Bioquell Regulatory News (BQE)

15 March, 2011

BIOQUELL PLC

Full year results for 2010

Significant improvement in results in H2 2010:good international organic growth opportunities for 2011 and beyond

Bioquell PLC (LSE: BQE) - provider of innovative low temperature, environmentally-friendly bio-decontamination technologies to the Healthcare, Life Sciences and Defence sectors, and specialist testing services in the UK - announces its results for the year ended 31 December, 2010.

Financial highlights:

§ Orders during year: £44.8 million (2009: £36.2 million) - growth of 24%

§ Revenues: £39.4 million (2009: £39.2 million) - growth of 1%

§ Significant improvement in trading in H2 2010: revenues of £21.4 million (H1: 2010 £18.0 million) - a 19% increase

§ Service-related revenues represent 64% (2009: 60%) of Group revenues; exports 57% (2009: 56%)

§ Profit before tax: £3.3 million (2009: £5.9 million) - decrease of 44%; basic earnings per share of 5.8p (2009: 10.3p)

§ Net cash of £4.8 million (2009: £4.4 million); net assets of £24.6 million (2009: £23.0 million)

§ Proposed dividend of 2.62p per ordinary share (2009: 2.42p) - a 8% increase

Bio-decontamination (Life Sciences, Healthcare & Defence) division highlights:

§ Substantial recovery in H2 2010 in Life Sciences activities - which still represent the largest proportion of the division's revenues

§ Significant growth in Healthcare service revenues in the year associated with the eradication of germs responsible for Hospital Acquired Infection

§ Strong growth in orders and revenues from the emerging markets, particularly Asia Pacific

TRaC (Testing, Regulatory and Compliance) division

§ 10% increase in TRaC revenues during year to £12.4 million (2009: £11.3 million)

§ New North West specialist EMC testing facility opened and fully operational

Commenting on Bioquell's 2010 preliminary results, Nigel Keen, Chairman of Bioquell PLC, said:

"After a challenging first half of the year, it was extremely encouraging to see activity picking up across all of the Group's activities in the second half - and we have gone into 2011 with good momentum."

"We continue to see interesting opportunities for - and have the cash resources needed to fund - substantial international organic growth across our three key sectors: Life Sciences, Healthcare and Defence."

"The new strains of extremely drug resistant Gram-negative bacteria are creating additional issues for healthcare providers around the world - and we anticipate helping many more hospitals combat this worrying new Hospital Acquired Infection problem in 2011."

- Ends -

Enquiries:

Nigel Keen (Chairman) Bioquell PLC 01264 835 900

Nick Adams (Group Chief Executive)

Mark Bodeker (Chief Operating Officer & Group Finance Director)

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Notes to Editors

§ Bioquell is a UK-headquartered, international technology company with two divisions:

o Bio-decontamination which sells specialist bio-decontamination products and services into the Healthcare, Life Sciences and Defence sectors, with most of its revenues generated from overseas customers; and

o TRaC which provides UK corporates with specialist Testing, Regulatory and Compliance services - many of which are required by national and international regulations.

§ Bioquell's gas phase bio-decontamination technology uses hydrogen peroxide vapour - which is highly efficacious at eradicating micro-organisms such as bacteria, viruses and fungi at room temperature - and is subsequently broken down using specialist catalysts to water vapour and oxygen at the end of the bio-decontamination process.

§ Bioquell's bio-decontamination technology:

o is used by bio-pharmaceutical, biologics, biotechnology and research institutions to provide sterile equipment and/or sterile working environments - which is of particular interest to organisations working with biologically-derived drugs;

o is used to eradicate drug resistant organisms associated with Hospital Acquired Infection as well as problematic viruses from the hospital environment. Independent scientific research has demonstrated that 'bioquelling' hospital equipment and facilities reduces the rates of hospital acquired infection;

o was selected by the United States Department of Defense for the JSSED programme to decontaminate sensitive equipment against biological and chemical warfare agents;

o benefits from a number of granted or pending patent filings in the UK and internationally;

o is used in other sectors where bioburden can create significant problems including, for example, the food industry; and

o also comprises specialist filtration technology including peroxide catalysis and chemical, biological, radiological and nuclear ("CBRN") filtration systems used principally in the defence sector.

