RLM.L Regulatory News (RLM)

29 Apr 2008 07:01

PuriCore Plc29 April 2008 PuriCore plc ("PuriCore" or "the Company") Preliminary Results Sales increase 17.5% in 2007 and 89% in Q1 2008 MALVERN, PENNSYLVANIA, AND STAFFORD, UK, 29 April 2008 - PuriCore (LSE: PURI),the life sciences company focused on the control of infectious pathogens withits novel, safe antimicrobial technology, today announces its preliminary annualresults for the year ended 31 December 2007. Additionally, PuriCore announcestoday its inaugural Interim Management Statement in a separate release. 2007 Financial Highlights • Revenue: up 17.5% to $18.6 million (2006: $15.9 million)• Recurring revenue: 79% of sales• Food Safety sales up 21% to $7.9 million (2006: $6.5 million)• Endoscopy sales up 15% to $10.3 million (2006: $8.9 million) 2007 Operational Highlights• 7 new US retail supermarket customers, bringing the total to more than 20 (including 2 of the top-10)• UK Endoscopy portfolio expanded• PuriCore systems used in 33% of UK NHS hospitals with endoscopy departments• Regulatory approvals • US FDA 510(k) clearance received for the Sterilox Endoscopy System • US FDA Food Contact Notification granted for Sterilox Solution• Patents and awards • 2 new US patents granted (now 34 patents in total with 32 more pending in global IP estate) • New US patents for Wound Therapy Method and PuriCore technology • Sterilox named Product of the Year by Foodservice Consultants Society International• Research published • Effectiveness of Sterilox Solution against major outbreak pathogens • Safety and efficacy of Vashe Wound Therapy • Effectiveness of Aquatine EC for root canal disinfecting and cleansing• More than 2,500 wound therapy patients treated: clinicians report no adverse or side effects 2008 Update (unaudited)• Q1 2008 revenue of $9.1 million, up 89% versus Q1 2007 • Food Safety sales up 128%, $ 4.3 million • UK Endoscopy sales up 68%, $ 4.7 million• $11 million Sterilox Food Safety contract announced for another top-5 supermarket retailer announced• Sterilox Solution demonstrated to be highly effective against pandemic H5N1 avian influenza• In advanced discussions with several lenders to raise additional capital• Sterilox Solution approved for use in Organic Food production, processing, and handling Greg Bosch, Chief Executive of PuriCore, said: "Our 2007 results showed continued top-line growth with recurring revenuesgrowing 57% over 2006 and EPS loss of $0.14 per share, in line with consensusestimates. We're also off to a very strong start for 2008 in both our US FoodSafety and UK Endoscopy businesses with first quarter growth of almost 90%versus Q1 2007. We anticipate this type of continued significant growththroughout the year as we capitalize on increasing market share, entering newmarkets, and leveraging our operations." Enquiries:Ben Brewerton Greg Bosch, CEOSusan Quigley Keith A. Goldan, CFOFinancial Dynamics PuriCore+44 (0) 20 7831 3113 +1 484 321 2700 About PuriCore PuriCore plc (LSE: PURI) is a life sciences company focused on developing andcommercialising proprietary products that safely, effectively, and naturallykill contagious pathogens. PuriCore's technology provides a solution to a broadrange of markets that depend upon controlling contamination, including foodsafety in retail and foodservice, medical device disinfection, wound therapy,and hospitality. The Company's proprietary technology mimics the human body'sproduction of the natural antimicrobial hypochlorous acid, which is highlyeffective in killing bacteria, viruses, and fungal spores. Deployinghypochlorous acid solutions as soaks, sprays, mists, and in other forms,PuriCore's technology is designed to limit the spread of infectious disease,including major public health threats of M. tuberculosis, MRSA, E.coli,Norovirus, Avian Influenza, HIV, Polio Virus, Helicobater pylori, andLegionella. PuriCore is headquartered in Malvern, Pennsylvania, with offices inStafford, UK. To receive additional information on PuriCore, please visit our website atwww.puricore.com, which does not form part of this press release. Certain statements made in this announcement are forward-looking statements.These forward-looking statements are not historical facts but rather are basedon the Company's current expectations, estimates, and projections about itsindustry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,''intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressionsare intended to identify forward-looking statements. These