Preliminary Results

RNS Number : 1955N

Proteome Sciences PLC

07 June 2010

 



Proteome Sciences plc

("Proteome Sciences" or the "Company")

Preliminary results for the year ended 31 December, 2009

                                                                                                                      7 June 2010

Highlights

·    Commercialisation

o  TMT^® sublicense between Thermo-Fisher and Life Technologies

o  Royalties on iTRAQ sales to 2021

o  Pre-clinical contract with Takeda Pharmaceutical Co. Ltd.

o  Strategic alliance in biomarkers with Parexel, the global CRO

o  License with Sigma-Aldrich Corporation for ProteoPrep^® sample preparation products

o  Licenses with Millipore (Alzheimer's), Axela (brain damage), Oncimmune (lung cancer)

o  Lung cancer blood test launched in USA, May 2009

o  ISO 9001: 2008 accreditation for Frankfurt facilities

·     Financial

o  Reduced pre-tax loss of £4.20m (2008: £4.79m)

o  Revenue increased 54% to £1.31m

o  Cash used in operations £2.83m (2008: £3.82m)

o  Cost effective operations with low, consistent and predictable cash burn

·     Current Outlook

o  Further multiple licenses expected for proprietary biomarkers

o  Increase in orders from expanding PS Biomarker Services customer base

o  Strong underlying growth in TMT^® revenue

o  New royalty streams from iTRAQ, CysTMT™ and ProteoPrep^® 

o  Further additions to TMT^® product range in 2011

o  Targeting breakeven in 2010 supported by rising revenue and royalties  

Our key goal for 2009 was to convert the results and intellectual property from our biomarker research activities into revenue and royalties.

With five licences/contracts completed during the year and with a further two concluded to date in 2010, we have fulfilled that objective and have established growing revenue streams for each of our three business units. These include biomarker licenses in lung cancer, brain damage and Alzheimer's disease, a sublicense and regularisation of iTRAQ reagents, and contracts for PS Biomarker Services with Takeda Pharmaceutical and Parexel, the global CRO.

The importance of biomarkers and their rapid growth and utility in diagnostics and drug development is projected to grow at a fast rate for the foreseeable future. This is driven by increasing regulatory requirements and the need to improve the time and cost of drug development and to achieve earlier diagnosis and more effective patient treatment and monitoring.

As a consequence, further multiple licenses are expected from our biomarker portfolio and, coupled to this, the level of enquiries and quotations has continued to grow at PS Biomarker Services where we anticipate a substantial increase in orders in 2010 from an expanding customer base. The strong underlying growth in TMT^® is also expected to continue, supplemented by royalties for the first time from iTRAQ and from Thermo-Fisher's recent launch of CysTMT^®.

Supported by rapidly rising revenue and royalties, we are targeting breakeven in 2010 with the prospect of serial licenses/contracts from an expanding pipeline.

ENDS

Attached:Full text of Chairman's statement, consolidated profit and loss account, consolidated balance sheet, consolidated cashflow statement and notes to the financial information.

For further information please contact:

Proteome Sciences plc

www.proteomics.com                                              Tel: [phone]

Christopher Pearce, Chief Executive                        Email:   [e-mail]

James Malthouse, Finance Director                          Email:   [e-mail]

Public Relations

IKON Associates                                                Redleaf Communications Limited

Adrian Shaw                                                           Anna Dunkin/Lucy Salaman

Tel:         [phone]                                   Tel:      [phone]

Mobile:    [phone]                                   Email:   [e-mail] 

Email:     [e-mail]                                           

Nominated Adviser

Singer Capital Markets Limited

Shaun Dobson/Claes Spång                                      Tel: [phone]

Notes to Editors:

About Proteome Sciences:

Proteome Sciences is a leading biomarker CRO providing protein biomarker discovery, validation and assay development services. The Company's MS Biomarker Assay system (MBA) uses its proprietary isobaric Tandem Mass Tags (TMT^®) and reference materials combined with isotope dilution mass spectrometry. Highly multiplexed assays can be developed in weeks and are suitable for screening 10's to 100's of candidate biomarkers in validation studies. Assays for validated biomarkers can be rapidly developed using the same isotope dilution mass spectrometry format, or can be transferred for immunoassay development.

