RNS Number:2984I
Provalis PLC
05 March 2003
Meeting today:
There will be a 10.00 am briefing for analysts at Buchanan Communications, 107
Cheapside London. Running simultaneously to the briefing at 10.00 am there will
be a live web cast of the Interim Results briefing. This will be followed by a
11.30 am briefing for the press.
To connect to the web cast facility please go to the following internet address
approximately 10 minutes before the start of the briefing: http://
radio.buchanan.uk.com.
This presentation will also be available on the Provalis website later today at:
www.provalis.com.
Provalis will be holding a lunch at 12.45 pm also at Buchanan Communications. If
you would like to attend any of the meetings please contact Charlie Forsyth on
020 7466 5000.
For Immediate Release 5 March 2003
Provalis plc
Interim Results For The Period Ended 31 December 2002
Provalis plc (LSE: PRO; NASDAQ: PVLS), the Medical Diagnostics and
Pharmaceuticals Group, is pleased to announce its interim results for the period
ended 31 December 2002.
Highlights
Group
* Strong sales growth of 92% to #7.1m; 76% of the prior full year's sales
* Group pre-tax loss reduced substantially (63%) to #1.2m (1H2002, loss of
#3.2m)
* Provalis now break-even at the pre-research and development (R&D) level
excluding the loss on termination of discontinued activities
* Group profitable at EBITDA level (#0.3m) excluding discontinued
activities (1H2002, loss of #2.3m)
* Closing cash of #7.3m further boosted by the initial #1.5m receipt from
Dr Falk Pharma in February 2003.
Medical Diagnostics
* Sales advance to #1.6m (1H2002, #0.4m)
* Losses reduced by 47% to #0.9m (1H2002, #1.7m)
* Glycosal penetrates the US market
* Development of G5 continues to make progress
Healthcare
* Sales increase by 77% to #5.5m (1H2002, #3.1m), 8% up on 2H2002 (#5.1m)
* Operating profit increased to #1.3m (1H2002, #0.1m)
* Diclomax sales maintained at #3.3m (2H2002, #3.3m)
* Stepping up search for new products to accelerate sales growth
Commenting on these results, Provalis Chairman Frank Harding said, "As we
anticipated, sales of Glycosal, our lead diabetes diagnostic product, have grown
strongly in the US, and the level of sales of Diclomax, our lead pharmaceutical
product, has been maintained. Whilst significant challenges remain, I feel this
performance bodes well for the longer-term future of the Group"
Phil Gould, CEO of Provalis, added "I am encouraged by the success of the sales
levels reached with both Glycosal and Diclomax. We have achieved our first
financial target of breaking even at the pre-R&D level"
For further information:-
Dr Phil Gould, Provalis plc, Tel: 01244 833463
Mr Neil Kirkby, Provalis plc, Tel: 01244 833552
Lisa Baderoon, Buchanan Communications, Tel: 020 7466 5000
Provalis' Internet Website ; http://www.provalis.com
"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of
1995: Statements in this announcement that relate to future plans, expectations,
events, performances and the like are forward-looking statements as defined in
the US Private Securities Litigation Reform Act of 1995. Actual results of
events could differ materially from those described in the forward-looking
statements due to a variety of factors. Such factors include, among others: the
rate at which operating losses are incurred; the rate of net cash utilisation
within the Group and, hence, the Group's possible need for additional capital in
the short, medium and/or long term; the execution of development, licensing,
research, manufacturing and other collaboration agreements with third parties;
the progress of the Group's continuing research and development activities;
uncertainties related to future trial results and the viability of the Group's
products, which are at various stages of development; the generation of
sufficient operating cash flow by the Group's healthcare and medical diagnostics
divisions to finance the ongoing development of these businesses as well as the
Group's research and development activities; the impact of future laws,
regulations and policies; availability and level of reimbursement for the
Group's products from government health administration authorities or other
third-party payors; the Group's intellectual property position and the success
of patent applications for its products and technologies; stock market trends in
the Group's sector; the Group's dependence on key personnel; general business
and economic conditions; and other factors beyond the Group's control that may
cause the Group's available capital resources to be used more quickly than
expected. These and other factors that could affect the Company's future
results are more fully described in its filings with the US Securities and
Exchange Commission, in particular the latest 20-F filing, copies of which are
available from the Company Secretary at the Company's registered address.
