Provexis Regulatory News (PXS)

30 May 2007 07:02

Provexis PLC30 May 2007 For release 07.00 Wednesday 30 May 2007 PROVEXIS plc("Provexis" or the "Company") AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Provexis plc (PXS.L), the nutraceutical company that developsscientifically-proven functional and medical foods, announces its auditedresults for the year ended 31 March 2007. Key Financial Results • Revenues of £805,000 (2006: £267,000 of which £140,000 relates tocontinuing operations) • Adjusted operating loss of £2,265,000 before depreciation (£4,000),amortisation of goodwill (£484,000) and share based compensation expense(£119,000). This compares to an adjusted operating loss in 2006 of £2,683,000before depreciation (£17,000), amortisation of goodwill (£363,000) and sharebased compensation expense (£523,000). • Net cash at 31 March 2007 £115,000 (2006: £2,166,000) prior to £2.15million fund raising in April 2007 Key Highlights • Collaboration Agreement signed with Unilever to develop advancedformat of Fruitflow(R) technology, with the aim of advancing to a licenseagreement • Major project underway with a global leader in beverage brands toassess the feasibility of the international launch of a juice product containingFruitflow(R) • Global scientific endorsement for clinical efficacy of Fruitflow(R)from the highest-ranked peer-review journal in nutrition, The American Journalof Clinical Nutrition • FDA affirm no objections to GRAS dossier for Fruitflow(R) clearingthe way for products to be launched in the USA • Patents cleared in the USA for the Company's technology for thetreatment of Crohn's Disease • Stephen Moon appointed Chief Executive as part of managementrestructuring • £2,150,000 raised post year-end for working capital to fund research,development and licensing activities Stephen Moon, Chief Executive Officer of Provexis plc, commented: "We are pleased with our progress in the last year, which has seen the Companybegin its transition to becoming a pure discovery, development and licensingbusiness. Sirco(R) has played a valuable role in demonstrating the validity ofthe Fruitflow(R) technology which is now being evidenced by the Unileveragreement and the interest being shown by other international groups." -ends- For further information please contact: Stephen Moon, Chief ExecutiveProvexis plc Tel: 020 8392 6631 Tom Griffiths/Alasdair YounieArbuthnot Securities Tel: 020 7012 2000 Chris SteeleAdventis Financial PR Tel: 020 7034 4759 Chairman's statement The past year has been one of significant change and progress for the business. The Board appointed Stephen Moon as Chief Executive in July 2006, believing hisskills to be ideally suited to this phase of the Company's development. TheBoard has worked closely with Stephen to refine the strategy of the business andto put in place the necessary working capital to achieve our aims. We believe that long-term shareholder value will be enhanced by focusing morefully on the discovery, development and licensing of functional and medical foodtechnologies. This sector is substantial and is growing strongly, as consumersseek to enhance their health and quality of life through daily diet. Thisconsumer demand is being met by major global food and beverage corporationsdeveloping new functional products. Our expertise in developing patented,scientifically-proven food technologies for an increasingly regulatedenvironment leave us well placed to meet the needs of these potential licensepartners. In this respect, we were delighted to announce a major collaboration withUnilever to develop an advanced version of our patented Fruitflow(R)heart-health technology and we expect this relationship, subject to reachingtechnical, regulatory and economic milestones, to develop into a full licensingarrangement. In addition, we are making progress on a further project with amajor international beverage brand owner to assess the feasibility of the launchof a Fruitflow(R) based beverage. The awareness created by this activity,together with the constant progress being made on the regulatory and scientificfronts is resulting in increased attention from brand owners and majoringredients businesses. The size and quality of our future partnerships is areal endorsement of the value of our technology. We are now also stepping up activity on our plantain-based medical foodtechnology for the treatment of Crohn's Disease and are to commence human trialsthis year. The management team is now also actively seeking to acquire therights to technologies in other areas, such as cardiovascular disease, digestivehealth and cancer prevention. Our Sirco(R) heart-health juice brand performed well, with 1,800 distributionpoints being achieved. While revenues were below expectations, this was in thecontext of reduced marketing expenditure as we focused our resources onpotential licensing and development activities. Most importantly, the Sirco(R)brand has achieved its goal by creating a global awareness of our Fruitflow(R)technology within the industry. I am very positive about the Company's prospects for the year ahead and believewe have in place the management team, technologies and working capital