Interim Results

Sareum Holdings PLC
23 February 2006


For immediate release                                          23 February 2006


                              SAREUM HOLDINGS PLC
                          ("Sareum" or the "Company")


                   FINANCIAL RESULTS FOR THE SIX MONTHS ENDED
                                31 DECEMBER 2005


Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discovery
and services business, is pleased to announce its financial results for the six
month period ended 31 December 2005.


Business Highlights during period 1 July to 31 December 05:



•     Major in-house drug discovery collaboration with leading cancer
      centres
•     Crystal Bank protein structure resource launched
•     Four-fold increase in revenues to £361,000 plus a further £302,000 in
      deferred revenue; ahead of Board expectations
•     Four-fold reduction in cash outflow before financing
•     Multi-disciplinary drug discovery collaboration with Organon
•     New protein structure collaborations with international pharmaceutical
      companies.


Post-period end highlights:



•     $5M Research collaboration with Idenix Pharmaceuticals
•     Exercise of £500,000 Put and Call option
•     Crystal Bank collaboration with UCB
•     Total current order book, depending on success, of £4 Million



Dr Tim Mitchell, CEO of Sareum Holdings plc, said: "Sareum has enjoyed yet
another productive and successful period. The Company has enhanced its in-house
drug discovery and secured revenue-generating collaborations with a further six
international pharmaceutical companies. We continue to move closer to our goal
of fully funding valuable cancer research programs from our sales revenues."



For further information please contact:


Sareum Holdings plc                                           01223 497700

Tim Mitchell, Chief Executive Officer
Buchanan Communications                                       020 7466 5000

Tim Anderson, Mary-Jane Johnson



 Notes for Editors

About Sareum Holdings plc

Sareum Holdings plc is a structure-based drug discovery business headquartered
in Cambridge, UK. Sareum Limited was formed in August 2003 to discover new drugs
for the treatment of cancer and to provide a range of drug discovery services to
the pharmaceutical industry. Sareum's unique approach aims to halve the time it
takes to discover new drug candidates.



A structure-based approach to drug discovery relies on knowledge of the
three-dimensional structure of the proteins that cause disease. Once the
structure is known, potential drugs are designed to 'lock-in' to the protein
with the aim of reversing or arresting a disease's progression. Knowledge of the
structure of the potential drugs and how they 'lock-in' to the protein permits
the best potential drug to be discovered. Determining structure is a complex
task and requires leading-edge equipment and experienced staff. Sareum's
approach to structure determination is to produce multiple recombinant proteins
primarily through a baculovirus expression system and to determine their
structure using x-ray crystallography.



When the structure is determined, the Company's innovative Template Screening
platform is used to identify novel chemical starting material designed to
interact with the target protein. Sareum then uses its high-throughput medicinal
chemistry platform to rapidly optimise these molecules and develop the most
promising into potential drug candidates.



Sareum provides its specialist drug discovery capabilities to partners in the
pharmaceutical and biotechnology industries. The Company aims to successfully
deliver: Programmes for complete gene-to-candidate structure-based discovery;
projects to accelerate or improve the productivity of specific activities; and
drug candidates for licensing at the Phase I or Phase II clinical trials stage.



Sareum joined the AIM market of the London Stock Exchange in October 2004 and
trades under the symbol SAR.  For further information, please visit
www.sareum.co.uk



Interim Results for the six months ended 31 December 2005


Chairman's Statement


Sareum Holdings plc has enjoyed another successful trading period, building both
its in-house drug discovery and its service business with a series of
collaborations with leading pharmaceutical research partners.  The message is
clear: Major international pharmaceutical companies are prepared to endorse
Sareum's technology platform by investing in research programmes to advance
their own key programmes.