Notes to Editors
Provalis plc (LSE:PRO and NASDAQ:PVLS) is a pharmaceutical company with two
operating divisions:-
* Medical Diagnostics - develops and sells to world markets medical
diagnostic products for chronic disease management. The division's principle
products are Glycosal and Osteosal in the areas of diabetes and osteoporosis
respectively.
* Healthcare - sells and markets its own, and third party, branded, prescription
medicines in the UK to GPs and hospitals through its own regionally
managed sales force. The division's principle product is Diclomax, a medicine
for use in the treatment of musculo-skeletal disorders, and it also sells
products in the areas of gastroenterology, osteoporosis, migraine and
dermatology.
Group
There are two key elements to the headline achievements of the last six months.
Whilst the success of Glycosal, our diabetes diagnostic product, in the USA
quite understandably takes centre stage, equally pleasing has been the
maintaining of the level of sales of Diclomax by the Healthcare division.
Together, these two products should help Provalis to deliver the financial and
operating goals for the full year.
The growth in sales by the Medical Diagnostics business, which has lower margins
than the pharmaceutical activities, resulted in the group gross margin reducing
slightly to 56% in the first half from the 61% we reported during the second
half of 2002. We expect this trend to continue as diagnostic sales become an
increasingly larger part of our overall sales mix.
These interim results show a pre-tax loss of #1.2m. Excluding R&D costs (#1.0m)
and the loss on termination of discontinued activities (#0.2m) the result is
break-even. The Group is now within sight of breaking even at the EBITDA level
(see note 4). The reduction in R&D spend following the cessation of certain
vaccine R&D activities should deliver further improvements to the result in the
second half of this financial year.
Our closing cash position was #7.3m. Following the recently announced agreement
with Dr Falk Pharma, the cash position for the Company was further improved by
the receipt of #1.5m in February 2003, with another #1.5m due in January 2004
and up to a further #2.0m due in January 2005. In addition, the National
Assembly For Wales has recently awarded the Company a grant of up to #0.95m
(payment being linked to capital expenditure and employment creation) to support
manufacturing expansion, for existing and new diabetes diagnostic products.
Provalis has sufficient funding for its present operational business needs.
Medical Diagnostics - Glycosal accelerates
HbA1c testing, and the regular use of Glycosal instruments and cartridges is not
yet a routine clinical practice at the point of care in our major markets.
However, this is rapidly changing. Our growing medical diagnostics business
reflects the need for products which allow both physicians and patients a route
to better management of diabetes. We continue to channel our efforts to ensure
these needs are met.
Six months ago in our full year report we outlined the difficulty of predicting
how initial stocking orders for Glycosal would ultimately translate into regular
repeat sales. We are now in a better position to judge the outcome and are
encouraged by what we have seen.
During the half year we recorded diagnostics sales of #1.6m, with #0.5m coming
from sales of Glycosal instruments and #1.0m from the associated test cartridges
and controls. These sales were substantially higher than the division's total
sales of #0.4m reported for the same period last year and resulted in the
Medical Diagnostic division's losses decreasing to #0.9m (1H2002, #1.7m).
The sales success of Glycosal in the US has been the main driver of this growth
and thanks to the excellent efforts of our joint marketing partner Cholestech,
we expect this success to continue.
We shipped 3,000 instruments during the first half year, including the one-off
supply of 1,300 to Abbott Laboratories. This is more than the total number of
instruments previously sold since launch of the product some three years ago.
Looking forward, we are on course to sell at least 1,500 more instruments this
year.
We sold 550,000 cartridges during the first half year which again is more than
the combined totals for 2001 and 2002. We now have a strong order book and can
already report sales and firm orders for cartridges in excess of #0.8m for the
second half of the financial year, with the 1 millionth cartridge for this year
due for delivery during April. We are also now seeing the first firm evidence of
significant, repeat, cartridge use from the US market. However, although the
level of usage we are seeing is promising, until the installed base of
instruments becomes more established, future cartridge demand will remain
difficult to predict.