to makestrong progress. Dawson Buck Chairman Chief Executive's statement Strategy and management structure The new management team has developed a focused strategy for the business whichwill see Provexis become a pure discovery, development and licensing business infunctional and medical foods. Given the global market for functional foods isworth over $73 billion and growing faster than conventional foods, together withthe strategic aims of global brand owners to deliver health-oriented foods andclaims to consumers, we believe this is a fertile sector. While regulatorydemands are increasing, particularly in the EU, we believe this is to ouradvantage given our approach of providing clinical proof for our claims,together with the capability of our management and R&D teams. As part of the strategy, we are to attempt to exit the Sirco(R) heart-healthjuice brand. This brand has served its purpose by raising the profile of ourFruitflow(R) technology globally and demonstrating consumer awareness and demandto potential license partners. Exiting the brand will clear the path forpotential license partners who require certain geographic and retail channelrights and will allow for deployment of cash and human resources to ourdevelopment and licensing activities. We believe that the brand has been asuccess and, indeed, the breadth of distribution has exceeded our expectations.However, in a sector where global brands are increasingly assuming a leaderrole, the cost of doing business is rising sharply, leading us to the conclusionthat shareholders' interests are best served by partnering rather than competingwith these major brands. In the 2007/8 financial year we intend to eliminate the bulk of Sirco(R)marketing and selling costs. We have also identified other administration,overhead and headcount savings. The result will be a reduction in total costs ofapproximately 45%. Shortly after the year end, the Company raised approximately £2.15 millionthrough a placing of 143,316,664 new ordinary shares at 1.5p per share. Thisworking capital injection, together with the cost savings identified above, willgive us sufficient cash to deliver our strategy. We see the further development of a top quality R&D team as being key to thestrategy and, as a result, we will continue to strengthen our team during thisyear. The acquisition of the rights to new technologies in the areas ofcardiovascular health, digestive health, cancer prevention and skin health willbe a focus during the upcoming months and we are working actively in this area. Fruitflow licensing We signed a Collaboration Agreement with Unilever in March 2007 to develop aconcentrated format of Fruitflow(R) for inclusion in Unilever branded products.During this year we will work with Unilever to finalise technicalspecifications, carry out clinical trials, meet regulatory requirements andidentify a cost effective supply chain. Subject to achieving this, we expect toprogress to a long term and extensive license agreement. Following any agreementof a license arrangement with Unilever, Provexis will retain exclusive globalrights for the use of Fruitflow(R) for drinks (excluding mini-drinks) containingfruit juice, products marketed for deep vein thrombosis, over the countermedicines and medical products. Categories outside of the exclusive areas areavailable to Unilever on a non-exclusive basis. The management team is continuing to work with a major international beveragebrand owner to assess the feasibility of a multi-country launch of a beveragecontaining Fruitflow(R). In addition, global business development activitiescontinue, with the Company being in dialogue with a range of major brand ownersand ingredients manufacturers. The concentrated format under development willlend itself to tablets and gel capsules and, as such, will provide a platformfor the dietary supplement and over the counter medicine sectors and as a resultwe are exploring routes to supply these sectors. During the year, the Fruitflow(R) technology gained high profile recognition inthe scientific arena, with the publication of two peer-reviewed papers in theprestigious American Journal of Clinical Nutrition. The FDA affirmed they had nofurther questions related to the GRAS dossier, clearing the way for productscontaining Fruitflow(R) to be launched in the USA. With a new EU health claimframework being introduced, a comprehensive support dossier has been completedand we have lodged our claims with both local and EU regulators. Our scientific team have identified in-vitro proof of a beneficial mode ofaction related to the treatment of deep vein thrombosis and as a result we havefiled a patent and will continue the development of this area. Deep veinthrombosis, commonly associated with economy-class airline travel, affects awide range of people including those involved in long distance travel andpatients immobilised for long periods in hospitals. Pipeline A US patent was granted for our plantain-based technology for the treatment ofinflammatory bowel disease and specifically Crohn's Disease. We remain committedto this important technology and will carry out a healthy human trial in thesummer, before commencing