§ Bioquell currently has overseas operations in the USA, France, Ireland and Singapore, and is in the process of establishing a company in China in response to demand for its equipment and bio-decontamination services from multi-nationals in the Life Sciences' sector with facilities in China.

§ TRaC sells its specialist testing services to the product development and engineering departments of a broad range of companies and organisations, principally based in the UK, with a particular focus on the aerospace, military and telecoms sectors.

CHAIRMAN'S STATEMENT

FINANCIAL PERFORMANCE

Orders and revenues

As previously reported Bioquell had a challenging start to 2010 with business improving as the year progressed:

§ in the first half we encountered a significant slowdown in activity from the Life Sciences sector principally as a result of large multi-national pharmaceutical groups cutting their cost bases in Western Europe and North America. We also faced a shortfall in revenues due to the late receipt of a CBRN filtration system defence contract;

§ in the second half, and in marked contrast, we saw significantly stronger activity from our clients in the Life Sciences and Defence sectors. In addition, during the year we saw significant growth in Healthcare revenues relating to the eradication of germs in hospitals responsible for Hospital Acquired Infection; and

§ encouraging growth was seen in TRaC.

Orders in 2010 were strong and totalled £44.8 million (2009: £36.2 million) representing an increase of some 24%. Despite the issues encountered in the first half, which have been previously reported, revenues in 2010 were up 1% to £39.4 million (2009: £39.2 million).

Order growth was strong in the Bio-decontamination division - with orders up 30% to £30.7 million (2009: £23.7 million). Revenues in the division were down 3% to £27.0 million (2009: £27.9 million).

TRaC displayed encouraging, consistent growth with orders up 14% to £14.1 million (2009: £12.4 million) and revenues up 10% to £12.4 million (2009: £11.3 million).

The Group continues to increase the proportion of its revenues from service-related activities, which increased to £25.2 million (2009: £23.5 million), representing 64% of total revenues (2009: 60%). Export revenues also increased to £22.4 million (2009: £21.8 million), representing 57% of the Group's revenues in 2010 (2009: 56%).

Overheads

Total overheads increased by 21% to £14.4 million (2009: £11.9 million), largely relating to the expansion of our operations in the US and the Asia Pacific region. We also increased our investment in sales and marketing by 8% to £6.4 million (2009: £5.9 million). Administration costs increased by £1.5 million (38%) to £5.4 million (2009: £3.9 million) of which some two thirds (£1 million) related to the business-driven expansion of our US, Asia Pacific and TRaC operations.

New product development, and associated research & development ("R&D"), continues to be critically important to the future growth of the Group. In 2010 R&D and Engineering costs increased by 19% to £2.5 million (2009: £2.1 million). A proportion of these costs were incurred in connection with a development contract for the US Department of Defense ("DoD").

Profitability

Profit before tax was £3.3 million (2009: £5.9 million). The profitability of the Group was significantly stronger in the second half - with pre-tax profits in the first half of only £0.5 million (2009: £2.8 million) but pre-tax profits in the second half of £2.8 million (2009: £3.1 million).

The effective tax rate was 26% (2009: 27%). Profit after tax for the year was £2.4 million (2009: £4.3 million). Basic earnings per share declined by 44% to 5.8p (2009: 10.3p).

Balance sheet & cashflow

The Group continues to benefit from a strong balance sheet and a conservative financing structure. Net assets were £24.6 million (2009: £23.0 million). Gross cash on the balance sheet at the year end was £6.1 million (2009: £5.9 million) and net cash, comprising gross cash less borrowings and obligations under finance leases, was £4.8 million (2009: £4.4 million). In addition to its own cash resources, the Group has unused overdraft facilities of £2.6 million and accordingly has sufficient cash resources in place to fund significant levels of organic growth.

During the year the Group invested £2.7 million (2009: £5.2 million) in capital expenditure principally relating to the upgrading of testing facilities for the TRaC division as well as completing the renovation of a new building for its manufacturing activities at its Andover-based headquarters.

Dividend

Your Board is recommending the payment of a final dividend of 2.62 pence per ordinary share which represents a 8% increase on the prior year (2009: 2.42 pence). The final dividend will be payable on 1 July 2011 to shareholders on the register on 3 June, 2011. Bioquell PLC currently does not pay interim dividends and it is the Board's current intention only to propose the payment of a final dividend each year.