Glycosal was again certified as passing the revised and more stringent National
Glycohaemoglobin Standardisation Programme (NGSP) requirements. This should
support continued sales growth in the US.
Healthcare - Diclomax transforms sales
Healthcare turnover was boosted 77% to #5.5m (1H2002, #3.1m) mainly from the
acquisition of Diclomax announced in December 2001. The division achieved an
operating profit of #1.3m over the half year compared to #0.1m in the same
period last year. Compared to the second half of last year, sales were #0.4m
(8%) up.
Sales of our leading product Diclomax were maintained at #3.3m in the first
half, in line with the preceding half year. Although we think some wholesaler
de-stocking has taken place since the end of the first half, prescription trends
remain promising, and we believe the Diclomax peak sales potential is higher
than current levels. This product will be the primary focus of our sales force
for the remainder of this year, in both the UK and Ireland.
Other pharmaceutical sales increased to #2.1m and were 18% up on the previous
half-year. This comparative period last year included a small amount of sales
of Pennsaid (#0.1m), a product licensed from Dimethaid Research Inc. Dimethaid
unexpectedly and unjustly terminated this license agreement and Provalis has now
submitted a claim for arbitration in the UK for recovery of its investment in
Pennsaid.
The success of Diclomax allows us to step up our search for new products for
promotion by our nationwide sales force, which should accelerate the sales
growth of this division. We have refocused our portfolio priorities and are now
more focussed on ownership of products, rather than being appointed as a
distributor. Some of the cash which Provalis will receive over the next two
years (up to #5.0m) resulting from the modification of the distribution
agreement with Dr Falk Pharma will be used to support the acquisition of such
products. As we announced on 3rd February 2003, this distribution agreement,
which previously was for the UK only and was to continue until 2010, was amended
to include Ireland from January 2003, and to terminate for all territories on
31st December 2004.
New product development - G5 due for trials in the US
G5, our next generation diabetes management diagnostic product, intended to be
available for home use on prescription, continues to make progress.
Pre-production manufacturing prototypes are available which technically perform
well. The product is currently undergoing the scale up of plastics moulding to
the levels necessary for commercial production; this has been technically
demanding. Nevertheless, trials of G5 are scheduled to start in the US in late
spring and we are continuing discussions with a number of potential
distributors, with interested companies currently conducting their own market
research to help define the specification of the product for the home market.
Final timing of product launch will depend on the level of customisation
required by our eventual partner.
Our longer term development project Micro G, a diabetes management diagnostic
test intended to be available for home use without prescription (over the
counter), has now commenced its first planning cycle. A project specialist has
been appointed to start market research studies for Micro G design.
Non core businesses
Provalis has stopped all major expenditure within the Vaccines R&D division,
other than direct patent support. The financial results for the current half
year include #0.7m of costs (including termination costs) for Vaccines R&D. We
anticipate only #0.1m of residual expenses during the second half of this year.
We have retained our interest in those programmes licensed to, and funded by,
third parties and remain in discussions with interested parties who have
expressed an interest in acquiring certain of the vaccine programmes.
Outlook for the Full Year
The Board is pleased with the Group's performance in the first half of this
financial year, and intends to build on this during the second half. The
Group's funding position has been considerably improved, both by the Falk
arrangement and by the continued reduction in operational cash burn, maintaining
our progress towards the goal of financial self-sufficiency. The continued
penetration of Glycosal in the US market, coupled with the promotion of Diclomax
in the UK and, in future, Ireland, should ensure strong growth in 2003 group
turnover over the prior year.