The Company's own research is focused on neurological and neurodegenerative conditions and it has discovered and patented blood biomarkers in stroke and brain damage as well as several cancers, solid organ transplant rejection and Alzheimer's disease.  Proteome Sciences is based in Cobham, UK with facilities in London and Frankfurt.

Chairman's Statement

For the year ended 31st December 2009

Dear Shareholder,

Following the license with Thermo-Fisher Scientific Inc. (Thermo-Fisher) for TMT^® isobaric mass tags, 2009 witnessed the successful commercialisation of a number of Proteome Sciences biomarkers, including licenses in lung cancer, brain damage and Alzheimer's disease. After obtaining ISO accreditation for our Frankfurt facilities in March 2009, we also received the first contract for PS Biomarker Services with a major pharmaceutical company, Takeda Pharmaceutical Co Ltd. (Takeda) for a pre-clinical study.

These were complemented by the sublicense agreement signed between Thermo-Fisher and Life Technologies Inc. in October, to regularise the patent position and receive royalties from all sales of iTRAQ isobaric mass tag products sold through their ABI subsidiary.

The commercial momentum established in 2009 has continued into 2010 with the strategic alliance  in biomarkers with Parexel, the global CRO (contract research organisation) announced in February and the subsequent license with Sigma Aldrich Corporation (Sigma) in April, for all sample preparation products sold by Sigma under Proteome Sciences ProteoPrep^® trademark in Europe, Japan and Australia.

Through these licences and contracts, Proteome Sciences has demonstrated its ability to successfully produce revenue  from the three main areas of its business and looks forward to sustainable and rising revenues from its expanding pipeline and is targeting breakeven for its activities in 2010.

A total of 26 patents were granted in 2009 across our 12 main patent families including TMT^®, stroke, brain damage, Huntington's, organ transplant rejection, Alzheimer's and cancer and new patent applications have been filed for TMT^®, Alzheimer's, stroke, cancer and Sensitizer^®.

Biomarkers

In a 2007 BCC Research report, biomarker discovery was projected to have a market value close to $6 billion per annum with compound annual growth of 17%. A more recent GBI Research report published in 2010 suggests that the total biomarker market will be worth over $22 billion in 2015. Both of these reports set out the importance of biomarkers and their rapid growth and utility in drug development and diagnostics.

There are a number of drivers propelling this rapid growth. An important factor is the urgent need for markers that show whether a drug is being effective at an early stage of treatment. Too often drugs are given to patients who do not benefit, but it can take weeks or months for the doctor to determine that a change is needed. Often there are also no clear indications of which treatment to try next and this is another area where biomarkers are showing considerable promise.

Biomarkers are the bedrock of the move to Personalised Medicine being driven by all key stakeholders in healthcare. For the pharmaceutical industry, the application of biomarkers to better guide development of new medicines is also showing significant benefits in the time and cost of pre-clinical and clinical research. For healthcare providers including governments and insurers, biomarkers provide a means to reduce costs by providing early diagnosis and better selection and monitoring of therapies tailored to individual patients. This means that they will not continue paying for treatments that are not effective and they will require the use of biomarkers to guide patient selection in late stage clinical trials and after approval.

Proteome Sciences' past strategy intentionally positioned the business in anticipation of these developments and the focus has evolved not only to address specific proprietary biomarkers for individual diseases, but towards the provision of valuable laboratory tools as a service to the wide range of pharmaceutical and diagnostics companies that increasingly require proteomics as a core element of their research. As a result, Proteome Sciences is strategically positioned for the provision of screening technologies that allow the identification of peptides and protein biomarkers from which it will be able to generate sustainable revenues that are expected to increase sharply over the short to mid-term. These apply to each of our three main business activities: Proprietary Biomarkers, PS Biomarker Services and Chemical Reagents TMT^®.

Considerable commercial progress was also made last year with the completion of three non-exclusive licenses for our biomarkers in lung cancer, brain cancer and Alzheimer's disease. This opens up the opportunity of further multiple licenses for the same biomarkers with all the major players in the same disease applications.