THE BIO-DECONTAMINATION DIVISION

Bioquell sells sophisticated, innovative, patent-protected bio-decontamination equipment to customers in the Life Sciences, Healthcare and Defence sectors. We also provide a unique, specialist bio-decontamination service, which uses proprietary equipment designed and manufactured by us, to eradicate micro-organisms from rooms and/or equipment throughout the world.

Bioquell's bio-decontamination technology has been designed to eradicate micro-organisms - comprising bacteria, viruses and fungi - based upon peroxy chemistry. The technology uses, in the gas phase, hydrogen peroxide vapour ("HPV") and, in the liquid phase, aqueous oxygen peroxide ("AOP"). These peroxy chemistry-based technologies are highly efficacious at eradicating - or 'quelling' - micro-organisms at room temperature. These active agents are then readily broken down by catalysts to water vapour and/or oxygen, making their use essentially residue-free and extremely environmentally friendly.

Bioquell has also developed a range of filtration products and other technical solutions - including catalytic filters, which complement and are used in its peroxy chemistry-based bio-decontamination systems.

Life Sciences

Bioquell is the leading supplier of low temperature bio-decontamination equipment and services to the Life Sciences industry worldwide, and currently the Bio-decontamination division generates more than half its revenues from customers within this sector.

The Group sells bio-decontamination equipment and bio-decontamination service solutions, via RBDS - its Room Bio-Decontamination Service, to a broad range of clients within the Life Sciences sector, including bio-pharmaceutical, bio-medical, bio-technology, university (and other research institutions) and hospital pharmacies. Its technology is used in small scale research facilities through to large scale third party outsourced manufacturing companies. All these organisations use Bioquell's technology to eradicate micro-organisms from rooms and sensitive electronic equipment at low temperature leaving no residues and in a repeatable, consistent manner which can be documented and demonstrated to the relevant regulatory bodies.

Bioquell's business - and prospects - in the Life Sciences' sector is influenced by a number of factors, including:

§ a substantial driver of growth in the Life Sciences sector is expected to come from biologically-derived drugs where sterility during the research and manufacturing phases is critically important. Many of these biologically-derived drugs enjoy patent protection and hence are more profitable for the manufacturers than traditional small-molecule based drugs. Our technology is used to provide sterile research & development and manufacturing facilities, including for generic or contract manufacturers, for biologically-derived drugs;

§ many Life Sciences groups are relocating their manufacturing operations away from North American and Western European manufacturing sites - and moving to the faster growing, lower cost-base emerging markets including China, India and Brazil. Bioquell opened its AsiaPac operations in Singapore approximately two years ago and is in the process of registering a company in China. We see significant growth in our business from clients in these markets;

§ we are continuing to see further growth in biologically-derived or biologically-sensitive bespoke prescription drugs which are often prepared in hospital pharmacies. It is widely reported that there will be strong growth in these 'personalised medicines' over the short to medium term - and Bioquell's products and services will increasingly be used during the development of these novel therapies as well as during their production;

§ there have been a number of high profile biological contamination events which have caused significant issues for Life Science companies. Further, the use of aseptic processing to produce biologically-derived drugs tends to be higher risk and/or more complex than traditional, non-sterile, small-molecule drug preparation. As a result Bioquell is starting to sell consulting services to a number of its bio-pharmaceutical clients, who together with the industry's regulators are taking a more 'risk based' approach to the production of biologically active products; and

§ many Governments around the world recognise the critical importance of knowledge-based economies for future growth and the Life Sciences sector is recognised to be an important source of such growth. As a result many Governments are facilitating - directly or indirectly - investment in the Life Sciences sector.

We believe that the underlying, increasingly biologically-derived, prospects for companies in the Life Sciences sector are positive for our business - particularly in the Asia Pacific region - and this should be a significant source of growth in 2011.

In addition, we are developing a new range of products designed to benefit from the growth in biologically-derived drugs and personalised medicine. These new products will be brought to the market over the next three years - and have been designed to bring to Bioquell an additional revenue stream associated with captive consumable cartridges.

Healthcare

Combating Hospital Acquired Infection

Hospital Acquired Infection ("HAI") is a major and increasing issue for healthcare providers internationally. The eradication of the pathogens - bacteria, viruses and fungi - which cause HAI represents a substantial, international opportunity for Bioquell.