Frank Harding Philip Gould
Chairman Chief Executive
4 March 2003
Consolidated Profit and Loss Account
for the six months ended 31 December 2002
Before Exceptional
Exceptional Item
Item Year ended Year
6 months 6 months Year ended 30 June ended
ended 31 ended 31 30 June 2002 30 June
Dec 2002 Dec 2001 2002 (see Note 3) 2002
(Unaudited) (Unaudited) (Audited) (Audited) (Audited)
Notes #'m #'m #'m #'m #'m
_______________________________________________________________________________________________________________________
Turnover 1
- Continuing Activities 7.1 3.5 9.1 - 9.1
- Discontinued Activities - 0.2 0.3 - 0.3
_______________________________________________________________________________________________________________________
7.1 3.7 9.4 - 9.4
Cost of sales (3.1) (1.9) (4.1) - (4.1)
_______________________________________________________________________________________________________________________
Gross profit 4.0 1.8 5.3 - 5.3
Selling and distribution
expenses (1.6) (1.4) (3.2) - (3.2)
Amortisation 4,6 (0.7) (0.2) (0.9) (0.5) (1.4)
General and administration
costs (1.8) (1.5) (2.8) - (2.8)
Research and development
costs (1.0) (2.0) (3.3) - (3.3)
_______________________________________________________________________________________________________________________
Operating loss
- Continuing Activities (0.7) (2.6) (3.7) (0.5) (4.2)
- Discontinued Activities (0.4) (0.7) (1.2) - (1.2)
_______________________________________________________________________________________________________________________
(1.1) (3.3) (4.9) (0.5) (5.4)
Loss on termination of
discontinued activities 1 (0.2) - - - -
_______________________________________________________________________________________________________________________
Loss on ordinary activities
before interest (1.3) (3.3) (4.9) (0.5) (5.4)
Interest receivable 0.1 0.1 0.2 - 0.2
_______________________________________________________________________________________________________________________
Loss on ordinary activities
before taxation 1 (1.2) (3.2) (4.7) (0.5) (5.2)
Taxation 2 - 0.3 0.4 - 0.4
_______________________________________________________________________________________________________________________
Loss for the period (1.2) (2.9) (4.3) (0.5) (4.8)
_______________________________________________________________________________________________________________________
Loss per ordinary share
- basic and diluted 5 (0.4p) (1.2p) (1.9p)
_______________________________________________________________________________________________________________________
The Group has no recognised gains and losses other than the losses above and
therefore no separate statement of total recognised gains and losses has been
presented.
The accompanying notes are an integral part of this Consolidated Profit and Loss
Account.
Reconciliation of Movements in Shareholders' Funds
for the six months ended 31 December 2002
6 months 6 months Year
ended 31 ended 31 ended 30
December December June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
#'m #'m #'m
_______________________________________________________________________________________________________________________
Shareholders' funds at the start of the period 15.9 10.6 10.6
Share capital issued - - 10.8
Share issue costs - - (0.7)
Loss for the period (1.2) (2.9) (4.8)
_______________________________________________________________________________________________________________________
Shareholders' funds at the end of the period 14.7 7.7 15.9
_______________________________________________________________________________________________________________________
The accompanying notes are an integral part of this Reconciliation of Movements
in Shareholders' Funds.
Consolidated Balance Sheet
at 31 December 2002
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
Notes #'m #'m #'m
_______________________________________________________________________________________________________________________
Fixed assets
Intangible assets 6 13.3 15.2 14.0
Tangible assets 1.6 1.6 1.6
Investments - restricted deposits 7 - 4.5 4.9
_______________________________________________________________________________________________________________________
14.9 21.3 20.5
_______________________________________________________________________________________________________________________
Current assets
Stocks 1.7 1.5 1.4
Debtors 2.2 4.0 2.4
Cash at bank and in hand 7.3 2.3 10.4
_______________________________________________________________________________________________________________________
11.2 7.8 14.2
Creditors: Amounts falling due within one year (7.3) (8.1) (7.5)
_______________________________________________________________________________________________________________________
Net current assets (liabilities) 3.9 (0.3) 6.7
_______________________________________________________________________________________________________________________
Total assets less current liabilities 18.8 21.0 27.2
_______________________________________________________________________________________________________________________
Creditors: Amounts falling due after more
than one year (4.1) (8.8) (6.4)
Provisions for liabilities and charges 7 - (4.5) (4.9)
_______________________________________________________________________________________________________________________
Net assets 1 14.7 7.7 15.9
_______________________________________________________________________________________________________________________
Capital and reserves
Called-up share capital 8 3.3 2.3 3.3
Share premium account 8 24.1 15.0 24.1
Merger reserve 8 96.3 96.3 96.3
Profit and loss account 8 (109.0) (105.9) (107.8)
_______________________________________________________________________________________________________________________
Equity shareholders' funds 14.7 7.7 15.9
_______________________________________________________________________________________________________________________
The accompanying notes are an integral part of this Consolidated Balance Sheet.
