SOURCE: BioProgress PLC

March 21, 2005 02:01 ET

BioProgress PLC announces Final Results

Cambridgeshire -- (MARKET WIRE) -- March 21, 2005 --

Press Release                                           21 March 2005 

       	                 BioProgress plc 

                 ("BioProgress" or the "Company") 

      Preliminary Results for the year ended 31 December 2004 

BioProgress plc (AIM: BPRG; NASDAQ: BPRG), the provider of innovative delivery mechanisms for the pharmaceutical oral dosage markets, today reports its Preliminary Results for the year ended 31 December 2004.


    .   Turnover of GBP2.5 million and gross profit of GBP0.8 million
    .   Cash balances of GBP14.4 million at year end                 
    .   Exclusive licensing agreement with FMC is progressing well 
    .   Wyeth option agreement executed                            
    .   Successful litigation against Stanelco Optic Fibres        
    .   Launch of LOCUM strategy with Custom Pharmaceuticals deal  
    .   Successful NASDAQ listing of ADRs   

Commenting on the Results, Graham Hind, Chief Executive Officer of BioProgress plc, said:

"2004 was an exciting year for BioProgress with significant progress made in licensing three of our key technologies. The relationships with FMC, Wyeth and Perrigo are strong and the launch of our LOCUM strategy will enable us to expand our film production capabilities extremely cost effectively. 2005 will be the year when several of our dosage form technologies will become demonstrable, enabling full commercialisation. We ended 2004 with a very strong balance sheet and, since a significant proportion of the costs incurred last year are not expected to recur, I am confident that 2005 will see a much improved financial performance."

                                  - Ends - 

Forward-Looking Information

The Ordinary Shares of BioProgress plc are registered under the US Securities and Exchange Act of 1934. This announcement contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. The forward-looking statements in this release include statements addressing future financial and operating results and the timing and benefits of the reorganisation. Detailed information about factors pertinent to the business of the company that could cause actual results to differ is set forth in the Company's filings with the Securities and Exchange Commission. The Company is under no obligation to (and expressly disclaim any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. This announcement is for information only and does not constitute an offer or invitation to acquire or dispose of any securities or investment advice. The distribution of the announcement and/or issue of securities in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required to inform themselves about and to observe such restrictions.

For further information: 

BioProgress plc                                            
Graham Hind, Chief Executive              Tel: +44 (0) 1354 655674             
Dan Farrow, Finance Director                                                        

UK Media enquiries: 
Henry Harrison-Topham / Heather Salmond   Tel: +44 (0) 20 7398 7700   

US Investor enquiries: 
Taylor Rafferty                                                  
Andrew Saunders                                Tel: +1 212 889 4350  

Chairman's Statement


BioProgress is pleased to report its Preliminary Results for the year ended 31 December 2004. During the year, the Company acquired certain assets of Aquafilm LLC in the USA, fulfilling the strategic requirement for a capability to manufacture film to cGMP standard in-house, and has since made good progress on refurbishing the facility in Tampa, Florida. We concluded major licensing deals for two of our XGEL® technologies and entered into an option agreement on a third. GBP5.0 million before expenses was raised through a convertible bond issue with an institututional investor, significantly strengthening the balance sheet. The institutional investor has an option to subscribe for a further GBP5 million on the same terms during a two year period. We expanded our engineering design resources through Harro Hoefliger in Germany to accelerate the delivery of fully commercialised XGEL® technologies. Our agreement with Custom Pharmaceuticals is the first demonstration of our LOCUM strategy, and will lead to the establishment of an additional fully pharmaceutically approved (cGMP) film production facility in the UK later this year.

In July we were successful in our litigation against Stanelco Fibre Optics Limited ("Stanelco"), winning both ownership of the controlling patent and being awarded breach of trust. However, this litigation has been extremely costly for the Company and had a significant adverse effect on 2004's financial results. Nevertheless, the success of our action against Stanelco sends out a powerful message to the Company's licensees that BioProgress is serious about defending its investments and to others that BioProgress will respond to challenges to its patents.