a trial on Crohn's Disease patients later in the year. Our extensive network in the global functional food sector has highlighted anumber of opportunities. We are continuing to assess these as well as continuingthe search for new functional and medical food technologies. Selection criteriainclude opportunities where we can secure full ownership of the rights and thepresence or potential for scientific proof. Outlook I am optimistic that we will progress successfully through the milestones withUnilever and proceed to a full license agreement for Fruitflow(R). Given theongoing discussions with a major international beverage brand owner, major brandowners and leading ingredients manufacturers, I am confident we will secureother areas of revenue generation for Fruitflow(R). We aim to devote moreresources to the plantain technology in the coming months and, in parallel, wewill seek to acquire further high-potential technologies. Cost saving programmes have been implemented and with our recent fund raising,we have sufficient resources with which to deliver the strategy. We are inadvanced discussions for exiting Sirco(R) and expect to make an announcement inthe near future. Overall, I believe that the business is well set for the coming financial year,with license revenues in prospect, a focused management team and reduced costbase in place. Stephen Moon Chief Executive Finance Director's statement Group turnover from continuing operations was £804,884 for the year ended 31March 2007 (2006: £139,972). This turnover relates to the sale of Sirco(R) whichcontains the Provexis proprietary Fruitflow(R) technology. The Sirco(R) brandwas launched in several UK supermarket chains during the first quarter of 2006.The overall revenue increase from continuing operations of 475% year on year wasmainly due an increase in volume since the Sirco(R) brand was launched in thefourth quarter of 2006. Cost of sales for continuing operations was £403,857 for the year ended 31 March2007 (2006: £75,707). The increase was mainly due to increased sales volume. Administrative expenses - other for the year ended 31 March 2007 were £3,090,925(2006: £2,976,931). The increase of 3.8% was due to increased salaries, benefitsand general overheads. Share option compensation expense of £118,619 was chargedto the profit and loss account during 2007, following the implementation of FRS20. This charge represents the amortisation of the fair value of unvested shareoptions granted in July 2005 over their normal vesting period. In 2006, a totalof £522,593 (of which £67,147 relates to a FRS20 prior year adjustment) shareoption compensation expense was charged to the profit and loss account inconnection with share options granted at exercise prices that were lower thanmarket price on the date of grant. Also, included in administrative expenses is£484,400, relating to amortisation of goodwill arising from the acquisition ofProvexis Limited in June 2005. The corresponding goodwill amortisation chargefor 2006 was £363,264. Research and development costs were £295,234 for the yearended 31 March 2007 (2006: £394,300). The decrease of 29% was mainly due to thesharing of costs with Unilever for the development of the Fruitflow(R) powder. Operating loss from continuing operations for the year ended 31 March 2007totalled £2,872,491 (2006: loss of £3,413,532). The decrease in operating lossis mainly due to increased Sirco(R) revenues for the year, reduced level ofresearch and development spend and a reduction in share option compensation costrecognised in the year. Loss after tax for the year ended 31 March 2007 for continued operationstotalled £2,922,255 (Basic and diluted EPS (1.5p)) (2006: loss of £3,463,485 andBasic and diluted EPS (2.0p)). Cash at bank as at 31 March 2007 was £115,824, compared to £2,166,243 at 31March 2006. The decrease in cash was mainly due to the outflow of cash fromoperating activities. Spending on new fixed assets was negligible in 2007 and noadditional financing activities were undertaken. On 12 April 2007, the Companyraised approximately £2,150,000 through the placing of 143,316,664 new ordinaryshares at a price of 1.5p per share. The costs in connection with the placingwere £156,000. We anticipate that our research and development expenditures related to theFruitflow(R) and plantain projects will increase during 2007/2008 as we continuedevelopment of additional Fruitflow(R) formats and claims and initiate an 18month clinical trial on patients in remission from Crohn's Disease. The netdevelopment costs for Fruitflow(R) will reflect the receipt of agreedco-development credits from Unilever on the Fruitflow(R) powder format. The Company initiated a restructuring plan in March 2007 to substantially reduceits central overheads. The focus to develop the Company as a technologylicensing business has created certain staff redundancies which were put intoeffect in April 2007. The overall staff savings amount to approximately £400,000per annum. The Directors and management are of the opinion that as at the year endannouncement on 30 May 2007, the Company's liquidity and capital resources areadequate to deliver our current strategic objectives