Lung cancer

Following the license signed in January 2009, the first clinical test for lung cancer incorporating Proteome Sciences' biomarkers, was launched by Oncimmune Inc. in the US at the end May 2009 using our annexin biomarkers and from which we started to receive royalties from the end of 2009. Whilst royalty revenue is not initially anticipated to be significant, it is expected to rise quickly in line with the number of centres offering the tests and more significantly following the introduction of reimbursement from US healthcare providers in June 2010. The necessary data and information for reimbursement has been collated and prepared by Oncimmune as a key priority and it is anticipated that Oncimmune will also move to launch the lung cancer test in the UK and Continental Europe in early 2011. Proteome Sciences receives royalties from all tests sold by Oncimmune. The license is non-exclusive and allows us to enter into multiple licenses with other diagnostics companies in lung cancer and using our full range of patented proprietary biomarkers.

Stroke

Following the excellent results and data generated from external evaluation of the stroke biomarkers that have previously been identified and validated, a further large study has been initiated with an existing commercial partner using a small panel of protein biomarkers to develop a rapid blood test for stroke. The panel of blood proteins are detectable within 15 minutes of the occurrence of a stroke. It is anticipated that this large study will lead to the introduction of a commercial blood test for stroke.

Further support for the utility of our blood biomarkers in stroke was presented at the European Stroke Congress, Barcelona, in 2010. A number of proteins were isolated form the site of stroke in human patients undergoing neurosurgery, directly linking them to the disease process. In a separate presentation one of these proteins GST-P was shown to predict the long-term outcome of stroke. With increasing clinical evidence being published on biomarker relevance, the strong patent position that Proteome Sciences has established and four research licenses in place, we remain confident of the successful exploitation and commercialisation of our stroke panel.

Alzheimer's disease (AD)

2009 has followed on from the previous year in providing Proteome Sciences with a continuing and consistent flow of important developments in Alzheimer's disease.

In July 2009, we announced a license agreement with Millipore Corporation who are developing Luminex^® bead based multiplex immunoassays using Proteome Sciences' proprietary AD biomarkers in blood and for other cognitive function disorders exclusively for the  Luminex^® platform. This will facilitate rapid measurement of biomarkers in AD and support the development of new drugs and diagnostics to treat and monitor AD patients. Proteome Sciences will receive royalties on all tests sold and these will cover a number of our biomarkers, the first few of which should be available later in 2010.

In September 2009, three new genes linked to AD were identified. The breakthrough, published in Nature Genetics, resulted from two independent studies covering over 21,000 patients and is the first since the discovery of APOE, the only other gene for AD which was discovered 16 years ago. Of the three newly associated genes, CLU (which produces the protein clusterin) is by far the most important and is involved in the clearance of amyloid beta peptide, a major component of the plaques that form in the brain of AD patients. This has been described as a major advance towards effective treatments. Clusterin is one of the 36 proteins discovered by Proteome Sciences in blood in 2004 and these are covered extensively by our intellectual property. A mass spectrometric (MS) based clusterin assay for a variety of applications was developed in 2008 by Proteome Sciences.

The development of the nine protein biomarker AD assay panel with our collaborators at KCL, which includes clusterin and APOE, has progressed very well over the period and it is anticipated that this will be completed in the near future. License discussions are being actively pursued with a range of diagnostic and pharmaceutical companies and the recent developments are opening up multiple new avenues and opportunities to exploit Proteome Sciences strong intellectual properly position in AD through serial outlicenses.

Over the course of our research into brain damage-related disorders, patents were filed covering over 200 biomarkers. In May 2009, we entered into a license with Axela Inc. for the development of assays to measure proprietary brain damage biomarkers on Axela's multiplex biomarker dotLab™ System. Axela's technology is particularly suited to brain injury testing where rapid and accurate quantitation of protein biomarker panels is vital and both companies should gain considerable commercial benefit by accelerating revenue and cutting the time and cost to market. In line with the other biomarker licenses, Proteome Sciences will receive royalties on all tests sold.

