Preliminary Results

Sareum Holdings PLC
04 September 2006


For immediate release                                           4 September 2006



SAREUM HOLDINGS PLC

                          ("Sareum" or the "Company")



                RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2006



Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discovery
business, is pleased to announce its results for the twelve month period ended
30 June 2006.


•        Financial highlights:

         -        Revenues increased 440% to £1.5M (2005: £0.3M)

         -        Loss on ordinary activities for period (after taxation) 
                  reduced 50% to £0.6M (2005: £1.2M)

         -        Loss on ordinary activities Jan-June 2006 (after taxation) 
                  reduced 96% to £22,000 (2005: £631,000)

         -        Exercise of £500,000 Put and Call option

         -        Cash in bank increased 20% to £528,000 (2005: £441,000)



•        Business highlights:

         -        Major in-house drug discovery collaboration announced with the
                  Institute of Cancer Research and Cancer Research Technologies 
                  Ltd

         -        Ten revenue generating collaborations announced, the largest 
                  of which is worth up to $5M

         -        "Crystal Bank" protein structure resource launched



•        Post year end highlights:

         -        Substantial progress with in-house drug discovery 
                  collaboration with the Institute of Cancer Research and Cancer
                  Research Technologies Ltd.

         -        Repeat business with Almirall and Lundbeck




Dr Paul Harper, Chairman of Sareum Holdings plc, said: "Sareum has enjoyed a
particularly productive and successful second full year of trading. The Company
and its management have made great progress, with financial performance being
close to market expectations.  The Board envisages strong growth in both
research activities and the generation of revenues for the year ahead.


The Board and the entire Sareum team remains dedicated to generating shareholder
value.  The Sareum directors continue to work to develop the Company's in-house
structure-based cancer drug discovery and development pipeline and remain
confident about its future prospects."






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





Results for the twelve months ended 31 June 2005



Chairman's Statement



Sareum Holdings plc has enjoyed a successful second financial year of trading.
Our in-house drug discovery activity has made excellent progress, generating
active compounds that we believe will ultimately lead to a candidate for
pre-clinical development. The fee for service business has been strong with,
particularly in the second half of the financial year, a series of
collaborations with leading pharmaceutical companies.


Our in-house drug discovery was significantly enhanced by the announcement in
July 2005 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 by this time next
year.


Sareum continued making good progress in obtaining revenue-generating service
collaborations, with the announcement of ten agreements, including top-50 global
pharmaceutical companies such as Schering AG, Organon, UCB and Lundbeck.


Notable agreements included a total of three integrated Structural Biology,
Fragment Screening and Discovery Chemistry projects, with Organon and Idenix
Pharmaceuticals, announced in January and February 2006. The two collaborative
projects with Idenix have a combined success dependent value of up to $5Million.


In addition to Idenix, Sareum has established itself in the USA, announcing
collaborations with Infinity Pharmaceuticals in September 2005 and Sirtris
Pharmaceuticals in June 2006. The Company was also very pleased to announce the
achievement of success milestones in its collaboration with Schering AG, an
extension to its collaboration with Almiral Prodesfarma and recently, a second
collaboration with Lundbeck.


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 and, in
January, the addition of the first reported structure of Bcl-2, an important
oncology target, was announced. A number of the collaborations referred to above
involve Crystal Bank targets and some others are expected to provide additional
proteins to Crystal Bank.



Progress in the period has been close to market expectations.  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, whilst increasing its revenue
generating activities by more than fourfold. This is a particularly creditable
performance confirming the strength of the technology, its attractiveness to
major players in drug discovery and the ability of the team to deliver results
that satisfy the needs of our internal programmes and those of our client
companies.





Financials


During this period revenues amounted to almost £1.5 Million with approx. 75% of
this figure being earned in the second half of the year, reflecting the
continuing increase in business development activity throughout the year. Losses
after taxation for the period were £624,000 representing a loss per share of
0.18p. Encouragingly, the after tax loss for the second half of the period was
£22,000, indicating that the Company is close to its stated goal of fully
funding its in-house research through its revenue generating collaborations. The
cash position increased to £528,000, underpinned by the £0.5 Million put and
call option exercised by Billam AG in February 2006.



Outlook


Sareum has enjoyed a particularly productive and successful year, substantially
meeting market expectations and continuing to deliver on its business strategy.
The Directors continue to work to develop the Company's structure-based drug
discovery programmes and services business and remain confident about future
prospects.




4 September 2006
Dr Paul Harper
Chairman Sareum Holdings plc





Chief Executive's Review


Strategy and Business Model


Sareum's strategy is to advance its own in-house research into novel cancer
therapies whilst generating revenues through the provision of specialist drug
discovery services to the pharmaceutical industry.


Our business model comprises two main components:


1)      Investment in proprietary research into novel cancer therapeutics to
generate drug candidates for partnering with pharmaceutical companies at the
early clinical or pre-clinical trials stage.


Our collaboration with the Cancer Research UK Centre for Cancer Therapeutics at
the Institute of Cancer Research enables us to share the risks involved in drug
discovery and to access specialist biology capabilities from one of the world's
leading cancer research organisations. We entered this collaboration in July
2005 and recently have announced the discovery of novel compounds that are
effective in cancer cell models.


During the next period we will continue to apply our unique and innovative
structure-based approaches in these programmes to rapidly optimise the selected
lead compounds with the aim of selecting a candidate for pre-clinical scale-up
and toxicology studies in mid 2007.


2)      Generation of revenues through the provision of specialist drug
discovery services to pharmaceutical company customers.