and business plan. Stewart Slade Finance Director Consolidated profit and loss account for the year ended 31 March 2007 ________________________________________________________________________________________________________________ Continuing Restated operations Total 2007 2006 Note £ £________________________________________________________________________________________________________________TurnoverExisting operations 804,884 127,688Acquisitions - 139,972________________________________________________________________________________________________________________ 804,884 267,660Cost of sales (403,837) (175,798)________________________________________________________________________________________________________________Gross profit 401,047 91,862________________________________________________________________________________________________________________Distribution costs (63,994) (25,267)Administrative expenses -- Other (3,090,925) (2,976,931)- Re-organisation costs - (152,606)- Share option costs (118,619) (522,593)________________________________________________________________________________________________________________Total administrative expenses (3,209,544) (3,652,130)________________________________________________________________________________________________________________Operating lossExisting operations (2,872,491) (172,003)Acquisitions - (3,413,532)________________________________________________________________________________________________________________ (2,872,491) (3,585,535)________________________________________________________________________________________________________________ Loss on ordinary activities before interest (2,872,491) (3,585,535)Interest receivable 28,435 113,918Interest payable and similar charges (90,000) (6,500)________________________________________________________________________________________________________________Loss on ordinary activities before and after taxation (2,934,056) (3,478,117)Minority interest 11,801 14,632________________________________________________________________________________________________________________Loss for the financial year 4 (2,922,255) (3,463,485)________________________________________________________________________________________________________________Basic and diluted loss from per share 3 £(0.01) £(0.02)________________________________________________________________________________________________________________ All recognised gains and losses are included in the profit and loss account. Consolidated statement of total recognised gains and losses for the year ended31 March 2007 _______________________________________________________________________________________________________________ 2007 2006 As Restated Note £ £_______________________________________________________________________________________________________________Loss for the year (2,922,255) (3,463,485)_______________________________________________________________________________________________________________Total recognised gains and losses for the year (2,922,255) (3,463,485)_______________________________________________________________________________________________________________Prior year adjustment - Share based payment 2 (67,147)_____________________________________________________________________________________________Total gains and losses recognised since last financial statements (2,989,402)_____________________________________________________________________________________________ Consolidated balance sheet at 31 March 2007 ______________________________________________________________________________________________________________ 2007 2007 2006 2006 As Restated As Restated Note £ £ £ £______________________________________________________________________________________________________________ Fixed assetsIntangible assets 6,417,613 6,902,013Tangible assets 12,607 16,517______________________________________________________________________________________________________________ 6,430,220 6,918,530Current assetsStocks 38,466 17,963Debtors 378,626 554,102Cash at bank and in hand 115,824 2,166,243_________________________________________________________________________________________________ 532,916 2,738,308Creditors: amounts falling due within (838,975) (807,240)one year_________________________________________________________________________________________________ (838,975) (807,240)_________________________________________________________________________________________________Net current assets/(liabilities) (306,059) 1,931,068______________________________________________________________________________________________________________Total assets less current liabilities 6,124,161 8,849,598______________________________________________________________________________________________________________Capital and reservesCalled up share capital 2,510,386 2,500,010Share premium account 4 5,391,867 5,312,243Merger reserve 4 6,273,909 6,273,909Share option reserve 4 990,563 871,944Profit and loss account 4 (9,016,131) (6,093,876)______________________________________________________________________________________________________________Total