PS Biomarker Services

The increasing move to specialist outsourcing, is well placed to benefit from PS Biomarker Services through the provisions of contract services to pharmaceutical, diagnostics and CRO companies for the discovery, validation and use of biomarkers to support development of new medicines and diagnostic tests. PS Biomarker Services, based at our Frankfurt facility, received ISO 9001:2008 certification in March 2009 which covers all our biomarker activities, rapid assay development, chemical and peptide synthesis and TMT^® isobaric mass tag development and production.

Following the ISO accreditation, we were particularly pleased to convert the strong level of enquiries and interest initially received into orders with our first research contract for a preclinical study with Takeda Pharmaceutical Co. Ltd. announced in October 2009. This was followed in February 2010 with the formation of a strategic alliance with PAREXEL International Corporation, the leading global biopharmaceutical services CRO, to use Proteome Sciences' protein and peptide biomarker capabilities for its customer programmes for assessment of new compounds in development in pre-clinical and clinical trials. The level of interest and quotations has continued to increase and we are in advanced negotiations to conclude a series of further orders/contracts in 2010 and beyond with a broad range of customers.

We participate in the three grant funded projects in which Europe - Sens-it-iv, Diogenes and BioTag - and these are all progressing well. Sens-it-iv in particular has made considerable progress. At present there are no in-vitro tests or test strategies available to test chemical compounds on their potential to induce allergies. The aim of the Sens-it-iv project is to develop in vitro alternatives to animal tests currently used for risk assessment of potential skin or lung sensitizers. After an initial feasibility study, a large discovery study has been undertaken by Proteome Sciences from which a top list of approximately 100 different protein biomarkers have been identified that can be used to develop protein-based assays for compound classification. TMT^®-SRM assays are currently in development to confirm the markers in an independent sample set.

With the imminent proposed changes in EU regulations, there could be considerable potential commercial utility of sensitizer biomarkers for the cosmetics, pharmaceuticals and chemicals industries and such tests could become a mandatory future requirement.

Reagents

The global marketing campaign instigated by Thermo-Fisher since the launch of TMT^® in 2008 has started to  impact and showed strong underlying growth with a more than doubling in proceeds over the second half of 2009 (the first comparative period on a like for like basis since the license was signed). We find this trend most encouraging, particularly since this excludes any royalty payments from sales of iTRAQ products following the sublicense agreement between Thermo-Fisher and Life Technologies. We expect the increase in TMT^® sales to continue.

The iTRAQ royalties will make an additional contribution from 2010 onwards to the existing revenues generated from Proteome Sciences' license and manufacturing agreement with Thermo-Fisher for  TMT^® chemical reagents. The sublicense agreement with Life Technologies, consented to by Proteome Sciences legitimises and confirms the view that iTRAQ falls under the field dominating IP that Proteome Sciences has established covering any type of isobaric tagging and which comes under the exclusive license with Thermo-Fisher.

Through this mechanism, any potential anomalies over the long term have been removed and we are delighted that Thermo-Fisher is now in a position to maximise the value of the TMT^® franchise for both itself and for Proteome Sciences, with the earliest TMT^® patents going through to 2021. As anticipated in the interim statement, we received c.£1.2m in revenue in the fourth quarter of 2009 made up through a mixture of sales, royalties, license and performance fees. As part of the sublicense, Life Technologies withdrew any opposition against Proteome Sciences European TMT^® patents.

As also set out in the interim statement, Proteome Sciences has continued to develop the TMT^® product range for Thermo-Fisher with the announcement that a new tag CysTMT^®  has been developed. CysTMT^® further expands the range of TMT^® in the market place by targeting a specific set of peptides and offers a range of different applications to the standard TMT^® reagents. It is particularly applicable for direct labelling of more complex samples, in particular plasma, and  removes the need for prior depletion.

As anticipated last year, Thermo-Fisher launched the new cysteine reactive TMT^® range at the recent Biomarker World Congress in the USA with further presentations scheduled throughout the summer at key scientific congresses. In addition CysTMT^® is being highlighted at its ongoing US road show alongside the existing TMT^® ranges.