In October the Company listed on the NASDAQ market to raise its profile in the United States, the world's largest market for its technology and where the majority of our current licensees and customers are based. This move will increase the Company's international profile and provide future access to capital from institutions in the United States if necessary.

The Company has worked hard during the period to put in place the infrastructure which will provide the foundations for its future success. During the period a number of new patents were granted and new customer interest in our technology has continued to increase.

Financial review

For the year to 31 December 2004, the Company's turnover was GBP2.5 million, producing a Gross Profit of GBP0.8 million. These results are not directly comparable with the Preliminary Results in 2003 which only covered the trading period from 22 May 2003 to 31 December 2003. Administrative expenses for the full year were GBP8.4 million after charging goodwill amortisation of GBP734,000 and unrealised foreign exchange losses (primarily on intercompany transactions) of GBP428,000. These expenses also included exceptionally high consultancy and legal costs of GBP1,555,000, particularly in relation to the litigation with Stanelco, which are not expected to continue into 2005 at the same level. The Pre-Tax Loss was GBP7.1 million and the loss per ordinary share was 6.3 pence.

Cash on the balance sheet was GBP14.4 million at the year end. Excluding exceptional items and not allowing for any revenues, the Company's consolidated overheads in 2005 are expected to be approximately GBP3.5 million, rising to GBP5 million in 2006 as the LOCUM strategy is rolled out.

In October 2004, the Company raised GBP5.0 million before expenses via the issue to an institutional investor of convertible bonds with a 4.0 per cent coupon, due 2009. The bonds are convertible into fully paid ordinary shares at a conversion price of GBP1.52 at any time during the five year life of the bonds. Full conversion of the existing bonds would result in the issue of approximately 3.3 million new shares, equivalent to approximately 2.8% of the current issued share capital. The institutional investor has an option to subscribe for up to a further GBP5 million of convertible bonds on the same terms at anytime during the two years until September 2006.

The Company's licensing business model for the commercialisation of several of its XGEL® dosage form technologies and its Ostomy product mean that the rate at which revenues are generated rely entirely upon the speed and commercial endeavours of its licensees. Major global companies tend to be cautious and methodical, wishing to ensure that the new products or technologies which they have licensed are thoroughly prepared for market in the early phases of the licensing agreements.

It is therefore difficult to accurately forecast the Company's financial performance during the early and pre commercialisation phase of its licensed technologies. This is a challenge for the Company's management but is offset by ensuring the company has a strong balance sheet with sufficient cash not only to underpin the companies financial security while revenues are uncertain but also to reassure its customers and licensees that it has the financial strength to survive during the period it is readying its technologies for commercialisation. This is an important issue for potential licensees as entering into a new technology licensing agreements involves the commitment of substantial resources by the licensee.

A strong cash position also enables the Company to delay licensing discussions for newer technologies like WAFERTAB™ until a much later stage in their commercial development when they are demonstrable. This enables much higher value to be secured for shareholders from customers or licensees than was possible in the earlier stages of the Company's development when it had fewer resources.

The Company will increasingly be able to control and forecast its revenue stream more accurately, and its financial performance will also stabilise as the XGEL® technologies become demonstrable and the Company can generate revenues by the sale of machines and film in markets and product fields outside of those it has already licensed and where licensees control the rate of revenue stream.

The revenue and profit contribution of BioTec Films has been lower than anticipated in 2004 and this will continue in 2005 as the market for simple relatively unsophisticated dissolve-in-the-mouth products has matured and become generic. There is more competition as these products do not require pharmaceutical standard manufacturing facilities and margins in this sector have been eroded.

The BioTec Film acquisition was strategically important to provide a film manufacturing facility quickly to meet the obligations the Company had to its customers and licensees to be able to demonstrate it had an in-house film manufacturing capability. The Company is continuing to develop in-the-mouth dissolving OTC and prescription medicine products which offer much higher margins and where the Company has significant formulation expertise and the protection of intellectual property.

The outlook for the Company remains positive and your Board will continue to focus on the commercialisation of the core technologies and their delivery to the growing customer base.

Finally, I would like to thank my co-directors and our loyal employees in both the United Kingdom and North America for their continued dedication and support during what has been an exciting and successful period.

21 March 2005 


2004 was the first full year on the Alternative Investment Market ("AIM"). Our first strategic objective in moving to AIM was to ensure the Company was well funded going forward. This objective has been achieved and the Company ended its first full financial year in a strong position, with cash of GBP14.4 million and access to a further GBP5 million if the institutional investor exercises the option to draw down more of the convertible bond.

The legal mechanism through which the Company moved from the OTC BB stock market to AIM also enabled a dual listing on the NASDAQ market without the administrative and cost burden of quarterly reporting in the USA. This was achieved in October 2004. The USA is the largest market in the world for our technologies and where the majority of our current licensees and customers are based. This move raises the Company's profile internationally and provides us with easier access to US as well as UK capital if required. We are pleased that, in the last six months, average trading volumes of BioProgress ADRs in terms of equivalent ordinary shares were greater than companies such as Benetton, Fiat and Publicis Group.

2004 also saw good progress in the achievement of our second strategic objective which was to identify and enter into licensing agreements with global partners that could provide the global reach to help us accelerate the rate of commercialisation of our exciting XGEL® family of technologies. We have executed licensing agreements with FMC BioPolymer for our NROBETM technology, with Perrigo for our TABWRAP™ technology for a specific market sector, and we have entered into an option agreement with Wyeth for our SWOLLO™ technology.

The execution of these agreements highlighted our need to provide an early source of in-house film production to meet our obligations to both licensees and customers. The first stage was achieved by the acquisition of the assets of the Aquafilm business in Tampa, Florida. It was clear, however, that our licensees would require the comfort of more than one film location to ensure continuity of supply. The LOCUM film manufacturing strategy we announced in November enables us to expand our film production capabilities extremely cost effectively. The first of our 'LOCUM' partnerships with Custom Pharmaceuticals in Brighton UK is planned to be in full production by August 2005.

Our strategic alliance with Harro Hoefliger in Germany whom we appointed as the global builder and supplier of the XGEL® machines has progressed well with good progress being made on the design and build of the XGEL® technologies. The Company is building a strong long term relationship with Harro Hoefliger but there is also flexibility within this relationship. Harro Hoefliger is focused on the development of the NROBE™ and SWOLLO™ technologies but the Company's objective is to also to demonstrate both TABWRAP™ and the solid dosage form of the WAFERTAB™ technology in 2005. BioProgress, in full consultation with Harro Hoefliger, will employ other appropriate external resources as necessary to achieve this. Harro Hoefliger remains the partner of choice to build, supply, commission and provide warranty and back-up support for the commercial versions of all BioProgress dosage form pharmaceutical machines.

The Ostomy project with BMS ConvaTec is progressing at a slower pace than originally anticipated due to a significant redesign of the product to incorporate some of the BMS patented technology from their latest generation of products. As a result, the programme of market research will now extend into 2005 but, due to confidentiality requirements, we are unable to say more at this time.

Discussions with Wyeth are proceeding positively but, once again due to confidentiality requirements, we are unable to disclose any further information at this time. Evaluation of Micap's technology is continuing and the project with Cambridge University is progressing well. Acquiring the necessary Chinese regulatory approvals for the Sunkist vitamin strips has taken AXM Pharma longer than was anticipated, but these are now in place and deliveries to China from BioTec Films are expected to commence in the second quarter of 2005. The Colgate toothpaste product incorporating mini breath strips supplied by BioTec films continues to perform strongly in the US market.