shareholders' funds 6,150,594 8,864,230Minority interests (26,433) (14,632)______________________________________________________________________________________________________________ 6,124,161 8,849,598______________________________________________________________________________________________________________ Consolidated cash flow statement for the year ended 31 March 2007 ______________________________________________________________________________________________________________ 2007 2007 2006 2006 Note £ £ £ £______________________________________________________________________________________________________________Net cash outflow from operating activities 5 (2,078,729) (2,741,662)Returns on investments and servicingof financeInterest received 28,435 119,981Interest paid on convertible loan notes - (6,500)______________________________________________________________________________________________________________Net cash inflow from returns on investment 28,435 113,481and servicing of financeCapital expenditure and financialinvestmentPurchase of tangible fixed assets (125) (16,264)Acquisitions and disposalsPurchase of subsidiary undertakings - (39,745)Cash acquired with subsidiary undertakings - 763,956Cash received on disposal of business - 43,455______________________________________________________________________________________________________________Net cash outflow before financing (2,050,419) (1,876,779)FinancingIssue of ordinary share capital - 3,775,744Exercise of share options - 3,725Cost of shares issues - (841,514)Capital element of finance lease rental - (622)payments ______________________________________________________________________________________________________________Cash inflow from financing - 2,937,333______________________________________________________________________________________________________________(Decrease)/ increase in cash 7 (2,050,419) 1,060,554______________________________________________________________________________________________________________ 1 Accounting policies The financial statements have been prepared under the historical cost conventionand are in accordance with applicable accounting standards. In preparing thesefinancial statements the group has adopted acquisition accounting as set out inFinancial Reporting Standard (FRS) 6 "Acquisitions and Mergers" and FRS 20 "Share Based Payments" for the first time. The financial statements are presented in UK pounds sterling as this represents the functional currency of the Group. The following principal accounting policies have been applied: Basis of consolidation The consolidated financial statements incorporate the financial statements ofProvexis PLC, and its wholly-owned and majority owned subsidiary undertakings,Provexis Nutrition Limited 100% ("PNL"), Provexis Natural Products Limited 100%("PNP"), Provexis (IBD) Limited 75% ("IBD") and Altucea Limited 94% ("ALT"), adormant company, all of which are registered in England. All entities arereferred to as the "Group" and those operations exclusively of Provexis PLC arereferred to as "The Company". The acquisition method of accounting is used to consolidate the results ofsubsidiary undertakings in the group's financial statements. Where merger relief applies, the investment is recorded in the company's balancesheet at the nominal value of the shares issued together with the fair value ofany additional consideration paid. A separate profit and loss account dealing with the results of the Company onlyhas not been presented, as provided by Section 230 of the Companies Act 1985.The group loss for the year includes a loss after tax of £208,619 (2006 -£455,446) which is dealt with in the financial statements of the parent company. The Group is also exempt under the terms of FRS 8 ("Related Party Disclosures")from disclosing normal trading related party transactions with entities that arepart of the Provexis PLC group. Going concern The group financial statements have been prepared on the basis of going concernas it is considered the group will continue in business for the foreseeablefuture. Share based employee remuneration Where share options are awarded to employees, the fair value of the options atthe time of grant is charged to the income statement over the vesting period.Non-market vesting conditions are taken into account by adjusting the number ofequity instruments expected to vest at each balance sheet date so thatultimately, the cumulative amount over the vesting period is based on the numberof options that eventually vest. Market vesting conditions are factored into thefair value of the options granted. As long as all other vesting conditions aresatisfied, a charge is made irrespective of whether the market conditions aresatisfied. The cumulative expense is not adjusted for the failure to achieve amarket vesting condition. Where the terms and conditions of options are modifiedbefore they vest, the increase in the fair value of the options, measuredimmediately before and after the modification, is also charged to the incomestatement over the remaining vesting period. Historically, when shares and share