By adapting TMT-SRM methodologies, we have also been able to successfully develop the first multi-protein mass spectrometry assay. Using two non-isobaric forms of TMT^®, we can precisely measure the levels of nine protein markers of Alzheimer's disease that make up the AD panel that we have developed from a single drop of blood.

TMT^® and CysTMT^® are highly complementary and extend the range of isobaric tags to a wider customer base and for a broader set of applications. These will expand the revenue from our core family of TMT^® reagents and TMT^®-SRM epitomises the versatility of TMT^® and its considerable commercial potential.

We entered into a non-exclusive license with Sigma-Aldrich Corporation (Sigma) in April 2010, under which Sigma will continue to sell products under Proteome's trademark ProteoPrep^® in Europe, Japan and Australia. There are currently eleven ProteoPrep^® kits available and the license will also include all future products sold under the ProteoPrep^® trademark. The license provides a signature fee and royalties on all ProteoPrep^® sales in the jurisdictions listed.

Results

In 2009, the company continued to keep its costs under careful control and this and the increase in turnover during the year resulted in a further reduction in the loss before taxation, which fell from £4.786m in 2008 to £4.197m. Non-cash costs, (depreciation and a charge under IFRS2 for share-based payment expense) were unchanged at £0.593m.

The loss on ordinary activities after taxation for the twelve month period ended 31^st December 2009 was £4.010m (2008: £4.624m). Cash used in operations declined to £2.831m from £3.823m in 2008.

At the year end, cash in hand was £0.131m (2008: £0.274m) and the board expects that, subject to unforeseen circumstances, costs in 2010 will remain close to the levels shown in these accounts.

Current Outlook

In 2009, biomarkers from three different areas of our research; lung cancer, brain damage and Alzheimer's disease, were successfully converted into important revenue generative licenses. Further licenses are expected for the same disease applications by way of a series of non-exclusive biomarkers with a number of the leading diagnostics and drug development companies and these will be complemented by licenses from other biomarkers covered by our broad IP portfolio.

PS Biomarker Services secured its first pre-clinical contract with Takeda shortly after obtaining ISO 9001:2008 accreditation. This was swiftly followed by the strategic alliance with Parexel for biomarker discovery and qualification in clinical trials. The level of enquiries and quotations has continued to grow and we expect a substantial increase in orders from an increasing number of customers in 2010 and beyond.

The stimulus funding programmes, particularly in the US and Japan, have resulted in quantitative proteomics undergoing significant growth, supported by substantial continuing investment in hardware and reagents. This is reflected in the strong underlying growth in TMT^® in 2009, with revenue more than doubled over the first comparable period. It is anticipated this trend will continue as newly acquired mass spectrometry systems come on line this year and into 2011. Following the legitimisation of iTRAQ products last year after the sublicense with Thermo-Fisher, reagents revenues will be supplemented for the first time by royalties from iTRAQ and from Thermo-Fisher's recent launch of CysTMT^®, with further additions to the TMT^® range scheduled for 2011.

The Company has today announced that it has conditionally raised £4.5m after expenses through a share placing and that it is looking to raise up to a further £1.95m after expenses through an open offer of new ordinary shares to existing shareholders. At the same time, C.D.J. Pearce, the Chief Executive, has agreed to convert £5m of his loan to the Company into new ordinary shares at the placing price.

As a result of the share placement the material uncertainty which previously existed regarding going concern has been removed and the auditor's report for the year ended 31st December 2009 will not be modified or qualified and details of the basis on which the accounts have been prepared are set out in the Director's report in the accounts, which are being posted to shareholders today.

Supported by the strengthened balance sheet, rapidly rising revenue and royalties, we are targeting breakeven in 2010 with the prospect of serial licenses/contracts expected from an expanding pipeline.