statements are notguarantees of future performance and are subject to known and unknown risks,uncertainties, and other factors, some of which are beyond the Company'scontrol, are difficult to predict, and could cause actual results to differmaterially from those expressed or forecasted in the forward-looking statements.The Company cautions shareholders and prospective shareholders not to placeundue reliance on these forward-looking statements, which reflect the view ofthe Company only as of the date of this announcement. The forward-lookingstatements made in this announcement relate only to events as of the date onwhich the statements are made. The Company will not undertake any obligation torelease publicly any revisions or updates to these forward-looking statements toreflect events, circumstances, or unanticipated events occurring after the dateof this announcement except as required by law or by any appropriate regulatoryauthority. All 2007 financials are audited. All 2008 financials are unaudited. Chairman and CEO Review PuriCore's unique green technology is deliverable across multiple markets andgeographies and provides shareholders with "Pure Opportunity." This opportunityarises from our core developed technology that we believe can deliver awidespread global impact on infectious disease. Sterilox Systems generate hypochlorous acid, an incredibly safe, yet powerfuland effective, natural antimicrobial that mimics the same biochemistry deployedby the human immune system to fight off infectious pathogens. This proprietaryantimicrobial technology is scientifically proven and approved for use inmultiple market applications. Sterilox Systems are technically sophisticated to ensure consistent qualityproduction of hypochlorous acid. Yet they are extremely easy for operators touse and require only common salt and water, offering a natural, 'green' solutionto address multiple significant markets, geographies, and applications. With ourSterilox Systems, our customers can generate on-site and on-demand a robust,natural antimicrobial solution tailored specifically to the volumes andconcentrations required for their needs. This strong scientific foundation is further fortified by our core businesses infood safety and medical device disinfection as well as by the significantpotential in size and scope of our new opportunities in biosafety, therapeuticwound management, and water safety. We aim to deliver on this broad portfolio ofopportunity and thereby provide significant long-term value to our shareholders. 2007 Business Report In 2007, we focused on building core strength in our first two businesses,namely US Food Safety and UK Endoscopy, ending the year with revenues of $18.6million, a 17.5% increase over 2006. 2007 proved to be a challenging year with adoption rates slower than initiallyexpected, particularly in our US Food Safety business. The delay of a majorcontract in 2007 led us to restrain our business plans for product developmentand new market entries. However, we won contracts with seven new US retailsupermarket chains, bringing our total supermarket customers to more than 20.Additionally, we have identified the potential to install an extra 5,000Sterilox Systems within our current customer base, and we are in discussionswith customers to install a further 11,000 additional Systems. By year-end andinto early 2008 having signed the delayed major contract, we have re-establishedour momentum, and confidence in our opportunity is stronger than at any timepreviously. Core businesses In 2007, we further penetrated our two primary markets. In the US Food Safetybusiness in the retail market, we concentrated on the largest retail chains thatdifferentiate themselves to consumers based on quality and reputation. With morethan 20 leading retail supermarket chains (including two of the 10 largest)using Sterilox Food Safety Systems in 2007, we garnered approximately 6% marketshare of our retail targets totalling approximately 1,600 stores. Revenues forthe US Sterilox Food Safety business grew 21%, with approximately 185 SteriloxSystem installations last year. In 2007, we anticipated adoption by several large retailers early in the yearbut agreements were not finalized until later and into January 2008, with asignificant award of an $11 million contract to install Sterilox Food SafetySystems in half of the stores for one of the largest US food retailers. Thisorder, from the second top-five US retailer to adopt our technology, combinedwith a robust pipeline of other leading retail chains, is expected to fuelsignificant organic growth in this business in 2008. In our second core market, the UK Sterilox Endoscopy business, revenues grew 15%in 2007 (7% on a constant currency basis), fuelled largely by the expandedproduct portfolio of our new AER distribution partnerships, despite thecontinued challenging NHS environment. We estimate that we now have garneredapproximately a third of the market for hospital endoscope disinfection unitswith our Endoscopy product portfolio. New strategic markets and geographies We have long identified the next markets that we would enter once our corebusinesses were stable. Capitalizing on our success in the US Food Retailmarket, we expanded our business development initiatives in the Foodservice,Hospitality, and Institutional markets. We began to identify distributionchannels for our initial efforts in those markets in which we have a presence,leveraging our early adopters in several of the major casino resort propertiesin Las Vegas. In healthcare, we continued to explore and invest in therapeutic applicationsfor our core technology with very encouraging results. We are impressed withclinician and patient response to date, and we have initiated early discussionswith potential partners for Vashe Wound Therapy. PuriCore also markets itsantimicrobial solutions to Dental practices targeting biofilm remediation andclinically oriented applications and research for root canal procedures and oralrinses. We also took steps to open new geographies for our core markets. In the US, weprepared for the commercialization of our Sterilox Endoscopy Systems. Wereceived a 510(k) clearance from the US FDA to reprocess endoscopes in 2007. Weare now identifying target accounts and expect to establish pilot sites in thethird quarter of 2008. Similarly, we initiated very early discussions withleading food retailers in the UK to explore the opportunity for the SteriloxFood Safety business. Outlook With a strong current order book and anticipated order flow in both our coremarkets, we foresee significant top-line organic growth in 2008 that will enableus to achieve additional leverage of our operations and further expand into newmarkets. Operationally, we anticipate strong sales growth and improving marginsthereby leveraging operating expenses and significantly reducing our cash burnrate. Our 2008 key strategies are to:• Extend leadership in our core markets: US Food Retail and UK Endoscopy• Focus on revenue growth, margin improvement, and leverage of operational costs• Launch into new strategic markets: US Endoscopy and US Foodservice and Hospitality• Maintain steady growth in our Dental franchise• Further develop business plans and explore partnerships in Wound Management and Water Safety Summary Throughout our organisation, we continue to strive for excellence in theexecution of our business processes to create a profitable, world-class company.We remain enormously proud of our safe, green, effective technology and equallyproud of PuriCore as a company and as a team. Whilst the development of our business was slower than we anticipated in 2007,we are now poised for significant growth in 2008 and the commercialisation of aportfolio of applications with our core platform technology to deliver our PureOpportunity. We look forward to executing on our 2008 strategies and deliveringexcellent returns for our shareholders. Christopher P.J. Wightman Gregory T. BoschChairman Chief Executive Officer 29 April 2008 Financial Report Income Statement Results for the year ended 31 December 2007 showed continued top-line revenuegrowth. Sales of $18.6 million (2006: $15.9 million) were 17.5% higher than in2006 (13% on a constant currency basis). This was slightly below the guidance ofsales of $19.1 million given in our February trading update due to the Q1 2008return of an order of third-party distributed products supplied in 2007.Recurring revenues, which are generated from the rental agreements, servicecontracts, and the sale of consumables, accounted for 79% of total revenue for2007, reflecting a 57% increase in recurring revenue over 2006. Whilst 2007 wasa challenging year for PuriCore, primarily due to unexpected contract delays,the Group's results validate our recurring revenue business model. Cost of sales for 2007 was $15.7 million (2006: $12.9 million), resulting in agross profit margin for the year of 15.8% (2006: 18.4%). The lower profit marginin 2007 resulted from higher sales of distributed products in our UK Endoscopybusiness that are not as profitable as our proprietary Endoscopy systems, aswell as by the costs of having spare capacity among our field-based personnel.The strong revenue growth that we expect in 2008 will take advantage of thisspare capacity, and we expect significant margin improvement throughout theyear. Investment in research and development in 2007 increased to $2.4 million (2006:$2.1 million), a 13.4% increase. The rate of growth of investment slowed in 2007(2006 increase in R&D from 2005 was 29%) whilst the Group balanced its continuedinvestment in engineering, clinical development, chemistry, and microbiologywith a focus on improving cash flow. Sales and marketing expenses in 2007 totalled $8.0 million compared with $7.3million in 2006, an increase of 9.3%. The increase was driven by additionalinvestment in sales and marketing in the US Food Safety business offset by fewerpersonnel and therefore lower costs in the UK Endoscopy business. General and administrative expenses in 2007 totalled $14.1 million compared with$11.6 million in 2006, an increase of 22.3%. The increase was largely the resultof the additional costs associated with operating as a public company for thefull year 2007 (only six months as a publicly traded company in 2006). Thesecosts comprised the additional overhead of legal, accounting, and otherprofessional fees, offset by lower non-cash stock compensation expense (2007:$0.8 million vs. 2006: $2.4 million) related to the issuance of share options toemployees and directors of the Group (as determined under IFRS 2). Balance Sheet and Cash Flow As at 31 December 2007, PuriCore had cash equivalents (including restrictedcash) of $18.9 million (compared with $43.0 million as of 31 December 2006), adecrease of $24.1 million. During the year, there were two major uses of cash:debt repayment and operating expenses. Approximately $5.5 million (net) was usedfor the repayment of debt associated with secured borrowing arrangements thatthe Company entered into to further the strategy of growing our base of rentedSterilox Systems installed on operating lease agreements. As at 31 December2007, outstanding debt related to these agreements totalled $9.2 million(including $4.5 million drawn on a line of credit) ($14.8 million at 31 December2006). In 2007, cash outflow from operating activities totaled $14.1 million(compared with $12.3 million in the year ended 31 December 2006). The Company also used $2.0 million of cash to build inventory, which increasedto $5.7 million at 31 December 2007 from $3.7 million at 31 December 2006. Theincrease was largely the result of strategic decisions to increase inventoriesin anticipation of US Food Retail orders and, although these didn't occur untilearly 2008, the recently announced $11 million order will utilise theseinventories. With increased demand for the Company's products and the generation of rapidlygrowing recurring revenues, the Directors consider there is now clear evidencethat PuriCore's business model is being successfully implemented. Accordingly,the Directors are confident that the necessary funding can be put in place tofulfill the Company's growth plans and secure its sustainable profitability,whether through debt, equity, or a mixture of both. Keith A. GoldanChief Financial Officer 29 April 2008 Consolidated Income StatementFor the Year Ended 31 December 2007 2007 2006 $ $ ______ ______ CONTINUING OPERATIONSRevenue 18,642,124 15,867,232Cost of sales (15,703,628) (12,943,478) Gross Profit 2,938,496 2,923,754Sales and marketing expenses (7,997,289) (7,319,127)General and administrative expenses (14,148,836) (11,568,711)Research and development expenses (2,405,930) (2,120,795) ______ ______ Loss before interest and tax (21,613,559) (18,084,879)Finance costs (1,190,501) (1,261,644)Finance income 1,372,962 1,341,385Net Finance Income 182,461 79,741 ______ ______Loss before taxation (21,431,098) (18,005,138)Taxation 116,434 166,160 ______ ______ Loss for the year (21,314,664) (17,838,978) ______ ______ Attributable to:Equity holders of the parent (21,314,664) (17,838,978) ______ ______ Loss Per Share $/share $/share ______ ______Continuing operations Basic and Diluted (0.14) (0.14) Consolidated Statement of Recognised Income and ExpensesFor the Year Ended 31 December 2007 2007 2006 $ $ ______ ______Exchange differences on translation of foreign operations 86,124 1,094,179 ______ ______ Net Income Recognised In Equity 86,124 1,094,179Loss for the financial year (21,314,664) (17,838,978) ______ ______ Total Recognised Income And Expense (21,228,540) (16,744,799) ______ ______ Total Recognised Income And Expense Is Attributable To:Equity holders of the parent (21,228,540) (16,744,799) ______ ______ Consolidated Balance SheetFor the Year Ended 31 December 2007 2007 2006 $ $ ______ ______ASSETSNon Current AssetsIntangible assets 6,042,265 5,329,721Property, plant, and equipment 8,002,124 9,323,024Restricted cash - 3,033,000Trade and other receivables 487,039 - ______ ______ Total Non Current Assets 14,531,428 17,685,745 Current AssetsInventories 5,683,726 3,672,381Trade and other receivables 4,689,389 6,496,776Restricted cash 3,033,000 2,250,000Cash and cash equivalents 15,861,207 37,683,515 ______ ______ Total Current Assets 29,267,322 50,102,672 Total Assets 43,798,750 67,788,417 ______ ______ LIABILITIESCurrent LiabilitiesTrade and other payables (7,326,745) (6,295,128)Loans and borrowings (7,991,371) (5,933,974)Provisions (93,870) (91,989) ______ ______ Total Current Liabilities (15,411,986) (12,321,091) ______ ______ Non Current LiabilitiesLoans and borrowings (1,549,064) (8,762,225) ______ ______ Total Non Current Liabilities (1,549,064) (8,762,225) ______ ______ Total Liabilities (16,961,050) (21,083,316) ______ ______Net Assets 26,837,700 46,705,101 ______ ______ EQUITYShare capital 2,777,795 2,758,718Share premium 145,455,962 144,931,003Other Reserves 6,204,404 5,387,301Retained earnings (128,804,935) (107,490,271)Cumulative translation adjustment 1,204,474 1,118,350 ______ ______ Issued capital and reserves attributable to equity holders of the parent 26,837,700 46,705,101 ______ ______ Total Equity 26,837,700 46,705,101 ______ ______ Consolidated Cash Flow StatementFor the Year Ended 31 December 2007 2007 2006 $ $ ______ ______Cash Flows From Operating ActivitiesLoss for the year (21,314,664) (17,838,978)Adjustments for:Taxation (116,434) (166,160)Finance costs 1,190,501 1,261,644Finance income (1,372,962) (1,341,385)Depreciation and amortisation 4,937,879 2,995,164Share based payment expense 817,103 2,578,466Loss/(gain) on disposal of property, plant, and equipment 270,211 (31,221) ______ ______ (15,588,366) (12,542,470)Operating Loss Before Movement In Working Capital(Increase)/decrease in inventories (2,011,345) 58,669Decrease/(increase) in trade and other receivables 1,015,595 (964,356)Increase/(decrease) in trade and other payables 1,031,617 (380,680)Increase in provisions 1,881 66,237 ______ ______ Cash Absorbed By Operations (15,550,618) (13,762,600)Interest received 1,372,962 1,341,385Income tax credit received 116,434 166,160 ______ ______ Net Cash Flow From Operating Activities (14,061,222) (12,255,055) ______ ______ Cash Flows From Investing ActivitiesPurchase of property, plant and equipment (3,294,420) (8,067,069)Proceeds from sale of property, plant, and equipment - 143,382Cash paid for internally generated intangibles (1,787,122) (1,102,626) ______ ______ Net Cash Flow From Investing Activities (5,081,542) (9,026,313) ______ ______ Cash Flows From Financing ActivitiesIssue of shares, options, and warrants 544,036 52,480,096Proceeds from new loan notes - 5,128,367Proceeds from new bank loans 4,500,000 7,529,081Repayment of borrowings (9,519,069) (2,075,985)Interest paid on borrowings (885,748) (1,151,269)Repayments of obligations under finance leases (64,246) (69,119)Decrease in overdraft (72,451) (635,356) ______ ______ Net Cash Flow From Financing Activities (5,497,478) 61,205,815 ______ ______ Net (Decrease)/Increase In Cash And Cash Equivalents (24,640,242) 39,924,447Cash and cash equivalents at beginning of year 42,966,515 952,842Effect of foreign exchange rate changes on cash held 567,934 2,089,226 ______ ______ Restricted cash 3,033,000 5,283,000Cash and Cash Equivalents 15,861,207 37,683,515Total Cash Held at End of Year 18,894,207 42,966,515 ______ ______ Basis of Preparation PuriCore plc (the "Company") is incorporated in the UK. PuriCore, Inc., isincorporated under the laws of Delaware in the USA. The Group financial statements are authorised for issue by the Board ofDirectors on 29 April 2008. European Union law (EULAW) (IAS Regulation EC 1606/2002) requires that the financial statements of the Group are prepared inaccordance with International Financial Reporting Standards as adopted by the EU(EU-IFRS). The financial statements have been prepared on the basis of therecognition and measurement requirements of EU-IFRS that are endorsed by the EUand effective at 31 December 2007. The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2007 or 2006 but is derivedfrom those accounts. Statutory accounts for 2006 have been delivered to theregistrar of companies, and those for 2007 will be delivered in due course. Theauditors have reported on the 2006 accounts; their report was (i) unqualified,(ii) did not include a reference to any matters to which the auditors drewattention by way of emphasis without qualifying their report, and (iii) did notcontain a statement under section 237(2) or (3) of the Companies Act 1985. The auditors have reported on the 2007 accounts; their report was (i)unqualified, (ii) included an emphasis of matter relating to the assumption thatthe going concern basis preparation is appropriate, and (iii) did not contain astatement under section 237(2) or (3) of the Companies Act 1985. Going Concern The financial statements are being prepared on a going concern basis, which theDirectors believe to be appropriate for the reasons set out below. The Group's operations are focused on the application and development ofhypochlorous acid solutions for customers at a range of concentrations to meetthe needs of each application. Given the research and development and sales andmarketing phase of the Group's life cycle and the continual work to developfurther applications of the Sterilox System, significant research, development,sales, and marketing costs have been incurred to date in excess of gross profit.The Group meets its day-to-day working capital requirements through cashreserves and external funding facilities. At 31 December 2007 cash held was$18.9 million (including $3.0 million restricted cash), a draw down of $4.5million had been made against an available line of credit, and outstanding notespayable were $4.7 million. The $4.5 million line of credit was repaid in April2008. The nature of the Group's operations means that future income is dependent onsecuring additional contracts within the markets it currently operates in and ondeveloping new applications for the Sterilox System and penetrating thoserelated markets. The Board has prepared projected cash flow information for the period ending 20months from the date of its approval of the financial statements, which show anet cash outflow. These projections include the release of $3.0 millionrestricted cash from 1 January 2009 in line with the current terms of theagreement, and assume additional funding of $10 million to be raised in June2008. Whilst the Group has not raised further funding to date, the Group iscurrently in negotiations with a number of potential lenders in relation to the$10 million projected to be raised in June 2008 and further funds that areexpected to be required in the 20 month period. On the basis of these projections and negotiations, the Board considers that theGroup will continue to operate with sufficient funding. However, given thegeneral inherent risk with forecasting revenues in the current markets in whichthe Group operates, the uncertainty inherent in the development of newapplications and penetrating the related markets for the Group's product and theuncertainty in the fund raising exercises to be undertaken by the Group, therecan be no certainty in relation to these matters. These uncertainties might cast significant doubt on the Company's and Group'sability to continue as a going concern and therefore the Company and Group mightbe unable to continue to realise their assets and discharge their liabilities inthe normal course of business. These financial statements do not include anyadjustments that would result from the going concern basis of preparation beinginappropriate. Segmental Analysis The Group is managed by type of business. Segmental information is providedhaving regard to the nature of the goods and services provided and the marketsserved. Under 'other,' we have identified the Group's Global Dental business andcertain business development activities not yet generating significant revenues. Primary Reporting Format - Business Segments For the year ended 31 December 2007 Endoscopy Food Other Corporate Total as Safety & reported unallocated for the Group $ $ $ $ $ ______ ______ ______ ______ ______Revenue 10,263,513 7,861,836 516,775 - 18,642,124 ______ ______ ______ ______ ______ Loss Before Interest, Tax,Depreciation, And Amortisation (7,054,985) (2,802,303) 230,813 (7,049,205) (16,675,680)Depreciation and amortisation (280,257) (2,922,330) - (1,735,292) (4,937,879) ______ ______ ______ ______ ______ Loss Before Interest And Tax (1) (7,335,242) (5,724,633) 230,813 (8,784,497) (21,613,559) ______ ______ ______ ______ ______ Segment AssetsNon current assets 1,748,996 415,396 - 12,367,036 14,531,428Current assets 5,435,474 8,358,745 226,191 15,246,912 29,267,322 ______ ______ ______ ______ ______ Total assets 7,184,470 8,774,141 226,191 27,613,948 43,798,750 ______ ______ ______ ______ ______ Segment LiabilitiesCurrent liabilities (4,530,368) (3,289,460) - (7,592,158) (15,411,986)Non current liabilities - (1,471,006) - (78,058) (1,549,064) ______ ______ ______ ______ ______ Total liabilities (4,530,368) (4,760,466) - (7,670,216) (16,961,050) ______ ______ ______ ______ ______ Other Segment Items Capital expenditure: property, plant 330,785 1,153,968 - 1,809,667 3,294,420& equipmentCapital expenditure: intangible 400,531 632,482 - 754,109 1,787,122assets ______ ______ ______ ______ ______ All business segments shown above are continuing. For the year ended 31 December 2006 Endoscopy Food Other Corporate Total as Safety & reported unallocated for the Group $ $ $ $ $ ______ ______ ______ ______ ______Revenue 8,902,951 6,477,618 486,663 - 15,867,232 ______ ______ ______ ______ ______ Loss Before Interest, Tax,Depreciation, And Amortisation (3,303,543) (442,747) (649,176) (10,694,249) (15,089,715)Depreciation and amortisation (233,213) (2,171,260) - (590,691) (2,995,164) ______ ______ ______ ______ ______ Loss Before Interest And Tax (1) (3,536,756) (2,614,007) (649,176) (11,284,940) (18,084,879) ______ ______ ______ ______ ______ Segment Assets Non current assets 1,816,881 7,542,917 46,156 8,279,791 17,685,745Current assets 4,663,731 2,476,623 349,385 42,612,933 50,102,672 ______ ______ ______ ______ ______ Total assets 6,480,612 10,019,540 395,541 50,892,724 67,788,417 ______ ______ ______ ______ ______ Segment LiabilitiesCurrent liabilities (4,035,610) (420,845) (168,562) (7,696,074) (12,321,091)Non current liabilities - - - (8,762,225) (8,762,225) ______ ______ ______ ______ ______ Total liabilities (4,035,610) (420,845) (168,562) (16,458,299) (21,083,316) Other Segment ItemsCapital expenditure: property, plant 329,273 6,791,863 20,850 925,083 8,067,069& equipmentCapital expenditure: intangible asset 267,645 728,426 28,221 78,334 1,102,626 ______ ______ ______ ______ ______ All business segments shown above are continuing. (1) Loss Before Interest and Tax represents the segment result for purposes ofIAS 14. 31 December 2007 loss includes a charge from 'Corporate & unallocated'to Food Safety in the amount of $3.3 million for General & Administrativeservices. This charge was not made in 2006. Intra-Group sales, which are priced on an 'arm's-length' basis, between bothsegments and regions are not significant. The analysis of Earnings BeforeInterest and Taxes by business includes an allocation, based on their nature, ofcosts incurred centrally in the United Kingdom and United States of America.Unallocated costs represent corporate expenses. Segment capital expenditure isthe total cost incurred during the year to acquire segment assets that areexpected to be used for more than one year. Secondary Reporting Format - Geographical Segments Sales Segment assets Capital expenditure 2007 2006 2007 2006 2007 2006 $ $ $ $ $ $Continuing OperationsUnited Kingdom 10,263,513 8,902,951 7,427,549 3,699,922 1,293,430 1,270,892United States 8,378,611 6,964,281 36,371,201 64,088,495 3,788,112 7,898,803 ______ ______ ______ ______ ______ ______ 18,642,124 15,867,232 43,798,750 67,788,417 5,081,542 9,169,695 ______ ______ ______ ______ ______ ______ The above analysis is based on the location of the customers. Products and Services Provided PuriCore's Sterilox Systems electrochemically generate hypochlorous acidsolutions for customers on-site and on-demand at a range of concentrations tomeet the needs of each application. Requiring only common salt, water, andelectricity, these systems are reliable, safe, effective, and user-friendly.Given hypochlorous acid quickly breaks down into salty water, Sterilox Systemsproduce the Solutions on-site for immediate use. Each Sterilox System includes a combination of proprietary electrolysis cells,software, and control systems within a custom-designed unit. These proprietarycontrol systems ensure that the optimum concentration of hypochlorous acid isproduced consistently and reliably within narrow specification tolerances. TheSterilox Solution produced is near neutral pH (between 5 and 7) to maximise thelevels that are generally recognised to be substantially more biocidal yet safe.