options were awarded to employees a chargewas made to the profit and loss account on the difference between the marketvalue of the Company's shares at the date of grant and the option price inaccordance with UITF17 (Revised 2003) "Employee Share Schemes". The credit entryfor the charge was taken to the share option reserve. National Insurance on Share Options To the extent that the share price at the balance sheet date is greater than theexercise price on options granted under unapproved schemes after 19 May 2002,provision for any National Insurance contribution has been made based on theprevailing rate of National Insurance. The provision is accrued over theperformance period attaching to the award. Turnover Turnover from sales of the Company's Sirco(R) product and the discontinued AltuTM product are recognised upon delivery which is generally the time of shipmentwhere legal title and risk of loss is transferred to the Group's customers, andis stated at the net invoiced value of goods supplied to customers afterdeduction of value added tax where applicable. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date except that therecognition of deferred tax assets is limited to the extent that the Groupanticipates making sufficient taxable profits in the future to absorb thereversal of the underlying timing differences. Deferred tax balances are not discounted. Goodwill Goodwill is capitalised and amortised on a straight line basis over its usefullife of 15 years. Goodwill included in the consolidated financial statementsrelates to the Group's acquisition on 24 June 2005 of Provexis Limited. Goodwillarising on an acquisition of a subsidiary undertaking is the difference betweenthe fair value of the consideration paid and the fair value of the assets andliabilities acquired. Impairment of fixed assets and goodwill The need for any fixed asset impairment write-down is assessed by comparison ofthe carrying value of the asset against the higher of realisable value and valuein use. Impairment tests on the carrying values are undertaken: • at the end of the first financial year following acquisition • in other periods if events or changes in circumstances indicate thatthe carrying value may not be recoverable Investments Investments are held at cost less any provision for impairment in value. Tangible fixed assets Tangible fixed assets are stated at cost. Depreciation is calculated on astraight line basis so as to write off the cost less estimated residual value oftangible fixed assets by equal instalments over their expected useful economiclives as follows: Plant, machinery and vehicles - 3 years Fixtures, fittings and equipment - 3 years Research and development Expenditure on research and development is written off as incurred and includesa proportion of salaries and other expenses relating thereto. Stock Stock has been valued at the lower of cost and net realisable value. Pension costs Contributions to the Company's defined contribution pension scheme are chargedto the profit and loss account in the period in which they become payable. Theassets of the scheme are held separately in independently managed funds. Financial instruments In relation to the disclosures made in note 17: • short term debtors and creditors are not treated as financialassets or financial liabilities (other than for currency disclosures); • the group does not hold or issue derivative financial instrumentsfor trading purposes. • in the group's current situation, hedging for interest rate riskis not considered appropriate; and • short-term liquidity risk is managed by obtaining and reviewingthe adequacy of banking facilities on a regular basis. Operations and working capital requirements are financed principally through thegroup's cash balances. However, the Board constantly monitors the financialmarkets to ensure this policy remains in the group's interest. Leased assets Where assets are financed by leasing agreements that give rights approximatingto ownership (finance leases), the assets are treated as if they had beenpurchased outright. The amount capitalised is the present value of the minimumlease payments payable during the lease term. The corresponding leasingcommitments are shown as amounts payable to the lessor. Depreciation on therelevant assets is charged to the profit and loss account. Lease payments are analysed between capital and interest components. Theinterest element of the payment is charged to the profit and loss account overthe period of the lease and is calculated so that it represents a constantproportion of the balance of capital payments outstanding. The capital partreduces the amounts payable to the lessor. All other leases are treated as operating leases. Their annual rentals arecharged to the profit and loss account on a straight-line basis over the term ofthe lease. Liquid Resources For the purposes of the cash flow statement, liquid resources aredefined as current asset investments and short term deposits. 