The interim financial statements were approved by the Board of Provalis plc on 4
March 2003.
Consolidated Cash Flow Statement
for the six months ended 31 December 2002
6 months 6 months Year
Ended Ended Ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
Notes #'m #'m #'m
_______________________________________________________________________________________________________________________
Net cash outflow from operating activities 9a (0.9) (2.0) (3.7)
_______________________________________________________________________________________________________________________
Returns on investments and servicing of finance
Interest received 0.1 0.1 0.2
_______________________________________________________________________________________________________________________
Net cash inflow from returns on
investments and servicing of finance 0.1 0.1 0.2
_______________________________________________________________________________________________________________________
Taxation
R&D tax credit received 0.4 - 0.1
_______________________________________________________________________________________________________________________
Net cash inflow from taxation 0.4 - 0.1
_______________________________________________________________________________________________________________________
Capital expenditure and financial investment
Purchase of intangible fixed assets (2.3) (2.3) (3.9)
Purchase of tangible fixed assets (0.3) (0.5) (0.8)
Security deposit - (1.5) -
_______________________________________________________________________________________________________________________
Net cash outflow from capital expenditure
and financial investment (2.6) (4.3) (4.7)
_______________________________________________________________________________________________________________________
Net cash outflow before management
of liquid resources and financing (3.0) (6.2) (8.1)
_______________________________________________________________________________________________________________________
Management of liquid resources
Decrease (increase) in short term deposits 2.2 7.0 (0.5)
_______________________________________________________________________________________________________________________
Net cash inflow (outflow) from management of
liquid resources 2.2 7.0 (0.5)
_______________________________________________________________________________________________________________________
Financing
Issue of ordinary shares - - 10.8
Share issue costs - - (0.7)
Unsecured loan repayments (0.1) (0.2) (0.3)
_______________________________________________________________________________________________________________________
Net cash (outflow) inflow from financing (0.1) (0.2) 9.8
_______________________________________________________________________________________________________________________
(Decrease) increase in cash (0.9) 0.6 1.2
_______________________________________________________________________________________________________________________
The accompanying notes are an integral part of this Consolidated Cash Flow
Statement.
Notes to Accounts
for the six months ended 31 December 2002
1. Segmental analysis by class of business
The analysis by class of business of the group's turnover, profit/(loss) on
ordinary activities before taxation and net assets is set out below:
6 months 6 months Year
ended 31 ended 31 ended 30
December December June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
#'m #'m #'m
_______________________________________________________________________________________________________________________
Turnover
Continuing Activities
- Medical Diagnostics 1.6 0.4 0.9
- Healthcare 5.5 3.1 8.2
_______________________________________________________________________________________________________________________
7.1 3.5 9.1
Discontinued Activities* - 0.2 0.3
_______________________________________________________________________________________________________________________
7.1 3.7 9.4
_______________________________________________________________________________________________________________________
Before
6 months 6 months exceptional item Exceptional item
ended ended Year ended Year ended Year ended
31 December 31 December 30 June 30 June 30 June
2002 2001 2002 2002 2002
(Unaudited) (Unaudited) (Audited) (Audited) (Audited)
Total
#'m #'m #'m #'m #'m
_______________________________________________________________________________________________________________________
Profit (loss) on ordinary
activities before taxation
Continuing Activities
- Medical Diagnostics (0.9) (1.7) (3.2) - (3.2)
- Healthcare 1.3 0.1 1.3 (0.5) 0.8
- Therapeutics R&D (0.1) (0.1) (0.2) - (0.2)
- Common costs (1.0) (0.9) (1.6) - (1.6)
- Net interest receivable 0.1 0.1 0.2 - 0.2
_______________________________________________________________________________________________________________________
(0.6) (2.5) (3.5) (0.5) (4.0)
Discontinued Activities* (0.4) (0.7) (1.2) - (1.2)
Loss on termination of
discontinued activities* (0.2) - - - -
_______________________________________________________________________________________________________________________
(1.2) (3.2) (4.7) (0.5) (5.2)
_______________________________________________________________________________________________________________________
* Discontinued activities relate to certain programmes in the Vaccines Research
Business of Therapeutics R&D, which were closed during the period. The costs
of closure have been included in the "Loss on termination of discontinued
activities".