Although MRSA and C.difficile are currently responsible for a significant proportion of HAI, a new and international HAI-related challenge is beginning to emerge for healthcare providers. Many large hospitals are extremely concerned by Gram-negative bacteria - for example Acinetobacter baumannii, Klebsiella pneumoniae, Pseudomonas aeruginosa and E. coli - which are becoming increasingly untreatable by the current generation of antibiotics. Typically these Gram-negative bacteria only affect very sick patients which means that when such patients are admitted to a hospital's clinically-critical departments including intensive care, cancer or transplant units, they are highly susceptible to infections associated with these extremely antibiotic resistant bacteria. For example, one recent study has suggested that 70% of all HAI in intensive care units in the United States is linked to Gram-negative bacteria. The problem is compounded by new antibiotic resistance mechanisms, such as the New Delhi metallo-ß-lactamase 1 enzyme, which are being rapidly spread internationally by air travel. Many of these emerging resistance mechanisms render largely ineffective the antibiotics currently available to treat Gram-negative infections.

Bioquell has been highly successful in carrying out research into the eradication of pathogens associated with HAI with highly respected hospitals and key opinion leaders around the world. We have been able to demonstrate that, among other things, the use of Bioquell's technology can reduce HAI rates in both outbreak and endemic settings. In 2010 we saw a significant increase in revenues associated with the eradication of these problematic pathogens from hospital equipment and facilities. However, the healthcare sector in general is relatively slow at adopting new technologies and in the case of HAI this is further complicated by the desire of many hospitals, particularly in the private sector, not to publicise or wish to discuss this difficult and highly sensitive issue.

Over the last 12 months we have extended our range of tailored solutions for hospitals with a HAI problem. In addition to the Q-10, a product we developed for use by a hospital's own staff, we are seeing increasing demand for our service-based solutions. Based on client requests and feedback we have now developed four service offerings which we are rolling out around the world:

§ 'Emergency' deployment where the hospital has an outbreak and needs fast and discreet deployment of a specialist eradication service by Bioquell's expert technicians using proprietary Bioquell equipment;

§ 'Scheduled' where the hospital works closely with Bioquell on the scheduling of a lower cost deployment of our bio-decontamination technologies, typically a few weeks after initial contact. This service is often used by NHS hospitals in the UK which want to decontaminate their C.difficile cohort wards;

§ 'Committed Technology' where Bioquell locates equipment at the hospital enabling highly trained Bioquell technicians to deploy to the hospital rapidly and flexibly without the logistics delay, or associated cost, of getting Bioquell equipment onsite; and

§ 'Proactive' whereby Bioquell technicians and proprietary equipment are located at the hospital, typically on an annual contract, and rooms are 'bioquelled' within the hospital on a preventative, proactive basis to drive down the rates of HAI.

At the moment our service-related revenues are substantially higher than our equipment revenues in the Healthcare sector. Based on our experience in 2010 we anticipate that this bias towards service-related revenues will continue in many parts of the world. Moreover, we have also developed a service-based model for our international distributors who use the Q-10 to provide service bio-decontamination - enabling us to derive revenues both from the consumable cartridges used in the Q-10 and from sales of the Q-10 equipment to the distributor.

We are seeing increasing levels of interest in our bio-decontamination technology and service solutions internationally, particularly as a result of our healthcare clients being exposed to the new highly resistant strains of Gram-negative bacteria and we are expecting to make good progress in the Healthcare sector in 2011.

Wound care

Over the last year the Group has made good progress with its BioxyQuell wound care product. More than fifty patients have now been accepted onto the clinical trial currently underway to validate this new product. In addition, Bioquell's manufacturing facilities in Andover, Hampshire have been approved by the regulators as suitable for the production of medical devices. We are currently waiting for the regulators to complete their review of our technical file submission relating to the award of a CE mark, which would enable us to market the product within Europe. The regulators should complete this review and make their decision by the end of the first half of 2011. We are also in the process of extending the patent protection enjoyed by this technology.

The UK healthcare market is undergoing significant structural changes mandated by the coalition Government. Accordingly we are in the process of establishing how best to take BioxyQuell to market, mindful of these far-reaching structural changes. In 2011 we anticipate carrying out further research with BioxyQuell with key opinion leaders involved in wound care and will start the application process required to obtain US regulatory approval for the product via a FDA 510(k) filing.