2 Changes to accounting policies - FRS 20 Share based payments In preparing these financial statements the group has adopted for thefirst time FRS 20. FRS 20 requires the recognition of share based payments atfair value at the time of grant. Prior to the adoption of FRS 20, the grouprecognised the financial effect of the share based payment in the following way:when shares and share options were awarded to employees a charge was made to theprofit and loss account based on the difference between the market value of theCompany's shares at the date of grant and the option exercise price inaccordance with UITF Abstract 17 (revised 2003) 'Employee Share Schemes'. The credit entry for this charge was taken to the share option reserveand reported in the reconciliation of movements of shareholders' funds. Inaccordance with transitional provisions of FRS 20, the standard was appliedretrospectively to all grants of equity instruments after 7 November 2002 thatwere unvested at 1 April 2006 and to liabilities for share based transactions at1 April 2006. The adoption of FRS 20 has resulted in the retained profit reservecarried forward for the year ended 31 March 2006 and the year ended 31 March2007 being decreased by £67,147 and £185,764 respectively. 3 Loss per share 2007 2006 Numerator £ £ ___________________________________________________________________________________________________________ Loss for the year (2,922,255) (3,463,485) ___________________________________________________________________________________________________________ Loss per share 1p 2p ___________________________________________________________________________________________________________ 2007 2006 Number Number ___________________________________________________________________________________________________________ Weighted average number of shares used in basic and diluted EPS 250,765,567 200,292,102 ___________________________________________________________________________________________________________ The inclusion of share options in the calculation of weighted average number ofshares would have the effect of reducing the loss per share. Consequently, the share options have been excluded from the calculation. 4 Reserves Share Share Profit premium Merger option and loss account reserve reserve account Group £ £ £ £ ___________________________________________________________________________________________________________ At 1 April 2006 as previously stated 5,312,243 6,273,909 804,797 (6,026,729) FRS 20 prior year adjustment - - 67,147 (67,147) ___________________________________________________________________________________________________________ At 1 April 2006 as restated 5,312,243 6,273,909 871,944 6,093,876 Premium on shares issued in lieu of 79,624 - - - implementation fee Loss for the year - - - (2,922,255) Fair value of unvested share options - - 118,619 - ___________________________________________________________________________________________________________ At 31 March 2007 5,391,867 6,273,909 990,563 (9,016,131) ___________________________________________________________________________________________________________ 5 Reconciliation of operating loss to net cash outflow from operatingactivities 2007 2006 As Restated £ £ __________________________________________________________________________________________________________ Operating loss continued operations (2,872,491) (3,413,532) Operating loss discontinued operations - (172,003) __________________________________________________________________________________________________________ Total operating loss (2,872,491) (3,585,535) Depreciation and amortisation 488,435 379,876 Increase in stocks (20,503) (46,931) Decrease/ (increase) in debtors 175,476 (171,540) Increase in creditors 31,735 145,745 Share based payment charges 118,619 536,723 __________________________________________________________________________________________________________ Net cash outflow from operating activities (2,078,729) (2,741,662) __________________________________________________________________________________________________________ 6 Reconciliation of net cash inflow to movement in net funds 2007 2006 £ £ __________________________________________________________________________________________________________ (Decrease)/increase in cash in the year (2,050,419) 1,060,554 Decrease in debt - 622 __________________________________________________________________________________________________________ Change in net funds resulting from cash flows (2,050,419) 1,061,176 Decrease in debt - non cash - 400,000 Net funds at beginning of year 2,166,243 705,067 __________________________________________________________________________________________________________ Net funds at end of year 115,824 2,166,243 __________________________________________________________________________________________________________ 7 Analysis of net funds At 1 April Cash Other non 31 March 2006 flow cash items 2007 ___________________________________________________________________________________________________________ Cash at bank and in hand 2,166,243 (2,050,419) - 115,824 ___________________________________________________________________________________________________________ Total 2,166,243 (2,050,419) - 115,824 ___________________________________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange