a controlling equity position. • Parsortix is the first company resulting from our preferred commercialisation partner agreement with Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP/SEP). Parsortix has secured intellectual property that has the potential to change the $600 million global market for prenatal diagnostics by eliminating the need for invasive procedures during maternity. Early definitive diagnosis for chromosomal abnormalities such as spina bifida and Down's syndrome, as well as other disorders due to genetic abnormalities, can help physicians better care for both the mother and the foetus during pregnancy. Existing portfolio update Good progress was made in developing the existing companies and notable milestones were: • Aberro evaluated its software testing product with beta customers during the half year and identified a number of enhancements, which would be attractive to a larger population of customers. The relevant development work is in progress and the enhanced product range is expected to be launched in the Summer. See www.aberrosoftware.com for product details. • Geomerics developed its radiosity product during the half year, which utilises its technology to provide rapid computation of light reflection and refraction in computer animation. This provides greater realism in computer games. A demonstration can be seen on www.geomerics.com. The radiosity product has been well received by the market and Geomerics is in discussions with a wide range of potential customers and has been invited to join Microsoft's X-Box 360 Tools program. • Novocellus progressed its clinical trials process during the half year to test the effectiveness of its embryo viability testing technology. A number of challenges were faced during the clinical trials process but these have now been addressed. It is expected that Novocellus' technology will improve current IVF rates by at least a third which will facilitate the move to routine single embryo transfer and thereby prevention of multiple births. Since the half year end, Novocellus has announced interim results from the trials. Further progress with the study will be necessary for statistical significance, nevertheless the interim data broadly confirms the pilot study findings regarding the effectiveness of Novocellus' technology. • Synature launched its internet personalisation products during the half year. These have been adopted by beta customers in social networking and internet retailing. Since the half year end, Synature has announced its first commercial sale of product to a leading player in the package holidays market, who are using the product to make holiday recommendations to customers of their web site. See www.synature.com for more information. Pipeline and Partnerships The pipeline of new companies remains strong and there are several new companies under consideration. ANGLE continues to be highly selective in the companies it develops and the rate of establishment of new Progeny(R) companies is carefully controlled in accordance with the investment capital available. At ANGLE's Showcase of its IP and Development Pipeline at the University of Reading on 28 November 2006, the Company updated the audience on ANGLE's 20 year strategic partnership with the University of Reading as announced on 27 July 2006. The University of Reading is a top 200 world university and a top 10 UK research-intensive university with £162 million income in 2006/07, 17,500 students and 4,000 staff. Work is under way to expand the number of relationships with major technology partners. In particular, ANGLE is in discussions with a number of other UK universities, with whom further long term exclusive Progeny(R) Partnerships may be established. The consulting and management business is a platform for our ventures activity, providing access through consulting relationships to IP opportunities as well as providing market credibility with IP owners. The fee income of £1.8 million for the half year (2005: £2.0 million) contributes to the Group's infrastructure costs enabling ventures activities to be more cost effective. The UK consulting division has under-performed and we are reviewing its positioning to determine how best it may support our venturing activity in the future. Outlook The market for the commercialisation of IP remains strong. The concentration of the ANGLE business model on the provision of experienced management is well differentiated and yields many opportunities for the Company going forward. ANGLE PLC CONSOLIDATED INTERIM INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2006 Note Six months ended Year ended 31 October 31 October 30 April 2006 2005 2006 (Unaudited) (Unaudited) (Audited) £ £ £ Turnover 3 1,799,113 2,016,036 4,092,867 Investments Change in fair value 6 (1,891,088) 1,226,768 2,377,772 Operating costs Consulting and Management (1,862,293) (2,058,582) (3,995,530) Ventures (1,399,779) (978,832) (2,471,626) Controlled investments (1,417,592) (777,957) (2,217,568) Share based payments (222,241) (173,120) (381,884) Restructuring charges - (200,221) (203,740) _________ _________ _________ (4,901,905) (4,188,712) (9,270,348) Operating profit / (loss) (4,993,880) (945,908) (2,799,709) Net finance income 122,354 110,539 131,969 _________ _________ _________ Profit / (loss) before tax (4,871,526) (835,369) (2,667,740) Loss before controlled investments (3,454,448) (57,412) (460,946) and tax Controlled investments (1,417,078) (777,957) (2,206,794) Tax 4 131,777 43,297 142,023 _________ _________ _________ Profit / (loss) for the period (4,739,749) (792,072) (2,525,717) ========== ========== ========== Earnings / (loss) per share 5 Basic and Diluted (pence per share) (17.47) (4.75) (14.36) ANGLE PLC CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2006 Note Six months ended Year ended 31 October 31 October 30 April 2006 2005 2006 (Unaudited) (Unaudited) (Audited) £ £ £ ASSETS Non-current assets Non-controlled investments 6 1,732,831 1,465,749 1,642,051 Property, plant and equipment 140,750 165,228 147,414 Intangible assets 7,713 3,875 3,575 _________ _________ _________ Total non-current assets 1,881,294 1,634,852 1,793,040 Current assets Non-controlled investments 6 2,976,989 3,787,629 4,868,077 Trade and other receivables 7 1,474,108 1,112,285 1,224,658 Cash and cash equivalents 4,327,383 3,266,363 8,234,853 _________ _________ _________ Total current assets 8,778,480 8,166,277 14,327,588 _________ _________ _________ Total assets 10,659,774 9,801,129 16,120,628 ========== ========== ========== EQUITY AND LIABILITIES Equity Issued capital 2,713,293 1,670,648 2,713,293 Share premium account 13,701,935 7,381,864 13,701,935 Share based payment reserve 1,141,117 710,112 918,876 Other reserves 2,553,356 2,553,356 2,553,356 Translation reserve (99,499) (14,377) (73,159) Retained earnings (10,052,704) (3,579,310) (5,312,955) ESOT shares (370,000) (20,000) (20,000) _________ _________ _________ Total equity 9,587,498 8,702,293 14,481,346 _________ _________ _________ Liabilities Non-current liabilities Obligations under finance leases 13,681 36,485 27,363 Current liabilities Trade and other payables 1,040,165 1,041,666 1,592,362 Obligations under finance leases 18,430 20,685 19,557 _________ _________ _________ Total current liabilities 1,058,595 1,062,351 1,611,919 _________ _________ _________ Total liabilities 1,072,276 1,098,836 1,639,282 _________ _________ _________ Total equity and liabilities 10,659,774 9,801,129 16,120,628 ========== ========== ========== ANGLE PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER 2006 Six months ended Year ended 31 October 31 October 30 April 2006 2005 2006 (Unaudited) (Unaudited) (Audited) £ £ £ Operating activities Operating profit / (loss) (4,993,880) (945,908) (2,799,709) Depreciation of property, plant and equipment 29,227 21,308 49,294 Amortisation of intangible assets 1,898 1,707 1,707 (Profit) / loss on disposal of property 429 - 1,059 Exchange differences (50,268) 28,210 (30,295) (Increase) / decrease in trade and other receivables (199,415) 47,473 (431) Increase / (decrease) in trade and other payables (438,481) 307,635 855,183 Change in fair value of non-controlled investments 1,891,088 (1,226,768) (2,377,772) Share based payments 222,241 173,120 381,884 ________ ________ ________ Net cash from operating activities (3,537,161) (1,593,223) (3,919,080) Investing activities Purchase of property, plant and equipment (24,755) (50,155) (61,242) Purchase of intangible assets (5,188) (820) (820) Purchase of non-controlled investments - (592,016) (698,018) Provision of convertible loans (90,780) (100,000) (100,000) Purchase of ESOT shares (350,000) (20,000) (20,000) Net interest received 129,478 91,600 136,312 ________ ________ ________ Net cash used in investing activities (341,245) (671,391) (743,768) Financing activities Net proceeds from issue of share capital (14,255) - 7,376,972 Capital elements of finance lease contracts (14,809) (3,911) (14,159) ________ ________ ________ Net cash from financing activities (29,064) (3,911) 7,362,813 Net increase / (decrease) in cash & cash equivalents (3,907,470) (2,268,525) 2,699,965 Cash and cash equivalents at start of period 8,234,853 5,534,888 5,534,888 ________ ________ ________ Cash and cash equivalents at end of period 4,327,383 3,266,363 8,234,853 ========= ========= ========= ANGLE PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 OCTOBER 2006 Attributable to equity holders of the Group Share based Issued Share payment Other Translation Retained ESOT Total capital premium reserve reserves reserve earnings shares equity (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) £ £ £ £ £ £ £ £ At 1 May 2005 1,670,648 7,381,864 536,992 2,553,356 (42,990) (2,787,238) - 9,312,632 For the period to 31 October 2005 Consolidated profit 28,613 (792,072) (763,459) / (loss) Share based payments 173,120 173,120 ESOT shares (20,000) (20,000) ________ ________ ________ ________ ________ ________ ________ ________ At 31 October 2005 1,670,648 7,381,864 710,112 2,553,356 (14,377) (3,579,310) (20,000) 8,702,293 For the period to 30 April 2006 Consolidated profit (58,782) (1,733,645) (1,792,427) / (loss) Share based payments 208,764 208,764 Issue