Finally, the Company's patent entitlement proceedings that were initiated against Stanelco Fibre Optics Limited, a subsidiary of Stanelco plc, in October 2003, were heard in July 2004 and BioProgress was granted ownership of the master patent and awarded breach of trust. These proceedings were expensive and non-recurring administrative and legal costs have impacted heavily on the 2004 results. Following disclosures from Stanelco, the process of calculating potential damages and preparation of the formal claim is now underway. BioProgress believes that proceedings should be concluded during 2005 but, due to the complexities involved and the options open to both parties, it is not possible now to give a precise date for these matters to be finally concluded. The business of BioProgress is based on Intellectual Property and we hope that the fact we have been prepared to undertake this action will firstly send a message to those who would challenge our intellectual property and secondly give comfort to our licensing partners.

Post Results events

Our previous Letter of Intent with Custom Pharmaceuticals became a firm agreement in February 2005, under which one of our film manufacturing lines is planned to be in production by August 2005 at their facility near Brighton, UK to full pharmaceutical standards. We anticipate making similar announcements under our LOCUM strategy in the future.

We also announced on 10 February 2005 that Callisto Consulting has been appointed to assist in developing Drug Master Files as part of regulatory testing and application procedures towards gaining US and European medicine licenses for a number of our technologies. Work on the development of a range of pharmaceutical film products containing active drugs has accelerated following the appointment of Callisto Consulting.

On 15 February 2005 we announced the appointment of Richard Trevillion and Tony Fabrizi as Non-Executive Directors and, on 7 March 2005, we announced the appointment of Dan Farrow as Finance Director. These changes reflect the fact that BioProgress has now moved into the commercialisation phase of its development. The new Directors bring extensive experience and skills in the healthcare and finance sectors, all of which will be very useful as we move forward.

On 3 March 2005 we announced that, in full consultation with Harro Hoefliger, we had engaged the services of Innomech Automation Solutions to build the first full scale TABWRAPTM machine which will be launched at the CPhl Worldwide and the International Control Services Expo exhibitions in Madrid in November 2005. This is in line with our objective to apply maximum effort to bring the maximum number of XGEL® technologies to a demonstrable stage during 2005.


In 2005 we plan to demonstrate several of our exciting technologies and begin to create the shareholder value the proposition has always promised. The outlook for the business continues to be extremely positive.

Chief Executive Officer  
21 March 2005 


                                                              from 13 
                                                           2002 to 31 
                                               2004              2003 
                        Note                GBP'000           GBP'000 

  Continuing operations              318                          947 
  Acquisitions                     2,190                            - 
                                              2,508               947 
  Cost of sales                                                      
  Continuing operations              (3)                            
  Acquisitions                   (1,703)                              
                                            (1,706)              (56) 
  Gross profit                                  802               891 
  Administrative expenses                                           
  Continuing operations          (7,050)                
  Acquisitions                   (1,340)                              
                                            (8,390)           (2,771) 
  Operating loss                                                      
  Continuing operations          (6,735)                
  Acquisitions                     (853)                              
                                            (7,588)           (1,880) 
  Exceptional item -                            
  profit on termination 
  of operations                                   -               182

  Net interest                                  457                26 

  Loss on ordinary                          
  activities before                                                   
  taxation                                  (7,131)           (1,672)

  Tax on loss on                                  
  ordinary activities                             -                 -

  Loss for the year                      
  transferred from                                                    
  reserves                                  (7,131)           (1,672)

  Loss per ordinary share                                           
  Basic                   2                  (6.3)p            (3.4)p 


