Gaming Realms Regulatory News (GMR)

15 December 2011

Pursuit Dynamics PLC

("PDX" or the "Company')

Results for the year ended 30 September 2011

PDX (AIM: PDX) announces preliminary results for the year to 30 September 2011 and post period trading.

Operational Highlights

·; Bioenergy Line of Business (LOB): At the end of September, 2011, installed ethanol base at 346 million US gallons per annum (m GPA) at 5 plants, which is expected to increase to 470m GPA by 31 December, 2011

·; Brewing, Food and Beverage LOB: Introduction of 2 new products in Brewing (mashing and cereal cooking) and establishment of 6 operating reference sites. Food product sales continue.

·; Waste Treatment LOB: Trials with Thames Water are ongoing, two product opportunities identified

·; Public Health and Safety LOB: Atomizer disinfection trials successful, prototype of First Responder System product developed

·; Industrial Licensing LOB: Significant progress with Procter and Gamble (P&G) under the Joint Development Agreement

·; Roel Pieper has resigned for personal reasons and will return to his venture capital activities and Jeremy Pelczer, a Non-Executive Director since June 2011 and former chair of the Audit Committee, has assumed the post of Interim CEO. Jeremy is a former CEO of Thames Water plc.

Financial Highlights (Fiscal Year 2010/11)

·; Revenues generated by four LOBs (2009/10: 1 LOB)

·; Revenue in the period of £490,000 (2009/10: £128,000)

·; Loss before tax of £15.3m (2009/10: £8.7m)

·; Cash at 30 September, 2011 of £7.3m

·; Proposed rights issue announced today, fully supported by institutional shareholders, to raise approximately £9.38m (£8.8m net of expenses). This will provide the Company with the financial resources required to become profitable and cash generative

Operating Outlook (Fiscal Year 2011/12)

·; The PDX Board has approved a revenue forecast of not less than £22m and the Board expects the business to be cash flow and EBITDA positive before the end of the fiscal year

·; The PDX Board and the new management team have already initiated a rigorous review of operating cost which is expected to reduce expenditure by some £3 million this year

·; In Bioenergy, Letters of Intent are in place with one existing and two additional ethanol producers, which, when active, will provide a combined total of 15 plants producing 1,046m GPA

·; In Industrial Licensing, PDX expects the JDA evaluation with P&G to conclude for the first business unit in the first quarter of 2012. Assuming a positive outcome, licensing discussions will follow thereafter. At least four further license agreements are expected during the year with other industrial groups.

·; In Brewing, Food and Beverage, PDX is exploring a number of distribution and licensing options to exploit a rapidly growing pipeline

·; In Public Health & Safety, we plan to launch the First Responder System and the Commercial Disinfection Product in the spring. First nuclear deployment revenues are also expected within the year

·; In Waste Treatment, we anticipate two product launches in 2012, subject to regulatory approval

Chairman Andy Quinn commented: "The Company has made progress during the year and we've developed product applications that have found traction with major industrial customers across multiple lines of business, although the revenues generated from these customers have been slower to emerge than we had expected. This is a timing issue and the delay means that income which we expected in the 2010/11 fiscal year should instead be recognised in the coming year. Jeremy Pelczer has been appointed Interim CEO following Roel Pieper's resignation. We enter 2012 with improving contract visibility and confidence that the revenue profile of the business will develop as expected. The planned fundraising we have announced today should assure shareholders, customers, and suppliers that our business is well-equipped financially to take full advantage of the opportunities we are generating."

There will be a presentation to analysts at 10:00 UK time today and there will be a simultaneous webcast for investors.

The presentation slides will be available shortly before the webcast via the company's website: www.pdx.biz

Investors will be able to dial in using the following details:

Telephone Number: +44 (0)20 7136 2055 

Confirmation Code: 4662468

Please contact M:Communications for further information about the meeting or webcast.

For further information, please contact:

Financial Review

2011 revenues were £490,000 against £128,000 in 2010. The bulk of these were in the food and brewing LOB following our decision to reactivate our activities in this market place during 2010/11. We also generated maiden revenue from our Bioenergy LOB. It is important to note that sales have now started through more than one line of business, an indication of the likely mix of sales to come during 2011/12.