Steve Harris

Chairman                                                                                                                    7th June 2010

Unaudited consolidated income statement

For the year ended 31st December 2009

		Year ended			Year ended
		31st December 2009			31st December 2008
		£			£
Continuing operations
Revenue		1,305,694			849,487
Cost of sales		(329,000)			(225,874)
		__________			__________
Gross profit		976,694			623,613
Administrative expenses		(4,842,600)			(4,888,371)
Share of results of associates		-			(14,538)
		__________			__________
Operating loss		(3,865,906)			(4,279,296)
Investment revenues		786			9,073
Finance costs		(331,736)			(516,060)
		__________			__________
Loss before taxation		(4,196,856)			(4,786,283)
Tax		187,026			161,815
		__________			__________
Loss for the period from continuing operations		(4,009,830)			(4,624,468)
		__________			__________
Attributed to shareholders of the company		(4,009,830)			(4,624,468)
		__________			__________
Loss per share
Basic and diluted		(3.02p)			(3.49p)
		__________			__________

Unaudited consolidated statement of comprehensive income

For the year ended 31st December 2009

	Year ended	Year ended
	31st December 2009	31st December 2008
	£	£
Exchange differences on translation of foreign operations	(41,470)	223,133
	__________	__________
	(41,470)	223,133
Other comprehensive expense for the year
Loss for the year	(4,009,830)	(4,624,468)
	__________	__________
Total comprehensive expense for the year attributable to equity holders of the company	(4,051,300)	(4,401,335)
	__________	__________

Unaudited consolidated balance sheet

As at 31st December 2009

		2009	2008
		£	£
Non-current assets
Goodwill		4,218,241	4,218,241
Property, plant and equipment		222,165	397,680
Other investments		763,502	763,502
		__________	__________
		5,203,908	5,379,423
		__________	__________
Current assets
Inventories		169,946	188,080
Trade and other receivables		694,752	600,699
Cash and cash equivalents		131,158	273,810
		__________	__________
		995,856	1,062,589
		__________	__________
Total assets		6,199,764	6,442,012
		__________	__________
Current liabilities
Trade and other payables		(1,058,340)	(821,826)
Current tax liabilities		(27,990)	(48,944)
Short-term borrowings		(11,787,021)	(9,087,662)
Short-term provisions		(2,433,886)	(1,972,232)
		__________	__________
		(15,307,237)	(11,930,664)
		__________	__________
Net current liabilities		(14,311,381)	(10,868,075)
		__________	__________
Non-current liabilities
Long-term provisions		(130,421)	(135,606)
		__________	__________
Total liabilities		(15,437,658)	(12,066,270)
		__________	__________
Net liabilities		(9,237,894)	(5,624,258)
		__________	__________
Equity
Share capital		1,328,036	1,328,036
Share premium account		29,660,338	29,660,338
Equity reserve		2,207,586	1,769,922
Other reserve		10,755,000	10,755,000
Translation reserve		120,061	161,531
Retained loss		(53,308,915)	(49,299,085)
		__________	__________
Total deficit		(9,237,894)	(5,624,258)
		__________	__________

Unaudited consolidated statement of changes in equity

For the year ended 31st December 2009

	Share Capital £	Share Premium Account £	Equity reserve £	Translation Reserve £	Other Reserve £	P&L Reserve £	Total £
At 1st January 2008	1,314,654	29,150,563	1,834,832	(61,602)	10,755,000	(45,158,414)	(2,164,967)
Loss for the year	-	-	-	-	-	(4,624,468)	(4,624,468)
Exchange differences on translation of foreign operations	-	-	-	223,133	-	-	223,133
	________	_________	________	_________	_________	__________	_________
Total comprehensive income (expense) for the year	1,314,654	29,150,563	1,834,832	161,531	10,755,000	(49,782,882)	(6,566,302)
Issue of share capital	13,382	509,775	-	-	-	-	523,157
Share-based payment charge	-	-	418,887	-	-	-	418,887
Options lapsing in the year	-	-	(483,797)	-	-	483,797	-
	________	_________	________	________	_________	___________	__________
At 31st December 2008	1,328,036	29,660,338	1,769,922	161,531	10,755,000	(49,299,085)	(5,624,258)
	________	_________	________	________	_________	___________	__________
At 1st January 2009	1,328,036	29,660,338	1,769,922	161,531	10,755,000	(49,299,085)	(5,624,258)
Loss for the year	-	-	-	-	-	(4,009,830)	(4,009,830)
Exchange differences on translation of foreign operations	-	-	-	(41,470)	-	-	(41,470)
Share-based payment charge	-	-	437,664	-	-	-	437,664
	________	_________	________	________	_________	___ ______	_________
At 31st December 2009	1,328,036	29,660,338	2,207,586	120,061	10,755,000	(53,308,915)	(9,237,894)
	__________	___________	__________	________	___________	___________	__________