of share 1,042,645 6,320,071 7,362,716 capital (net) ________ ________ ________ ________ ________ ________ ________ ________ At 1 May 2006 2,713,293 13,701,935 918,876 2,553,356 (73,159) (5,312,955) (20,000) 14,481,346 For the period to 31 October 2006 Consolidated profit (26,340) (4,739,749) (4,766,089) / (loss) Share based payments 222,241 222,241 ESOT shares (350,000) (350,000) ________ ________ ________ ________ ________ ________ ________ ________ At 31 October 2006 2,713,293 13,701,935 1,141,117 2,553,356 (99,499) (10,052,704) (370,000) 9,587,498 ========== ========== ========== ========== ========= =========== ========== ========== Share based payment reserve The share based payment reserve account is used for the corresponding entry to the share based payments charged through the income statement. Transfers are made from this reserve to retained earnings as the related share options are exercised, lapse or expire. Translation reserve The translation reserve account comprises cumulative exchange differences arising on consolidation from the translation of the financial statements of international operations. Under IFRS this is separated from retained earnings. ESOT shares These relate to shares purchased by the ANGLE Employee Share Ownership Trust. ANGLE PLC NOTES TO THE INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 31 OCTOBER 2006 1 Basis of preparation and accounting policies The interim financial information in this document does not constitute statutory financial statements for the purposes of s240 of the Companies Act 1985. The statutory financial statements for the year ended 30 April 2006 ('Report and Accounts 2006') have been filed with the Registrar of Companies. The auditor's report on those financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), was unqualified and did not contain statements under section 237(2) or 237(3) of the Companies Act 1985. This interim financial information is the unaudited interim consolidated financial statements (the 'Interim Financial Statements') of ANGLE plc, a company incorporated in Great Britain and registered in England and Wales, and its subsidiaries (together referred to as the 'Group') for the six month period ended 31 October 2006 (the 'interim period'). The interim financial statements are unaudited but have been reviewed by the Auditors in accordance with Auditing Practices Board Bulletin 1999/4 'Review of Interim Financial Information' by the auditors. The Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting ('IAS 34'), as adopted by the EU, and on the basis of the accounting policies set out in the Report and Accounts 2006. The presentation of the Interim Financial Statements is consistent with the Report and Accounts 2006. Where necessary, comparative information has been reclassified or expanded from the previously reported Interim Financial Statements to take into account any presentational changes made in the Report and Accounts 2006. The Interim Financial Statements were approved by the Board and authorised for issue on 30 January 2007. Critical accounting estimates and judgements The preparation of the Interim Financial Statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates and assumptions are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities relate to the valuation of the non-controlled unquoted investments which are held at fair value in accordance with IAS39 and on the basis of the accounting policies in the Report and Accounts 2006. 2 Summary segmental analysis The Group operates in one principal area of activity - technology wealth creation through the commercialisation of intellectual property and the development of technology industry. The primary business segments are: • Consulting and Management - provision of consulting and management services to clients including research organisations, corporate and governmental organisations on a fee-for-service basis. This business segment provides a platform for the Ventures activities. • Ventures - activities to establish, develop and create value in technology companies. The Group uses a proprietary Progeny(R) process to develop these companies, which are referred to as Progeny(R) companies. ANGLE's unique business model involves ANGLE founding new companies which it controls during the critical early stages of development, before securing third party funding. Under IFRS, the accounting for Progeny(R) companies divides into controlled investments and non-controlled investments. o Controlled investments - Progeny(R) companies where the Group has control, typically as a result of owning in excess of 50% of the equity. These are consolidated and the Group's investment costs are expensed in the Income Statement. o Non-controlled investments - Progeny(R) companies where the Group does not have control. These investments are held on the balance sheet at fair value, with changes in fair value passing through the Income Statement. The nature of these operations is significantly different. The primary format and segmentation by class of business has been provided on the face of the Consolidated Income Statement. 