Trading

The Company delivered a loss before tax during 2010-11 of £15.3m (up by 68% over the previous year's loss of £9.1m). The increase was due to the programme of investment that continued throughout the year to create a solid platform for future trading through expenditure on Company resources and new product development. Importantly, a number of installations have been successfully commissioned at client sites.

Capital expenditure

Spending on our fixed assets during the year totalled £1.9 million, of which the substantial majority (£1.5 million) was spent installing the ERS in five US ethanol production plants. By 30 September 2011, two of these plants were generating commercial revenues.

A significant proportion of the balance of our capital expenditure was used to upgrade our R&D facilities in Huntingdon, with a view to accelerating the commercialisation of our technologies and streamlining the sales process. The balance was spent on improving our back office resources, including the development of our new Swiss operations.

Operating Expenses

Excluding non-cash operating expenses, our operational expenditure rose in 2010-11 to £11.8 million from £7.3 million the previous year. The main non-cash item was the share-option charge of £3.6m. During the period, our average headcount rose from 43 to 67 people.

Taxation

The development of new technology and applications is now driven from our new Swiss structure and to support this change a number of Swiss operating companies have been created. It is also underpinned by a formal transfer-pricing policy which sets the foundations both for a tax-efficient status for the Company and coherent internal pricing agreements.

Cash flowThe total cash outflow from operating activities for the Company during the year was £10.9m, up from £5.6m in 2009-10. This was due to general trading losses as we continued to invest in the business, our technological development and our capital expenditure programme. The Company has no borrowings and has a negligible lending facility with its bankers, Barclays. Positive cash funds are conservatively managed through deposits on the short-term sterling money markets.Our total cash position on 30 September 2011 amounted to £7.3m, benefiting from our fund-raising activities during the year which delivered an injection of £8 million before expenses. The Group has today announced its intention to raise approximately £9.38m (£8.88m net of expenses) by way of a rights issue, with commitment from institutional investors to subscribe for all of the new shares issued as part of the rights issue.

In order for the Rights Issue Agreement to become unconditional and for admission of the new shares to AIM to take place the Prospectus, which will also be an Admission Document for the purposes of AIM, will need to be prepared to a standard acceptable to Cenkos, the Company's Nominated Adviser and to be approved by the FSA. It is anticipated that the Prospectus will need to contain a statement concerning the sufficiency of working capital available to the Group in respect of a 12 month priod following acquisition. The Directors ability to make a statement in relation to the sufficiency of working capital in respect of such period will depend upon the circumstances prevailing at the time of publication of the Prospectus. The Prospectus is expected to be published towards the end of February 2012.

Operational Review by Line of Business

PDX commercialises its products through licensing, royalty contract and capital sales as appropriate to different markets. In addition, the Company seeks to partner and/or license with appropriate entities to develop distribution channels.

The Lines of Business have laid substantive foundations during the year. Reviews for each LOB follow.

Bioenergy

PDX has changed its Bioenergy leadership. We have recently hired John King as SVP/GM of the Bioenergy LOB. John joined PDX in November, coming from Great Plains Oil Exploration LLC, where he was COO. John brings twenty four years of relevant experience, including 17 years of engineering and operations leadership at P&G followed by 7 years of commercial leadership in various Biofuels businesses. John's immediate task is to complete the commercialisation at the installed client base, as well as continuing the business development efforts to increase installed capacity.

Today, we are focused on commercialising our technology via installation of the PDX Ethanol Reactor System (ERS) in US corn ethanol plants. During the year, we installed our technology in five plants representing 314m GPA of production and we've established initial revenue agreements with two of these five. These plants are based on the most prevalent engineering designs in the industry and range in capacity from 40 to 140m GPA. These plants were chosen as part of our strategy to prove the benefits of the ERS through demonstrated successful operations at a portfolio of reference sites.

For the early adopter plants, PDX covered the cost of ERS installation and offered a discounted royalty rate in recognition of the higher risk associated with early ERS development. New customers are now significantly contributing to the cost of installation and new royalty agreements are at a higher rate.

Revenue growth for the Bioenergy LOB has been delayed vs. targets for 2010/11. This was caused in part by an inability to measure ERS benefits in the early plants due to variability in plant operations and lack of effective validation protocol. In addition, revenue was impacted by lower ERS installed capacity (314m GPA at 30 September 2011 vs. targeted 500m GPA) resulting from installation delays as the ERS supply chain was established. The installed and shipped capacity is expected to reach 470m GPA by 31 December, 2011.

To address the delay in validation, we're exploiting our knowledge from rapid market entry in a diverse set of ethanol plants. We now understand the differences in plant configurations and operational settings, and we've established a disciplined scientific approach to define the plant-customized process when running with the ERS. This new approach is designed to provide maximum benefits for the plant and will allow us to move toward our threshold target of $0.02/gal of installed capacity. This customized approach, combined with a deeper focus on empirical bench-scale learning and engagement with strong academic and industry expertise is expected to reduce the time from installation to revenue generation at new plants.

Our pipeline of new plant opportunities remains strong, with LOIs in place for a further 576m GPA and strong traction in the corn ethanol industry. We are also encouraged by a key customer's repeat order, following progress at its first site. This demonstrates customer satisfaction. Based on these improvements we are confident in our current Bioenergy financial forecast for 2011/12.

Brewing, Food and Beverage

In brewing our primary focus was to establish a strong and growing base of installations within representative markets. During the period PDX has contracted sales of its product lines to some of the market leaders. Installations have been commissioned or have been agreed at 6 sites as reference installations. These sites establish our technology in the industry as a standard solution and open new markets.

Our wort-heating application is under commercial contract to the Susquehanna Brewing Company and The Radeberger Gruppe and is being piloted by MillerCoors and Warsteiner. This application provides the opportunity to reduce energy consumption by up to 50% during wort-boiling, providing payback in less than 18 months. Our new commercial installations have shown improved flavour stability and consistency from one brew to the next and, critically, have passed the strict German beer purity laws. All tests and evaluations were made by independent university institutes and by the breweries themselves.

We have developed two new products, PDX Cereal Cooking and PDX Mashing, which were launched at the Brau Beviale exhibition in November 2011 in Nürnberg. A series of convincing trials to rigorous standards has been successfully completed at the Doemens Academy supported by the VLB University. Based on the results we are preparing quotations and cost estimates for a number of sites. Each of these products has the same estimated market size as Wort Heating. The launch of these two new products was well received in the market and a number of companies have expressed interest in licensing the products.

We have also commenced a structured process with OEMs in the brewing industry which may lead to licensing and distribution agreements to sell, market, and deliver complete PDX solutions in the Brewing sector. We expect to provide an update before the end of March, 2012.

The increasing acceptance of our products in the brewing industry has opened the opportunity for the application of our disinfection products in this sector. We expect to launch a comprehensive disinfection solution during 2012, which uses our atomiser technology to enable easy and cost-effective decontamination while dramatically reducing water usage and chemical costs.

A contract was announced with a major European food producer worth approximately £400,000 in September. This was the second major contract win since our decision to re-enter the food sector. The 2012 pipeline is encouraging. We have built a strong skill set to support some of our important licensing opportunities. Motivated by the rising project list we are looking for international OEM partners to approach jointly these promising markets.

Our Reactor-based PDX Sonic solution is already proven as an ideal solution for the production and processing of a wide range of foods through its ability to heat, homogenise, emulsify, entrain and pump any liquid food, including ready meals, custards, ice cream mixes and more. Ingredient quantities, such as starch, gums and spices can be reduced, while maintaining or even improving flavour profiles and product quality. As a response to growing demand, we have invested in building the expertise of our food team, to enable better speed and depth in developing, testing and bringing new products to market.

Waste Treatment

The trials at Thames Water's Basingstoke Sewage works commenced in August and have provided statistically significant support for the development of two products to be introduced in 2012. In addition there is sufficient evidence to continue the trials for a Biogas-related technology which may lead to a third product development program, also in 2012.

The trials have shown up to a 6 log kill rate for EColi that indicates the opportunity to develop an in line, fast and efficient process for pathogen kill with a significant capex and operating cost advantage over existing technologies. A system comprising PDX reactors in line could potentially treat municipal waste instantly and replace existing technologies that are capex intensive and heat batches of sludge for 30 minutes at 70 degrees Celsius to achieve the same result. The process will require regulatory review and approval from the Environment Agency and PDX has initiated this process with the assistance of Thames Water. If successful, it is expected to complete in 2012.

The results also support a second application treating food waste, which is an excellent feedstock for anaerobic digestion to create biogas. In order for food waste to be treated it must be pre-processed and often homogenised with other feed stocks. The PDX reactor potentially offers an in line, continuous and efficient solution to this challenge and, again, could achieve an impressive treatment for pathogens in the same process. This is an emerging high-growth market following government policy initiatives to encourage the processing of food waste through anaerobic digestion, either on its own or in combination with other feed stocks including sewage sludge.

The data from Basingstoke, as well as the results from Cranfield and Alabama, also supports ongoing trials and development of a Biogas-related product. The results show reduced particle size, increased soluble chemical oxygen demand (SCOD) and an increase in volatile fatty acids that demonstrates that the cellular material is being broken. This indicates that improved biogas generation may be achievable. The program is expected to last another three months and will focus on raising the organic solid loadings, shortening of retention times in the anaerobic digester and increasing the temperature profile of the process. If successful this will enable the development of a Biogas focussed product, also in 2012. As an enhancement to the pathogen treatment benefit this would further enhance the system pricing.

Dr Piers Clark, Commercial Director of Thames Water, said: "The pathogen kill opportunity is particularly exciting as this addresses an immediate need for the global water industry. The treatment of food waste is an emerging market in which every water company is showing interest. Furthermore, having seen the PDX unit in operation, Thames Water can see how increasing the temperature within the PDX reactor and increasing the solid loading could result in enhanced biogas generation"

Public Health and Safety

During the year we entered into a Joint Venture with National Nuclear Laboratories Ltd. The JV has secured its first revenues, which relate to research and product development. We foresee a multi product portfolio which will generate revenues through their deployment with NNL and other partners.

PDX has a new product in its 'First Responder Backpack' which we expect to generate sales from spring 2012 onwards. We will develop a sales structure with partners to maximize international penetration.

Following the successful disinfection trials at Campden BRI we will introduce the first Commercial Disinfection product. The proposed joint venture with Biomimetics will enable us to offer ready to use systems which consist of an applicator, chemical and procedure. The Commercial Disinfection product will act as a starting point for the development of an application-specific product range driven by customer requirement. This will enable us to segment the market by industry and distribution channel. In parallel we will explore the best approach to serve the broad international customer base by also evaluating a licence model.

Industrial Licensing

The Industrial Licensing group are working on a range of opportunities for the atomiser and reactor technologies. The most immediate and significant is that previously announced with P&G.

With P&G PDX has agreed a one month extension to the Joint Development Agreement (JDA), allowing P&G additional time to complete the complex technical and commercial evaluation of the PDX technology. The evaluation is expected to reach a conclusion during the first quarter of 2012. Successful completion of all learning objectives of the JDA would then clear the way for the two sides to move into commercial discussions of a fee structure that would allow P&G to license PDX's technology.

The Company announced in November 2010 a JDA that runs through Feb 2012. The JDA is to develop specific applications using the PDX reactor technology in a wide range of production processes. The JDA was developed to enable P&G business units to explore process and product development opportunities on the PDX reactor with the full support of the Company's scientists at P&G's facilities. After working jointly to develop a platform, P&G now is in the process of data discovery, translating technical performance to model commercial benefits across a test business unit. Given the breadth and complexity of this exercise, PDX and P&G have agreed to extend the JDA.

PDX expects its reactor will deliver savings on both capex, operations and total energy. If the parties ultimately enter into an agreement for licensing of the technology, such an agreement is anticipated to include a licensing fee to reflect an equitable share of the annual value to P&G.

Jeff Weedman, Vice President, P&G Global Business commented:

"PDX has proven to be a valuable collaboration partner over the last several months. We look forward to our continued work with them on this project."

Additionally we are in various stages of discussions and trials with other significant potential licensees.

 CONSOLIDATED INCOME STATEMENT

For the year ended 30 September 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2011

Consolidated balance sheet

As at 30 September 2011

consolidated statement of changes in equity

For the year ended 30 September 2011

Consolidated cash flow statement

For year ended 30 September 2011

notes to the financial INFORMATION

1. General information

The Company is a public limited liability company incorporated and domiciled in England & Wales. The address of its registered office is Shackleton House, Kingfisher Way, Hinchingbrooke Business Park, Huntingdon, Cambridgeshire, PE29 6HB.

2. Basis of preparation

This condensed consolidated financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial information has been prepared on a historical cost basis.

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30 September 2010, as described in those annual financial statements.

During the period the group has had a 60% interest in an entity which is jointly controlled with another party. The group has chosen to account for joint ventures using the proportionate method of consolidation. The Group's investments in joint ventures are reported in the financial information using the proportionate consolidation method, whereby the Group's share of each of the assets, liabilities, income and expenses of its joint ventures is combined line by line with similar items in the Group's financial information or reported as separate line items within the Group's financial information.

The results shown for 2011 are unaudited. The results shown for 2010 are audited. The consolidated financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts of the Company in respect of the year ended 30 September 2010 were approved by the Board of directors on 3 December 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph nor any statement under Section 498 of the Companies Act 2006.

3. Going concern

The Group has today announced its intention to raise approximately £9.38m (£8.88m net of expenses) by way of a rights issue, with commitment from institutional investors to subscribe for all of the new shares issued as part of the rights issue.In order for the Rights Issue Agreement to become unconditional and for Admission to take place the Prospectus, which will also be an Admission Document for the purposes of AIM, will need to be prepared to a standard acceptable to Cenkos, the Company's Nominated Adviser and to be approved by the FSA. It is anticipated that the Prospectus will need to contain a statement concerning the sufficiency of working capital available to the Group in respect of a 12 month period following Admission. The Directors' ability to make a statement in relation to the sufficiency of working capital in respect of such periodwill depend upon the circumstances prevailing at the time of publication of the Prospectus. The Prospectus is expected to be published towards the end of February 2012.

4 Loss per share

Basic loss per share is calculated by dividing the loss attributable to Ordinary shareholders by the weighted average number of shares in issue during the year. For fully diluted loss per share, the weighted average number of Ordinary shares in issue is adjusted to assume conversion of dilutive potential Ordinary shares. The Group's potentially dilutive securities consist of share options and performance shares. As the Group is loss-making, none of the potentially dilutive securities are currently dilutive.

For basic and diluted loss per share, the weighted average numbers of shares used in the calculations are set out below:

5 Segmental information

The Group's operating segments are determined with reference to the information supplied to the Group's Chief Operating Decision Maker in order for it to allocate the Group's resources and monitor the performance of the Group. The Group considers the Chief Operating Decision Maker to be the Board of Directors.

During the year the Group was organised on a worldwide basis in five business segments, Bioenergy, Brewing Food and Beverage, Public Health and Safety, Industrial Licensing and Waste to Energy. Industrial Licensing and Waste to Energy are new business segments.

The segment results for the year ended 30 September 2011 are as follows:

The segment results for the year ended 30 September 2010 are as follows:

In our 2009-2010 Annual Report, we included New Ventures as a line of business. We have now reclassified this as a business development function that passes those ventures identified as having tangible market potential on to our Lines of Business to take to market.

The segment assets and liabilities at 30 September 2011 and capital expenditure for the year then ended are as follows:

The segment assets and liabilities at 30 September 2010 and capital expenditure for the year then ended are as follows:

Analysis by geographical area

Analysis by revenue stream

Revenues of £375,574 (2010: £92,990) are derived from 3 (2010: 5) customers. They are attributable to the following segments.

6 Cash used in operations