Defence

Decontamination of BWAs and CWAs using Bioquell's HPV technology

In 2007 Bioquell's HPV technology was selected by the United States of America's Department of Defense ("DoD") for inclusion in its Joint Materials Decontamination System ("JMDS") to decontaminate biological warfare agents ("BWAs") and chemical warfare agents ("CWAs"). Teledyne Brown Engineering, Inc ("TBE") of Huntsville, Alabama, USA was the prime contractor to the DoD on the programme - and Bioquell was awarded a significant share of the work associated with the research & development, engineering and manufacturing relating to the JMDS.

The JMDS programme represented an aggregation of two DoD programmes: the Joint Services Sensitive Equipment Decontamination ("JSSED") programme and the Joint Program Interior Decontamination ("JPID") programme. In 2010 the DoD decided to focus resources onto JSSED. We manufactured ten prototype JSSED units in 2010 and the DoD is in the process of carrying out work relating to the evaluation of these systems. TBE have informed us that whilst the DoD evaluates these JSSED systems, we will need to switch our focus onto the JPID development programme. TBE have also indicated that they will require us to carry out more research work relating to the JPID system this year, although the amount of work chargeable to the DoD is likely to be significantly lower than in 2010. Moreover, at the moment there is some uncertainty relating to the key dates and scope of the JPID system as, among other things, the Obama Administration has stated its intention to reduce the DoD budget, the DoD budget is itself currently in a period of 'Continuing Resolution' as it has not been approved by Congress and the Program Office within the DoD responsible for the JSSED, JPID and JMDS programmes has recently been restructured. In addition, the DoD may decide to open up the JPID program to a further tender process.

CBRN filtration systems

Bioquell has designed and manufactured a range of Chemical, Biological, Radiological and Nuclear ("CBRN") filtration systems for more than 40 years. Over recent years Bioquell has been selling CBRN filtration systems to overseas customers. For example, in September 2010 Bioquell received a £3.6 million order from a Turkish customer.

In contrast to our HPV technology there are no patents associated with the Group's CBRN filtration systems; however, there is a high degree of specialist know-how and there are relatively few competitors in the international markets. Most of the Group's CBRN systems are sold into military vehicle programmes.

The USA remains by far the largest defence market in the world. Bioquell continues to work on expanding its sales of CBRN filtration equipment into the USA, whilst at the same time ensuring that its defence products are well positioned to win new customers in emerging markets.

TRaC - Testing, Regulatory and Compliance

The Group's TRaC division provides specialist testing, regulatory and compliance services to companies or organisations based in the UK from seven sites located throughout the UK. In particular, TRaC provides electromagnetic compatibility (EMC) and environmental testing to a large number of British military and aerospace companies.

Unlike a number of specialist testing service companies, TRaC's client base predominately comprises companies or government funded organisations involved with new product or technology development - and accordingly TRaC's activities are currently not directly associated with manufacturing-related product testing. In addition, TRaC's specialist telecoms & wireless testing business, based in the North of England, generates export revenues from international telecoms companies, particularly those based in the USA.

During 2010 TRaC opened a new site in the North West of England to replace a poorly invested and sub-scale facility in the region. During 2011, TRaC will consolidate two sites in the South of England to create a new, state-of-the-art facility which will be well positioned to support and assist the aerospace groups located in the South. Once this investment in the new site has been completed, we do not anticipate further large scale facility-related investments in TRaC - and the TRaC division should start to become significantly cash generative.

In addition to expanding its core specialist testing services, the well-regarded TRaC management team is continuing to focus on the development of the business by the expansion of its specialist consultancy services.