(Below pH 4, the solution is aqueous chlorine; above pH 7.4, the solution ishypochlorite, the chemical in common bleach.) The Sterilox Systems can beremotely monitored and incorporate a series of internal controls to ensure thatonly effective solution is available for use. The Sterilox Solution is currently used in the following areas: UK Endoscopy-Endoscopes are commonly used in many medical procedures such ascolonoscopies and bronchoscopies. These endoscopes are designed to bereprocessed between patient clinical procedures. Strict regulations governspecific cleaning processes to ensure adequate safety and quality controls toprevent pathogen transmission and patient protection. These processes include amanual cleaning step, automated washing, disinfection with an approved chemical/sterilant, and final wash with a bacteria-free rinse water. US Food Safety-Sterilox is a proven intervention to improve shelf life and homelife for fresh produce, floral, and seafood. The patented technology produces anon-toxic, food-safe sanitizer at a fraction of the costs of traditionalchemicals whilst ensuring a safer product for supermarket produce consumers. US & UK Dental-Water lines used in dental surgeries suffer from the build up ofbiofilms and other contamination. Sterilox Solutions act to decontaminate waterlines and maintain acceptable water quality levels providing a safer, healthierwork environment for patients and staff. Earnings per Share The calculation of basic and diluted earnings per share is based on thefollowing data: Group 2007 2006 $ $ ______ ______LossLoss for the purpose of basic and diluted loss per share (21,314,664) (17,838,978) ______ ______ Group 2007 2006 Number Number ______ ______Number of SharesWeighted average number of ordinary shares for the purpose of basic loss per 151,901,613 125,665,449share Group 2007 2006 $/share $/share ______ ______Loss per ShareFrom continuing operations:Basic and diluted (0.14) (0.14) ______ ______ The calculation for diluted loss per share is identical to that used for basicloss per share. This is because the exercise of share options would have theeffect of reducing the loss per share and is therefore not dilutive under theterms of IAS 33 'Earnings per share.' Operating Lease Rentals Group 2007 2006 $ $ ______ ______Minimum lease payments under operating leases recognised as income in the year 8,212,653 6,904,314 ______ ______ At the balance sheet date the Group has total outstanding receivablescommitments under non-cancellable operating leases, which fall due as follows: 2007 2006 $ $ ______ ______Within one year 7,471,969 6,967,101In the second to fifth years inclusive 3,557,356 8,775,807After five years - 9,125 ______ ______ 11,029,325 15,752,033 ______ ______ Operating lease receipts represent rentals receivable from customers for the useof certain property, plant, and equipment. Leases have varying terms and renewalrights. Post Balance Sheet Events The Group was awarded a contract worth approximately $11 million in 2008 toinstall its Sterilox Food Safety Systems into roughly half of the retaillocations of one of the largest supermarkets in the U.S. The contract wasannounced on 11 January 2008. In compliance with the Combined Code, Joseph William Birkett was appointedSenior Independent Director of the Group on 31 January 2008. The Group signed an agreement to acquire nine issued U.S. patents related toelectrolyzed water equipment and processes from ECT, with the intent to expandits operations in commercial and industrial water treatment. The Group alsosigned separate agreements to hire two senior ECT scientists who bring manyyears of collective experience in electrolysed water technology. Theseagreements were announced 20 February 2008 and are subject to the approval ofthe United States Bankruptcy Court for the Eastern District of Missouri. The Group granted options over Ordinary Shares in the Company to the Directorsand PDMRs under the terms of the PuriCore plc Executive Omnibus Incentive Plan.The grant was announced 21 February 2008. The total number of options overOrdinary Shares in the Company issued to Directors, PDMRs, and employees was3,696,000. Refer to Note 22 of the financial statements for additionalinformation on share-based payments. On 14 April 2008 the Group repaid the $4.5 million balance on the line of creditfacility with Brown Brothers Harriman. This information is provided by RNS The company news service from the London Stock Exchange