Gaming Realms Regulatory News (GMR)

14 June 2011

Pursuit Dynamics PLC

("PDX" or the "Company')

Interim Results for the Six Months Ending 31st March 2011

PDX (AIM: PDX), the developer of the PDX® Atomiser and PDX® Reactor products and technology, is pleased to announce its results for the six months to 31 March 2011 and to update shareholders on the commercialisation of its products and technology.

Operational highlights

- The first Biofuels plant, the Pacific Ethanol Columbia LLC ("Pacific Ethanol") plant at Boardman, Oregon, went into commercial operation and installations at two further plants were completed.

- The Joint Venture agreement with National Nuclear Laboratories Ltd. ("NNL") was signed, creating NDX Solutions Ltd ("NDX"). PDX has a 60% stake in the company which will market and deliver decontamination solutions into the nuclear sector.

- A Joint Development Agreement was signed with Proctor and Gamble Technical Centres Limited ("P&G") to develop specific applications for P&G's wide range of processes.

- Several new contracts were signed in our Brewing, Food and Beverages LOB.

Financial highlights

- Revenue in the period was £105k (2010: £79k).

- Cash operating loss for the period of £5.0m (2010: £2.7m), reflecting the costs incurred in strengthening of each of the Lines of Business ("LOB") through increased investment in essential product development work, sales and marketing. The Company continues to make significant investment in its intellectual property with more than 100 patents now filed worldwide.

- The increase in fixed assets in the period of £900k largely reflects the investment in installations of the PDX Ethanol Reactor System ("ERS") in the Biofuels LOB.

- Cash at the end of the period was £4.3m (2010: £3.7m).

Post-period end

- In April 2011 we successfully raised £8m, before expenses, at £2.50 per share, enabling the Company to accelerate progress in all of the LOBs and further strengthen our core capabilities.

- Current cash balance of over £11m.

- We are today announcing agreements in the Biofuels LOB with Marquis Energy LLC ("Marquis") and BioFuel Energy LLC ("BFE"), in addition to the agreement announced in May with Front Range Energy LLC.

- In our Brewing, Food and Beverages LOB we announced an agreement with a major European food manufacturer, and today we are announcing an agreement with German brewer Radeberger Gruppe KG ("Raderberger") (see separate announcement).

- In our Public Health and Decontamination LOB we announced development and distribution agreements with KaercherFuturetech GmbH ("KFT").

- PDX has also today announced (see separate announcement) that Jeremy Pelczer and Bernard Bulkin will be joining the Board of Directors as non-executive Directors, and that Michael Ryan and Stuart Evans will be stepping down.

Commenting on the results, Roel Pieper, CEO of PDX, said:

"During the period we have made significant progress in key areas, notably the completed installations of the first three biofuels plants, the signing of a number of major commercial agreements with partners such as KFT, NNL and P&G, and the strengthening further of the senior management team. We have also today announced a number of significant agreements, including one with Marquis, one of the largest ethanol plants in the US, in our Biofuels business, and we expect to sign agreements with additional plants in the coming months. In April this year we successfully raised further funds enabling us to capitalise on the exciting opportunities that we are seeing in the market to grow our business. We are looking forward to the remainder of the year with confidence".

For Further Information, please contact:

NOTES TO EDITORS

About PDX

- PDX (AIM: PDX) owns and commercialises the PDX Atomiser and Reactor technologies that enable significant reductions in energy usage, process acceleration and result enhancement for a wide range of industrial processes and applications.

- The PDX business model is currently organised into five Lines of Business

Biofuels; Brewing, Food and Beverages; Public Health and Decontamination;

Industrial Licensing; Water.

- PDX is headquartered in Huntingdon with offices in London,

Schaffhausen, Connecticut and Denver.

- Further information is available at the Company's website: www.pdx.biz 

- Publication quality photographs are available from FD

Interim Statement

Financial Review

Revenue in the period was £105k (2010: £79k), as modest revenues began to materialise following the agreements signed over the past year. Revenue generation will accelerate significantly over the next 12 months as the benefits from these and additional agreements begin to flow.

The cash operating loss for the period was £5.0m (2010: £2.7m), reflecting the costs incurred in strengthening each of our LOBs through increased investment in essential product development work, building up our management and operating teams, as well as sales and marketing. The Company continues to make significant investment in its intellectual property with more than 100 patents now filed worldwide.

The increase in fixed assets in the period of £900k largely reflects the investment in installations of the ERS in the Biofuels LOB.

Cash at the end of the period was £4.3m (2010: £3.7m).

Operational Highlights

Biofuels

As at 31st March, three plant installations had been successfully completed with a total annual capacity of 240 million US Gallons per annum ("Gpa"). These installations continue to demonstrate the system's ability to operate effectively in full commercial operation. On 16th March formal terms were signed with Pacific Ethanol in respect of these plants in relation to its Columbia operating plant at Boardman, Oregon, which has a production volume of approximately 50 million Gpa. Revenues from these agreements are typically due from the date of signature and are calculated as a sharing of benefits achieved by the plants. As at 31st March, PDX had, in total, agreements in place to install seven ERSs for a total designed capacity of 420 million Gpa.

Since the period-end we have announced the signing of an agreement to install the ERS with Front Range Energy LLC, capacity 50 million Gpa. We are also announcing today the signing of an agreement with BFE to install the ERS at two of its plants, each 115 million Gpa. This brings the total number of operating and/or contracted to be installed plants to ten with a total design capacity of 700 million Gpa.

In addition, we are pleased to announce today that we have agreed formal terms with Marquis, one of the largest ethanol plants in the USA with a production rate of 135 million Gpa (included in the 420 million Gpa figure given above), for the commercial operation of the ERS installation at its plant at Hennepin, IL, USA.

The pipeline for further plants has been prioritised to maximise application of the experience gained so far and target larger, higher capacity installations in the near term. Looking forward we plan to move to one installation per month, rising to two per month during the next fiscal year as the understanding and acceptance of our systems gains momentum. By the end of the current financial year we expect to have an installed base of 500 million Gpa and over two billion Gpa by the end of FY 2012. Through a combination of the Optimisation, Cycle Time and Performance modes of operation, we remain confident that we can secure US$ 2c to US$ 4c per gallon as our share of the achieved benefits as average for all plants. In the future we will seek to negotiate a benefit share of 30% of the economic benefit.

We are in discussions with a number of financing companies to secure equipment lease financing of the roll out of our Generation One Biofuels program, thus further improving the cash-flow of the Company.

Early progress on Cellulosic (Generation Two) biofuels, the production of biofuel from biomass, is encouraging. We are working with a leading global enzyme partner and one of the world's largest cane sugar producers with the objective of creating a new venture that can jointly exploit the results of the successful trials completed so far. The goal of PDX and our partners is to achieve ethanol production costs well below US$ 2 per gallon. We and our partners are focussing on organic feedstock that can be uniquely exploited through the use of the PDX Reactor as well as developing the next generation of enzymes developed specifically for these feedstocks.

Brewing, Food and Beverages

In the six months ended 31st March, we saw two important sales orders, one in Brewing and the other in Food, confirming the attractiveness of our technology to this market. The pipeline of food opportunities continues to strengthen and we are encouraged by the outlook for this LOB.

We are also pleased to announce today (see separate announcement) the signing of an important deal with Radeberger, the highly respected German brewer, to install a wort-boiling system at one of its large scale industrial plants.

Our brewing installations are progressing well, with new pilot installations underway at Warsteiner's and Bitburger's plants in Germany and SAB MillerCoors' plant Milwaukee, USA. We expect these to run for several months before converting into commercial contracts. Each of them will provide further reference sites as well as high quality verification data to support the growing pipeline of future opportunities.

We are working to add two new product lines to our brewing portfolio - 'Mashing' and 'Disinfection'. 'Mashing' which is an early stage of the brewing process, is a highly attractive target market with no advanced technology solution other than traditional, less efficient methods. To drive this forward we have agreed to work with a leading German brewing academy, Doemens, for a full end-to-end trial to prove the validity of the PDX Mashing Solution. A further product line, 'Disinfection', has produced very encouraging trial results in a laboratory environment and industrial trials are set to commence after the industry summer production peak. For both the Mashing and Disinfection solutions we have had discussions with major brewing Original Equipment Manufacturers in order to accelerate commercialisation.

To support this work we have now recruited an experienced and talented LOB team, led by the divisional MD Juergen Kroner who joined us in October last year.

Public Health and Decontamination

NDX, our 60% owned joint venture with NNL, provides solutions to the nuclear industry though multiple applications including oil residue processing, airborne particulate knockdown and tie down for the removal and safe containment of contamination in handling boxes, cells and building interiors as well as fire suppression. NDX has secured its first revenues and anticipates securing a number of initial orders in Q3. NDX is currently in negotiation with a number of the other major global operators in the sector to exploit the technology.

Following a period of successful development work and negotiations we announced on 13th April that we had entered into an agreement with KFT to develop a number of commercial applications of the PDX technology in the military and civil decontamination sectors. Under the terms of the agreement, PDX and KFT will jointly develop two groups of solutions, the First Responder System and a Hospital System. KFT will market the product through its world leading network of distributors based on minimum order quantities for each solution which will be agreed going forward. The first customer sales for the First Responder System are expected by the end of the calendar year 2011. A substantial portion of the additional funds raised in May will be put towards developing further the Hospital System, a disinfection product for the health care market, and we expect to bring this product to market towards the end of calendar 2012.

Industrial Licensing

We are very encouraged by the results from the work currently being undertaken under the terms of the P & G Joint Development Agreement. The positive outcome of trials, which initially led P & G to enter the agreement, has now been more extensively substantiated and quantified. This led P&G to widen the range of product lines it is verifying. We are in active discussions with a number of other major multinational companies in the food, drinks, confectionary, pharmaceuticals, paints and starch process segments to expand the range of licence opportunities. To accelerate this LOB further we have made a number of investments in our scientific base, both in terms of the highly skilled individuals we need to progress the work as well as to our laboratory facilities. This will give us the internal capability to improve significantly the speed and quality of the development work we undertake and allow us to be less reliant on expensive external service providers.

Water

PDX announced the creation of a Water LOB in December 2010 as a result of successful verification programs in the USA. The application of PDX technology for waste water treatment and the production of biogas is the main target for the PDX Reactor-based solutions. PDX believes that a substantial increase of biogas production can lead to economically attractive waste water treatment solutions (based on the PDX Reactor) for which PDX will look to contract, or to partner, with leading industry players during the next financial year.

Recent trials at Cranfield University have demonstrated some encouraging results in increasing the effectiveness of existing anaerobic digestion processing of municipal waste water. PDX is in preliminary discussions with a number of municipal waste companies, including Thames Water, the UK's largest water utility company, to implement full scale field trials and commercial validation. PDX is continuing its R&D efforts for the delivery of a number of additional solutions such as desalination (all based on the PDX Reactor and Atomiser platforms). PDX expects to make further announcements on these developments during the next financial year.

Outlook

In Biofuels, it has taken slightly longer than we had anticipated to develop a complete understanding of the operations of the differing plants in which we installed the ERS. However, through the further development of our data analysis systems and the ever-increasing experience of our operational teams, the process for booking revenues following plant installation agreements should be much quicker going forward.

The brewing sector has proved to be more conservative adopters of new technology than expected, but securing accreditation under Germany purity standards (the Reinheitsgebot) and the recruitment of skilled brewing professionals has enabled us to gain further traction in the market and we have regained our momentum.

Whilst some uncertainties remain, we have made good progress and have secured contracts that should generate significant future revenues. Following the recent fundraising, the Directors believe that the Company has sufficient funds to deliver its current plans.

Overall, we are seeing very strong momentum across all our LOBs and we are looking forward to the remainder of the year with confidence.

CONSOLIDATED INCOME STATEMENT

for the six months ended 31 March 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 31 March 2011

CONSOLIDATED BALANCE SHEET

as at 31 March 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 31 March 2011

NOTES TO THE INTERIM FINANCIAL STATEMENTS

for the six months ended 31 March 2011

1 General

The Company is a 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.

This condensed consolidated interim financial information was approved for issue on 13 June 2011.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for 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, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This consolidated interim financial information has been reviewed, not audited.

2. Basis of preparation of half-year report

The financial information has been prepared in accordance with all IFRS and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that had been published by 31 March 2011 as endorsed by the European Union (EU). The Standards that will be applicable for the year ending 30 September 2011 are not known with certainty at the time of preparing the interim results. Accordingly, the accounting policies for that accounting period will be determined finally only when the annual financial statements for the year ending 30 September 2011 are prepared.

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. As at the date of signing the interim financial statements, there are no new Standards likely to affect the financial statements for the year ending 30 September 2011.

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 statements 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 statements or reported as separate line items within the Group's financial statements.

3. Accounting policies

The accounting policies are consistent with those of the annual financial statements for the year ended 30 September 2010.

4. Loss per share

The calculation of basic and diluted loss per share is based on a loss on ordinary activities after tax of £7,156,237 (year ended 30 September 2010: £8,681,382 and six months ended 31 March 2010 £3,478,026) and a weighted average number of shares of 70,091,456 (30 September 2010: 67,361,963 and 31 March 2010: 65,253,975).

5. Dividend

The directors do not intend to recommend the payment of any dividends until they consider it prudent to do so, having regard to the need to retain sufficient funds to finance the development of the Group's activities.

6. Cash used in operations

for the six months ended 31 March 2011

7. Development costs

During the year development costs of £29,288 were capitalised.

8. Post balance sheet events

On 28 April 2011 3,200,000 ordinary shares of 1p were issued for consideration of approx £8,000,000 before expenses.

9. Copies of report

Copies of the interim report will be sent to shareholders. Further copies will be available from the Company Secretary.

Independent review report to Pursuit Dynamics plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2011, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the basis of preparation set out in note 2.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2011 is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 and the AIM Rules for Companies.

PricewaterhouseCoopers LLP

Chartered Accountants

13 June 2011

Notes:

a) The maintenance and integrity of the Pursuit Dynamics plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.