3 Turnover The breakdown of turnover by business segment is set out below. Six months ended Year ended 31 October 31 October 30 April 2006 2005 2006 (Unaudited) (Unaudited) (Audited) £ £ £ Turnover Consulting and Management 1,792,290 1,965,152 4,022,092 Ventures 6,308 50,884 60,000 Controlled investments 515 - 10,775 _________ _________ _________ 1,799,113 2,016,036 4,092,867 ========== ========== ========== Turnover from Consulting and Management represents fees received from clients for consulting and management services. Turnover from Ventures represents fees received from the non-controlled investments for accounting and other services provided by the Company until those companies take those activities in-house. Turnover from controlled investments represents the turnover of those businesses, which is consolidated prior to the company becoming non-controlled. 4 Tax The Group is eligible for the substantial shareholdings relief UK corporation tax exemption. This results in the gain from any disposals of UK investments where the Group has an equity stake greater than 10%, subject to certain other tests, being free of corporation tax. Tax is therefore based on the profits in the Consulting and Management businesses as relieved by losses incurred in the establishment and development of new Ventures. Controlled investments undertake research and development activities. In the UK these activities qualify for tax relief and result in tax credits. 5 Earnings / (loss) per share The basic and fully diluted earnings / (loss) per share is calculated on an after tax loss of £4.7 million (6 months to 31 October 2005: loss £0.8 million, year to 30 April 2006: loss £2.5 million). The basic and fully diluted earnings / (loss) per share are based on 27,132,934 weighted average ordinary 10p shares (6 months to 31 October 2005: 16,688,884, year to 30 April 2006: 17,584,521). Share options are non-dilutive for the period. 6 Non-controlled investments The Group's investment portfolio comprises investments in Progeny(R) companies. Where the Group has control of a Progeny(R) company (typically owning more than 50% of the equity), these are controlled investments and are consolidated as subsidiaries. At the point control no longer exists, a deemed profit arises and the non-controlled investment is held at fair value on the consolidated balance sheet In the six months to 31 October 2006 costs relating to controlled investments of £1.4 million (2005: £0.8 million) were charged to the income statement. Where the Group does not control a Progeny(R) company (typically owning less than 50% of the equity), these are defined as non-controlled investments and held on the balance sheet at fair value, as set out in the table below: Total Non-current assets Current assets Non-controlled Unquoted Quoted Investments (Unaudited) (Unaudited) (Unaudited) £ £ £ At 1 May 2005 2,515,517 818,819 3,334,336 Investments 192,250 500,024 692,274 Reclassifications (1,041,219) 1,041,219 - Change in fair value (200,799) 1,427,567 1,226,768 _________ _________ _________ At 31 October 2005 1,465,749 3,787,629 5,253,378 Investments 105,746 - 105,746 Change in fair value 70,556 1,080,448 1,151,004 _________ _________ _________ At 1 May 2006 1,642,051 4,868,077 6,510,128 Investments 90,780 - 90,780 Change in fair value - (1,891,088) (1,891,088) _________ _________ _________ At 31 October 2006 1,732,831 2,976,989 4,709,820 ========== ========== ========== 7 Trade and other receivables During the half year there was a default on the repayment of a £239,570 loan note due to the Group. Action is being taken to recover the debt and the Board do not consider that a provision is required. 8 Shareholder communications The announcement is being sent to all shareholders on the register on 31 January 2007. Copies of this announcement are posted on the Company's website www.ANGLEplc.com and are available from Buchanan Communications and the Company's registered office: 20 Nugent Road, Surrey Research Park, Guildford, GU2 7AF. ANGLE PLC INDEPENDENT REVIEW REPORT TO ANGLE PLC FOR THE SIX MONTHS ENDED 31 OCTOBER 2006 Introduction We have been instructed by the company to review the financial information set out on pages 8 to 14 for the six months ended 31 October 2006 and we have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of their interim statement and for no other purpose. We do not, therefore in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors' Responsibilities The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim Statement in accordance with the Alternative Investment Market Rules which require that the accounting policies and presentation applied to the interim figures must be consistent with those that will be adopted in the company's annual accounts. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board as if that Bulletin applied. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 October 2006. BAKER TILLY Chartered Accountants Guildford This information is provided by RNS The company news service from the London Stock Exchange

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