31 December 2002 31 December 2001 30 June 2002
(Unaudited) (Unaudited) (Audited)
#'m #'m #'m
_______________________________________________________________________________________________________________________
Net assets
- Medical Diagnostics 0.4 - 1.6
- Healthcare 5.1 5.1 3.9
_______________________________________________________________________________________________________________________
5.5 5.1 5.5
- Discontinued Activities - - -
_______________________________________________________________________________________________________________________
5.5 5.1 5.5
Unallocated common assets
including cash and deposits 9.2 2.6 10.4
_______________________________________________________________________________________________________________________
Net assets 14.7 7.7 15.9
_______________________________________________________________________________________________________________________
2. Taxation
The tax credit in the previous year represented a claim for refundable R&D tax
credit. No claim has been made in the current period since the Group will
benefit more from the use of the R&D allowances to reduce profits chargeable to
corporation tax in the period.
3. Exceptional Item
The exceptional item included in the operating loss for the year ended 30 June
2002 reflected the write off of the net book value of the investment in Pennsaid
(R) including both the cost of acquisition of the UK distribution rights and the
value of the remaining stock holding. The legality of early termination of
Provalis' rights under the distribution agreement by Dimethaid, the Canadian
owner of Pennsaid(R), is being challenged by Provalis.
4. Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Before
6 months 6 months exceptional item Exceptional item
ended ended Year ended Year ended Year ended
31 December 31 December 30 June 30 June 30 June
2002 2001 2002 2002 2002
(Unaudited) (Unaudited) (Audited) (Audited) (Audited)
Total
#'m #'m #'m #'m #'m
_______________________________________________________________________________________________________________________
Loss on ordinary activities
before taxation (1.2) (3.2) (4.7) (0.5) (5.2)
Interest (0.1) (0.1) (0.2) - (0.2)
Amortisation 0.7 0.2 0.9 0.5 1.4
Depreciation (See note 9a) 0.3 0.1 0.4 - 0.4
_______________________________________________________________________________________________________________________
EBITDA (0.3) (3.0) (3.6) - (3.6)
Operating loss from
discontinued activities 0.4 0.7 1.2 - 1.2
Loss on termination of
discontinued activities 0.2 - - - -
_______________________________________________________________________________________________________________________
EBITDA excluding
discontinued activities 0.3 (2.3) (2.4) - (2.4)
_______________________________________________________________________________________________________________________
This note 4 has been included as an estimation of the free operating cashflow of
the Group, both including and excluding discontinued activities.
5. Loss per share
The loss per share is based on the loss for the period of #1.2m (6 months ended
31 December 2001: #2.9m; full year 2002: #4.8m) and the weighted average number
of ordinary shares in issue during the period of 330,360,181 (6 months ended 31
December 2001: 234,360,181; full year 2002: 258,294,428).
6. Intangible assets
The intangible assets represent the total cost of acquisition of Diclomax from
Parke Davis on 3 December 2001 for #14.9m (including #0.4m of transaction
costs). The asset is being amortised over a period of ten years. The
consolidated profit and loss account for the six months ended 31 December 2002
contains an amortisation charge of #0.7m.
The cash outflow associated with the acquisition was #2.3m in the half year.
Cumulative repayments at 31 December 2002 totalled #6.2m. The remaining #8.7m
of acquisition cost is held within creditors (with #4.1m due after more than one
year) and is payable in weekly instalments over the next two years.
As security for the payment of the remaining consideration, Parke Davis has a
fixed and floating charge over the assets (excluding book debts) of Provalis
Healthcare Limited.