Outlook

2011 has started well and the Group has good opportunities for organic growth in the key sectors it is targeting:

·; the prospects for our range of products and services in the Life Sciences sector continue to improve, with most of the growth coming from overseas, particularly the emerging markets. We are well positioned to benefit from this growth from our operations in Singapore and China. In addition, during the next few years we anticipate further market penetration associated with the launch of new products designed specifically for the Life Sciences sector;

·; healthcare providers around the globe are continuing to face increasing problems from multi-drug resistant organisms which cause Hospital Acquired Infection and they are now facing a particular issue associated with the lack of antibiotics still effective against the Gram-negative bacteria which affect Intensive Care Units (and other high risk units). As our Healthcare business grows, we expect to increase the proportion of service-related revenues derived from our hospital clients worldwide;

·; there continues to be an interesting opportunity to provide our HPV technology to the US military to enable them to combat biological and chemical warfare agents, although we do not anticipate major revenues in 2011 from these programmes. However, we are expecting satisfactory revenues from our CBRN systems this year; and

·; TRaC is continuing to perform well and sees continuing opportunities for growth in the UK.

As always securing these international organic growth opportunities will take good, efficient execution and accordingly we continue to strengthen our management teams and expand our businesses overseas. We are also continuing to work hard to reduce the proportion of the Group's revenues which are related to capital expenditure by our customers and to increase the proportion of our revenues derived from service provision and consumable-cartridge sales. The Group is well capitalised and we are able to fund substantial levels of organic growth. We look forward to growth in 2011 and beyond with considerable enthusiasm.

Nigel Keen

Chairman

15 March, 2011

Principal risks and uncertainties

The Group faces a number of principal risks and uncertainties associated with its activities. It has put in place formal review structures and mechanisms to assess and monitor such risks; and, as appropriate, takes steps to mitigate the identified risks to the extent practicable and/or cost effective. However, it is not possible to identify or anticipate all known or unknown risks; nor is it possible to mitigate all identified risks or uncertainties.

Set out below is a summary of the principal risks and uncertainties, over and above those risks which are inherent with carrying out commercial activities, which your Board believes the Group faces. The description of these principal risks and uncertainties should be read in conjunction with, and considered taking into account of, the description of the activities of the Group set out elsewhere in this document:

Technology. The Group derives a considerable proportion of its revenues by selling products or services based on technology it has developed. There is a risk that third parties could develop technologies which are 'better' or more cost effective.

Regulatory, political and reputational. The Group operates in a number of countries and sectors which are highly regulated. There is a risk that the relevant regulations could be changed and such change(s) could significantly adversely affect the Group's business in that country. Such a change could occur as a result of political intervention which itself could be as a result of lobbying by third parties and/or competitors. Moreover, there is an elevated reputational risk associated with doing business in many of these highly regulated and high profile sectors.

Rapid, international growth. The Group is experiencing rapid growth in a number of the overseas markets in which it sells products or services. There are a number of risks and management challenges associated with such rapid growth in overseas territories. Under certain circumstances the Group could find it difficult to fulfil the demand for its products or services.

Competition. Some of the Group's competitors are substantially larger than the Group and have, among other things, greater financial, selling and political-lobbying resources. Accordingly there is a risk that the Group's business could be adversely affected by actions undertaken by these large competitors. Further, although Bioquell has a number of granted or pending patents internationally, which should protect the key components of its intellectual property from copying, there is a risk that competitors operating from territories with poorly enforced, or enforceable, patent law/patent protection could copy, in part or in whole, Bioquell's products or services. In addition, in certain markets in which the Group operates there is always a risk that 'doing nothing' is the preferred course of action taken by prospective customers - and apathy or continuing with the status quo represents a risk for some of the Group's new products or services.

Financial. The Group has a number of international subsidiaries and trades with companies located throughout the world. The international nature of many of its business activities result in elevated financial risk, including, but not limited to: foreign exchange exposure, credit risk and cash retention/management.

Legal liabilities. Given its international activities, the Group could be subject to litigation in a number of different jurisdictions. By its very nature, such litigation could be related to a broad number of issues, including alleged patent infringement, problems relating to the Group's technology or contravention of anti-bribery legislation.

Reliance on suppliers. Due to the complexity of many of its products, the Group is dependent on a number of key suppliers. These suppliers could supply components late, supply poor quality components, refuse to supply or cease trading. Such disruptions to the Group's supply chain could cause major issues to the trading activities of the Group.

Reliance on customers within a given sector.Although the Group is not significantly dependent upon one single customer, changes within a sector or sub-sector could adversely affect the trading performance of the Group. For example, the pharmaceutical industry is currently facing significant challenges as a number of drugs lose patent protection and accordingly there is a risk that this could affect the revenues that the Group generates from companies within this sector.