Unaudited consolidated cash flow statement

For the year ended 31st December 2009

		Group	Company	Group	Company
		Year ended	Year ended	Year ended	Year ended
		31st December	31st December	31st December	31st December
		2009	2009	2008	2008
	Note	£	£	£	£
Cash flows from operating activities
Cash used in operations	26	(2,831,271)	(2,512,706)	(3,823,233)	(3,485,238)
Interest paid		(331,736)	(331,691)	(516,060)	(516,060)
Tax refunded		191,072		217,678	-
		__________	__________	__________	__________
Net cash outflow from operating activities		(2,971,935)	(2,844,397)	(4,121,615)	(4,001,298)
		__________	__________	__________	__________
Cash flows from investing activities
Purchases of property, plant and equipment		(10,579)	-	(31,346)	-
Interest received		786	112	9,073	4,190
		__________	__________	__________	__________
Net cash (outflow)/inflow from investing activities		(9,793)	112	(22,273)	4,190
		__________	__________	__________	__________
Financing activities
Proceeds on issue of shares		-	-	523,157	523,157
New loans raised		2,699,359	2,699,359	3,151,063	3,257,581
		__________	__________	__________	__________
Net cash from financing activities		2,699,359	2,699,359	3,674,220	3,780,738
		__________	__________	__________	__________
Net (decrease)/increase in cash and cash equivalents		(282,369)	(144,926)	(469,668)	(216,370)
Cash and cash equivalents at beginning of year		273,810	184,033	530,195	400,403
Effect of foreign exchange rate changes		139,717	-	213,283	-
		__________	__________	__________	__________
Cash and cash equivalents at end of year		131,158	39,107	273,810	184,033
		__________	__________	__________	__________

Notes to the financial information

1.             The preceding financial information does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the year to 31st December 2008 (the comparative financial information) is extracted from the statutory accounts for that year. These accounts, upon which the auditors issued an unqualified opinion including an emphasis of matter paragraph in relation to a material uncertainty, and which did not contain any statement under Section 237(2) or (3) of the Companies Act 1985, have been delivered to the Registrar of Companies.

The preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the year ended 31 December 2009.  Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRSs.

The statutory accounts for the year ended 31st December 2009 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be posted to shareholders early next week. After that time, they will also be available at the Company's registered office: Coveham House, Downside Bridge Road, Cobham, Surrey  KT11 3EP. 

2.             The Directors have acknowledged the latest guidance on going concern. The Company has conditionally raised £4.5m after expenses through a share placing and a document containing proposals for an Open Offer to shareholders to subscribe for up to a further Є2.5m (c.£1.95m after expenses) of new shares  at the Placing price will be sent to shareholders later this week. At the same time, C.D.J. Pearce, the Chief Executive, has agreed to convert £5m of his loan to the Company into new ordinary shares at the Placing Price. Accordingly, the directors have a reasonable expectation that adequate financial resources will continue to be available for the foreseeable future.    

 

3.             Following the loss for the year of £4,009,830, the Directors do not recommend the payment of a dividend.

4.             Loss per share from continuing operations

                The calculation of the basic and diluted loss per share is based on the following data:

	Unaudited 2009	Year ended 31st December  2008
Loss	£	£
Loss for the purpose of basic loss per share being net loss attributable to equity holders of the parent company	(4,009,830)	(4,624,468)
Number of shares
Weighted average number of ordinary shares for the purpose of basic loss per share	132,803,571	132,405,718
	__________	__________
Weighted average number of ordinary shares for the purpose of diluted loss per share	132,803,571	132,408,718
	__________	__________

IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, the net loss would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume that the option holders would act irrationally, no adjustment has been made to diluted EPS for out-of-the-money share options.

 

END

 

 

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