7. Restricted deposits
Restricted deposits related to Research and Development (R&D) syndications. The
deposits could only be used for the conduct of the contractual R&D or, in
certain circumstances, in satisfaction of the Group's obligations to acquire
third party interests in the syndications. A provision of equal amount was held
in the balance sheet reflecting the Group's obligations to perform the R&D
activities or acquire the third party interests. The restricted deposit held at
30 June 2002 was repaid to syndicate investors when the final syndicate was
unwound in July 2002.
8. Movements in equity shareholders' funds
Called-up share Share premium Merger Profit and loss
Capital Account Reserve Account Total
#'m #'m #'m #'m #'m
_______________________________________________________________________________________________________________________
Balance at 1 July 2002 3.3 24.1 96.3 (107.8) 15.9
Loss for the period - - - (1.2) (1.2)
_______________________________________________________________________________________________________________________
Balance at
31 December 2002 3.3 24.1 96.3 (109.0) 14.7
_______________________________________________________________________________________________________________________
9. Cash flow information
(a) Reconciliation of operating loss to operating cash flows
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
#'m #'m #'m
_______________________________________________________________________________________________________________________
Operating loss (1.3) (3.3) (5.4)
Depreciation and impairment of tangible fixed assets 0.3 0.1 0.4
Amortisation of intangible fixed assets 0.7 0.2 1.4
Increase in stocks (0.3) (0.7) (0.6)
Increase (Decrease) in trade creditors 0.3 1.1 (0.1)
(Decrease) Increase in other creditors (0.4) (0.1) (0.1)
(Increase) Decrease in trade debtors (0.2) 0.3 0.3
Decrease in other debtors and prepayments - 0.4 0.4
_______________________________________________________________________________________________________________________
Net cash outflow from operating activities (0.9) (2.0) (3.7)
_______________________________________________________________________________________________________________________
(b) Reconciliation of net cash flow to movements in net funds
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
#'m #'m #'m
_______________________________________________________________________________________________________________________
(Decrease) Increase in cash in the period (0.9) 0.6 1.2
Repayments of unsecured loan 0.1 0.2 0.3
(Decrease) Increase in short term deposits (2.2) (7.0) 0.5
_______________________________________________________________________________________________________________________
Movement in net funds in the period (3.0) (6.2) 2.0
Net funds at start of period 10.3 8.3 8.3
_______________________________________________________________________________________________________________________
Net funds at end of period 7.3 2.1 10.3
_______________________________________________________________________________________________________________________
c) Analysis of changes in net funds
As at As at
1 July 2002 Cashflow 31 December 2002
#'m #'m #'m
_______________________________________________________________________________________________________________________
Cash 1.9 (0.9) 1.0
Short term deposits 8.5 (2.2) 6.3
Cash and deposits 10.4 (3.1) 7.3
Unsecured loan due in under one year (0.1) 0.1 -
Net funds 10.3 3.0 7.3
Short term deposits have a maturity of more than 24 hours but less than 12
months. They are repayable on demand subject, in some instances, to the
repayment of certain expenses. Cash includes cash in hand and deposits repayable
on demand.
10. Nature of financial information
The interim results for the six months ended 31 December 2002 have been
independently reviewed by the auditors, but they, and those for the six months
ended 31 December 2001, have not been audited.
The financial information set out herein does not comprise full accounts within
the meaning of section 240 of the Companies Act 1985. The comparative figures
for the year ended 30 June 2002 are extracted from the audited accounts for that
year, which have been filed with the Registrar of Companies. The auditor's
report on those audited accounts was unqualified and did not contain any
statement under sections 237(2) or (3) of the Companies Act 1985.
The interim report has been prepared on the basis of the accounting policies set
out in the most recent set of annual financial statements.
Independent review report by KPMG Audit Plc to Provalis plc
Introduction
We have been engaged by the company to review the financial information which
comprises consolidated profit and loss account, reconciliation of movements in
shareholders funds, consolidated balance sheet, consolidated cash flow statement
and notes 1 to 10 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2002.
KPMG Audit Plc
Chartered Accountants
8 Princes Parade
Liverpool
L3 1QH
4 March 2003
END
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