During this period we signed collaborations in Europe with Almirall Prodesfarma,
Schering AG, Organon, Lundbeck and UCB, and established a strong presence in the
US with Infinity, Idenix and Sirtris. The collaborations with Organon and Idenix
mark our first multi-disciplinary collaborations that deploy our fragments
screening and discovery chemistry capabilities in addition to our ability to
solve protein structures.


We also launched "Crystal Bank", a collection of therapeutically relevant
proteins that we are using to accelerate the discovery of potential drug
candidates. Crystal Bank demonstrates our ability to successfully solve the
structures of important target proteins in drug discovery, for example the
important oncology target, Bcl-2, which, to date, has been the basis of three
collaborations.


Our unique technology platforms and experienced scientific staff, combined with
our integrated chemistry and biology capabilities have enabled us to meet and
often exceed our customers' expectations, as exemplified by the announcements of
success in our collaborations with Schering AG and Almirall. As well as leading
to repeat business, this track record provides solid evidence of our
capabilities.


We will continue to build on this tremendous business development record. In
addition to our ongoing activities in Europe and the USA we have been active in
Japan, a major market for outsourced pharmaceutical research.


Objectives for the coming year


We look forward to successfully building on the solid foundation created in our
second trading year.


Our primary objective is to advance our in-house drug discovery pipeline to
deliver drug candidates positioned to attract lucrative partnering deals with
pharmaceutical companies.  We will continue to advance these programmes, filing
drug patent applications during the coming year, and developing drug candidates
for pre-clinical studies in 2007/8. Additionally, we will seek to add further
programs to this pipeline, either by licence, collaboration or acquisition.


We will continue to advance our worldwide business development pipeline to
generate the revenues to support our current drug discovery pipeline. In
addition to securing repeat business from our impressive list of current
customers, we will seek to sign longer term collaborations, potentially
including clinical development milestones, with major international
pharmaceutical companies. We look forward to announcing successful results from
these existing and developing relationships.



4 September 2006
Dr Tim Mitchell
CEO Sareum Holdings plc





Consolidated profit and loss account

For the year ended 30 June 2006


                                                                   2006                          2005
                                                               £               £              £              £
Turnover                                                               1,475,792                       332,335

Cost of sales                                                          1,080,278                       798,599
Gross profit (loss)                                                      395,514                     (466,264)

Administrative expenses                                                1,145,792                       912,350
Operating loss                                                         (750,278)                   (1,378,614)

Interest receivable                                       10,478                         28,846
Interest payable                                        (12,586)                       (13,786)
                                                                         (2,108)                        15,060
Loss on ordinary activities before taxation                            (752,386)                   (1,363,554)

Tax on loss on ordinary activities                                     (128,040)                     (119,796)
Loss on ordinary activities after taxation                             (624,346)                   (1,243,758)

Basic and diluted earnings per share                                    (0.0018)                      (0.0042)



The loss on ordinary activities before taxation arises from the Group's
operations all of which are continuing.

There are no recognised gains or losses other than as stated in the profit and
loss account.







Consolidated balance sheet

As at 30 June 2006


                                                            2006                             2005
                                                           £               £                £                £
Fixed assets

Intangible assets                                                     17,499                            23,498
Tangible fixed assets                                                792,072                           964,455
                                                                     809,571                           987,953
Current assets

Debtors                                              436,982                          362,191
Cash at bank                                         528,476                          441,435
                                                     965,458                          803,626
Creditors: amounts falling due within one year       517,010                          378,762
Net current assets                                                   448,448                           424,864

Total assets less current liabilities                              1,258,019                         1,412,817

Creditors: amounts falling due after more than                        62,702                            93,154
one year
Net assets                                                         1,195,317                         1,319,663


Capital and reserves

Called up share capital                                               93,187                            86,937
Share premium account                                              3,088,108                         2,594,358
Merger reserve                                                            27                                27
Profit and loss account                                          (1,986,005)                       (1,361,659)
Equity shareholders' funds                                         1,195,317                         1,319,663






Company Balance Sheet

As at 30 June 2006


                                                  2006                              2005
                                                  £              £                 £                £
Fixed assets

Investment in subsidiary                                    30,000                             30,000
Debtors

Long term debt - subsidiary             2,958,387                          2,549,971
Net current assets                                       2,958,387                          2,549,971

Net assets                                               2,988,387                          2,579,971

Capital and reserves

Called up share capital                                     93,187                             86,937
Share premium account                                    3,088,108                          2,594,358
Profit and loss account                                  (192,908)                          (101,324)
Equity shareholders' funds                               2,988,387                          2,579,971






Consolidated cash flow statement

For the year ended 30 June 2006


                                                                              2006               2005
                                                                                 £                  £
Net cash (outflow)/inflow from operating activities                      (362,664)        (1,553,557)
Returns on investment and servicing of finance                             (2,108)             15,060
Taxation                                                                   119,796
Capital expenditure                                                       (66,145)          (880,983)
Cash flow before financing                                               (311,121)        (2,419,480)
Financing                                                                  398,162          2,719,287
Increase in cash                                                            87,041            299,807







NOTES TO THE FINANCIAL STATEMENTS


1          General


The financial information set out above does not constitute statutory accounts
within the meaning of s.240 of the Companies Act 1985.



2          Basis of accounting


The financial statements have been prepared under the historical cost convention
and in accordance with applicable UK accounting standards.



3          Earnings per share


The basic and diluted earnings per share is calculated on the loss after tax of
£624,346 and a weighted average number of shares of 359,403,542 (2005:
295,115,883). The calculation of diluted earnings per share takes account of
share options that have vested.


                      This information is provided by RNS
            The company news service from the London Stock Exchange