Retention of key employees. The Group has a number of key employees working for it. The loss of certain of these employees could be problematic for the Group.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review in the Chairman's Statement and the risks summarised above. The Group has sufficient financial resources to cover budgeted future cash-flows, together with contracts with its customers and suppliers across different geographic areas and industries. The Directors believe that the Group is well placed to manage its business risks successfully.

In accordance with the Corporate Governance requirements, the Directors confirm that they have a reasonable expectation that the Group has adequate financial resources to continue to trade for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements.

Responsibility statement

We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

This responsibility statement was approved by the Board of Directors on 15 March 2011 and is signed on its behalf by:

Nick Adams Mark BodekerGroup Chief Executive Group Finance Director

Consolidated statement of recognised income and expense

For the year ended 31 December 2010

Movements in reserves are set out in notes 13, 14, 15 and 16.

All amounts are derived from continuing operations.

Consolidated statement of recognised income and expense

For the year ended 31 December 2010

Consolidated balance sheet

As at 31 December 2010

Consolidated statement of changes in equity

For the year ended 31 December 2010

Consolidated cash flow statement

For the year ended 31 December 2010

Notes to the preliminary announcement

For the year ended 31 December 2010

1. Basis of preparation

The financial information set out in the full year results announcement does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's Annual General Meeting on 16 May 2011. The auditors' reports on both the 2009 and 2010 accounts were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of Companies Act 2006 or equivalent preceding legislation.

2. Revenue

An analysis of the Group's revenue is as follows:

3. Business and geographical segments

For management purposes, the Group is currently organised into two divisions - Bio-decontamination ('BIO-DECON') and TRaC (Testing, Regulatory and Compliance). These divisions are consistent with the internal reporting as reviewed by the Chief Executive. Segment information about these businesses is presented below:

3. Business and geographical segments continued

All assets and liabilities are allocated to reportable segments with the exception of investments in associated companies.

3. Business and geographical segments continued

Geographical segments

The Group's bio-decontamination equipment is manufactured within the UK and sold into the UK, Europe and Rest of World markets. The TRaC segment offers services from bases within the UK.

The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods or services:

3. Business and geographical segments continued

The following is an analysis of the carrying amount of segments assets, and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the assets are located:

4. Profit from operations

Profit from operations has been arrived at after charging/(crediting):

5. Investment revenues

6. Finance costs

7. Tax

Corporation tax is calculated at 28% (2009: 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The charge for the year can be reconciled to the profit per the income statement as follows:

In addition to the amount charged to the income statement an amount of £90,000 was charged directly to equity (2009: credit to equity of £118,000). This related to the estimated excess tax deductions related to share-based payments.

8. Earnings per share

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

For a profit making company with outstanding share options, net profit per share is decreased by the exercise of share options. Therefore diluted earnings per share are calculated by including all share options in the denominator irrespective of vesting conditions. Basic earnings per share are 5.8p (2009: 10.3p). Diluted earnings per share are 5.1p (2009: 9.3p).

9. Provisions

The warranty provision represents management's best estimate of the Group's liability under twelve month warranties granted on products and services, based on past experience. Other provisions represent potential property-related costs, including property maintenance required under lease obligations within the subsidiaries.

10. Analysis of net cash

11. Share capital

During the year the Company issued a total of 125,000 ordinary shares of 10p each for £58,000 on the conversion of options under the executive share option schemes.

12. Share premium account

13. Special reserve

Following the agreement of shareholders at the GM held on 27 May 2008 and subsequent approval by the Court on 26 June 2008, the Share Premium Accounts was canceled and the balance of £10,933,000 transferred to the Special Reserve. These funds are now available for distribution.

14. Equity reserve

15. Capital reserve

16. Translation reserve

17. Retained earnings

18. Notes to the cash flow statement

Of the new additions to fixtures and equipment during the year assets to the value of £nil (2009: £nil) were financed by new finance leases. Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short term highly liquid investments with a maturity of three months or less.

19. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are therefore not disclosed.

Remuneration of key management personnel

The total remuneration for all of the Directors of Bioquell PLC, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

*2009 restated to include the bonus payment based on the company performance in the year; historically the number has been derived on a cash paid basis. The short term employee benefits have been restated from £847,000 to £872,000.