Our in-house drug discovery was significantly enhanced by the announcement in
July that the Company had established a joint research team with Cancer Research
Technology Ltd. and the Cancer Research UK Centre for Cancer Therapeutics at the
Institute of Cancer Research, to develop cancer treatments that are effective
against tumours that are resistant to traditional therapeutics. The Institute of
Cancer Research is one of the world's leading cancer research organisations and
thus a prestigious partner for Sareum's in-house research, and this
collaboration continues to progress on-track. We are currently working on a
number of cancer targets for our in-house programmes in addition to the joint
venture activities. If all goes to plan we aim to have a candidate molecule
ready to enter pre-clinical development within 12-18 months



We have made better than expected progress in securing service collaborations
that generate revenues to support our in-house research. In this period,
agreements were reached with Almirall Prodesfarma, Infinity Pharmaceuticals and
Schering AG. In addition to receiving research fees, success milestone payments
have also been earned in all of these collaborations. Additionally, in December,
collaborative agreements were entered into with Idenix Pharmaceuticals, Organon
and Lundbeck. The collaboration with Organon represented Sareum's largest
fee-for-service collaboration.  It is the first programme to combine the
Company's expertise in its three key areas of protein structure determination,
Template Screening and automated medicinal chemistry.



The Crystal Bank protein structure resource was launched during the period. This
provides the Company with a source of additional revenue as well as being an
effective demonstration of Sareum's success in its core capability of protein
structures determination. In November, we announced additions to the Crystal
Bank, increasing the number of therapeutically relevant proteins to 16. A number
of the collaborations referred to above are expected to provide additional
proteins to Crystal Bank.



During this period, revenues of £361,000 have been recognised, representing a
more than four-fold increase over the same period last year.  In addition,
pre-payments of £302,000 were received for collaborations signed in December,
which will be recognised by the end of the current financial year. Thus the
total contracted sales for this period are £662,000 and somewhat ahead of Board
expectations. This brings the total amount earned by the Company, from its
service activities since flotation in October 2004, to almost £1 Million. With
the announcement in February 2006 of a second research collaboration with Idenix
Pharmaceuticals, inc. that has a value of up to US$ 5 Million, the Company's
order book currently stands at £4 Million, depending on successful delivery.



A focus on meeting (or exceeding) customer expectations to maximise the revenue
potential of each contract combined with careful management of costs has
resulted in a cash outflow before financing of £408,000.  This is less than a
quarter of that in the same period last year. The Company's short term cash
position is expected to improve substantially in H2 as the revenues from
existing contracts and the additional revenues from the contracts signed in
December flow through.  This position was further underpinned by the £0.5
Million put and call option exercised by Billam AG in February 2006.



Sareum has demonstrated that it is able to considerably advance its in-house
research by developing programmes to plan whilst at the same time investing in
strategic alliances to develop candidate drug molecules, increasing its revenue
generating activities by more than fourfold. This is a creditable performance
and one that reflects the professionalism and commitment of the entire Sareum
team to excellence and to generating shareholder value.


Dr Paul Harper


Chairman Sareum Holdings plc


Sareum Holdings plc


Unaudited Consolidated Profit & Loss Account
for the half year ended 31 December 2005


                                                                    Unaudited    Unaudited      Audited
                                                                 Half Year to Half Year to   Year ended
                                                                    31 Dec 05    31 Dec 04    30 Jun 05
                                                                        £'000        £'000        £'000
                                                                                        
Turnover                                                                  361           82          332

Cost of sales                                                           (476)        (342)        (799)

Gross loss                                                              (115)        (260)        (467)

Administrative expenses                                                 (555)        (358)        (912)

Operating loss                                                          (670)        (618)      (1,379)

Interest receivable and similar income                                      3           12           29

Interest payable and similar charges                                      (7)          (7)         (14)

Loss on ordinary activities before taxation                             (674)        (613)      (1,364)

Tax on loss on ordinary activities                                         72          -            120

Loss on ordinary activities after taxation                              (602)        (613)      (1,244)

Loss per share (pence)

Basic and diluted                                                        0.2p         0.2p         0.4p



Sareum Holdings plc

Unaudited Consolidated Balance Sheet
as at 31 December 2005


                                                                     Unaudited    Unaudited      Audited
                                                                     31 Dec 05    31 Dec 04    30 Jun 05
                                                                         £'000        £'000        £'000
Fixed assets
                                                                            

Intangible assets                                                           20           26           24

Tangible assets                                                            857          813          964

                                                                           877          839          988
Current assets

Debtors                                                                    469          192          363

Cash at bank and in hand                                                   153        1,242          441


                                                                           622        1,434          804


Creditors:   amounts falling due within one year                         (403)        (171)        (320)


             deferred income                                             (302)         (26)         (59)

                    
Net current assets                                                        (83)        1,237          425

                                                                          
Total assets less current liabilities                                      794        2,076        1,413
                                                                          

Creditors:   amounts falling due after more than one year                 (77)        (126)         (93)

                                                                           
Net assets                                                                 717        1,950        1,320

Capital and reserves                                                        
                                                                           

Called up share capital                                                     87           87           87
                                                                         

Share premium account                                                    2,594        2,594        2,594
 
                              
Merger reserve                                                               0            0            0

 
Profit and loss account                                                (1,964)        (731)      (1,361)
                                                                           

Equity shareholders' funds                                                 717        1,950        1,320


Sareum Holdings plc
Unaudited Consolidated Cash Flow Statement
for the half year ended 31 December 2005


                                                                    Unaudited    Unaudited      Audited
                                                                 Half year to Half year to      Year to
                                                                    31 Dec 05    31 Dec 04    30 Jun 05
                                                                        £'000        £'000        £'000

Net cash outflow from operating activities                              (395)      (1,285)      (1,553)
Returns on investments and servicing of finance                           (4)            5           15
Capital Expenditure                                                       (9)        (410)        (881)
Cash flow before financing                                              (408)      (1,690)      (2,419)
Financing                                                                 120        2,932        2,719
Increase/(Decrease) in cash                                             (288)        1,242          300



Reconciliation of operating loss to net cash outflow from operating activities

                                                                    Unaudited    Unaudited      Audited
                                                                 Half year to Half year to      Year to
                                                                    31 Dec 05    31 Dec 04    30 Jun 05
                                                                        £'000        £'000        £'000

Operating loss                                                          (670)        (618)      (1,379)
Depreciation and amortisation                                             120           59          159
(Increase) in debtors                                                   (155)        (100)        (150)
Increase/(Decrease) in creditors                                          310        (626)        (184)
Net cash outflow from operations                                        (395)      (1,285)      (1,554)



Reconciliation of net cash flow to movement in net funds
                                                                    Unaudited    Unaudited      Audited
                                                                 Half year to Half year to      Year to
                                                                    31 Dec 05    31 Dec 04    30 Jun 05
                                                                        £'000        £'000        £'000

Increase/(Decrease) in cash                                             (288)        1,242          300
Cash inflow/(outflow) from financing                                       54        (730)        (298)
Change in net funds resulting from cash flows                           (234)          512            2
Conversion of convertible loan                                            -            450          -
Net funds at period start                                                 143          141          141
Net funds at period end                                                  (91)        1,103          143



Analysis of changes in net funds
                                                                    1 Jul 05    Cash flow    31 Dec 05
                                                                       £'000        £'000        £'000

Cash in hand and at bank                                                 441        (288)          153
Debt:           due within one year                                     (28)          -           (28)
                due after one year                                      (93)           14         (79)
                finance lease agreements                               (177)           40        (137)
Net funds                                                                143        (234)         (91)



SAREUM HOLDINGS PLC


NOTES TO THE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005



1. FINANCIAL INFORMATION

The results for the six months ended 31 December 2005 are unaudited and do not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985.  The 30 June 2005 Annual Report and Accounts are available from
Sareum's web site, www.sareum.co.uk.



2. BASIS OF ACCOUNTING

   They have been drawn up using the same accounting policies and principles as
   are detailed in the Company's 30 June 2005 Annual Report and Accounts.



3. TAXATION

   No liability arises for corporation tax for the period ended 31 December 
   2005. Research and Development tax credits are estimated to be £72,200 for 
   the period.


4. DIVIDENDS

   The directors do not propose the payment of a dividend in respect of the six
   months ended 31 December 2005.


5. LOSS PER SHARE

   Basic and diluted loss per share 0.2p (2004: 0.2p)



   The basic loss per ordinary share is based on the Group's loss for the six
   months of £602,000 (2004: £613,000) divided by the weighted average number of
   shares in issue.  The weighted average number of shares in issue during the
   period was 347,750,000 (2004: 246,500,932).


6. DEFERRED INCOME

   Deferred income has increased substantially during the half year. Deferred
   income arises when sales invoices have been issued to clients but the work
   covered by the invoices has not been completed at the end of the accounting
   period.  Deferred income will be credited to turnover once the invoiced work 
   is complete.



7. WORKING CAPITAL

   Under the arrangements put in place when the Company floated on AIM the 
   Company has access to an additional £0.5 million of funds under a "put and 
   call" option, which is exercisable on or before 28th February 2006.







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