                     Note        2004       2004      2003       2003 
                              GBP'000    GBP'000   GBP'000    GBP'000 
  Fixed assets                                                        
  Intangible assets            13,953               11,294          
  Tangible assets               1,975                  256            
                                          15,928               11,550 
  Current assets                                                      
  Stock                         1,761                    -            
  Debtors                       1,972                1,022            
  Debtors - share                  
  issue proceeds                    -                5,482
  Cash at bank and             
  in hand                      14,447                1,872
                               18,180                8,376            
  amounts falling                                                     
  due within one                                                      
  year                        (1,522)                (839)   
  Net current assets                      16,658                7,537 
  Total assets                            
  less current                                                      
  liabilities                             32,586               19,087
  amounts falling                                                     
  due after more 
  than one year          3               (4,717)                    -
  Provision for                          
  liabilities and                                                     
  charges                                (2,861)                    -
                                          25,008               19,087 
  Capital and reserves
  Called up share 
  capital                4                 1,178                1,025
  Share premium                           
  account                                 32,304               19,708
  Profit and loss                        
  account                                (8,713)              (1,646)
  Other reserves                             239                    - 
  Shareholders' funds     5               25,008               19,087 
  Equity shareholders'                    
  funds                                   25,008               18,566
  shareholders' funds                          -                  521
                                          25,008               19,087 

                                       Note                    Period 
                                                              from 13 
                                                           2002 to 31 
                                                   2004          2003 
                                                GBP'000       GBP'000 

  Net cash outflow from operating              
  activities                             6      (7,806)       (3,449)

  Returns on investments and                                          
  servicing of finance                                                
  Interest received                                 506            31 
  Interest paid                                     (2)           (5) 

  Net cash inflow from returns on                                     
  investments and servicing of 
  finance                                           504            26 

  Taxation                                         (12)         (112) 

  Capital expenditure and financial                                   
  Purchase of tangible fixed assets               (848)          (50) 
  Purchase of intangible fixed assets                 -          (15) 
  Net cash outflow from capital expenditure
  and financial investment                        (848)          (65) 

  Acquisitions and disposals                                          
  Purchase of unincorporated business           (1,901)             - 
  Purchase of subsidiary undertakings                 -         (224) 
  Net overdraft from purchase of              
  subsidiary undertakings                             -         (445) 
  Cost of terminating operations                      -          (11) 

  Net cash outflow from acquisitions            (1,901)         (680) 
  and disposals                                                       

  Issue of shares                                18,621         6,152 
  Share issue costs                               (455)             - 
  Receipts from convertible bond                  5,000             - 
  Issue costs for convertible bond                 (44)             - 
  Redemption of preference shares                 (484)             - 
  Net cash inflow from financing                 22,638         6,152 

  Increase in cash                       7       12,575         1,872 




The principal accounting policies of the group are set out in the group's 2003 annual report and financial statements. The policies have remained unchanged from the previous annual report apart from those detailed below that have been adopted to reflect transactions during the course of the year.


Purchased goodwill, representing the excess of the fair value of the consideration given over the fair values of the identifiable net assets acquired is capitalised and is amortised on a straight line basis over an estimated useful economic life of 20 years.


Convertible bonds are recorded at the proceeds received less issue costs.


Warrants issued for services provided in connection with issuing convertible bonds are valued at the fair value of those services and are accounted for as issue costs. The issue costs are offset against the convertible bond proceeds and amortised over the convertible bonds period.


                                                        from 13
                                                     2002 to 31 
                                             2004          2003 
                                          GBP'000       GBP'000 
  Basic loss per share                                    
  Loss for the financial period           (7,131)       (1,672) 
                                             2004         2003 
                                           Number       Number
                                        Thousands    Thousands 

  Weighted average number of ordinary     113,361       48,482 
  shares in issue during the period                      
  Basic loss per share                      (6.3)p       (3.4)p 

The convertible bond, share options and warrants in issue are anti-dilutive and therefore the basic loss per share and diluted loss per share are the same.


                                             2004        2003 
                                          GBP'000     GBP'000 

   Convertible bond                         4,717           - 

The group raised GBP5 million via the issue of 4% unsecured convertible bonds due 2009. The bonds have been privately placed, subject to customary closing conditions, with a leading institutional investor. 3,500,000 warrants were issued to Collins Stewart on the 6 October 2004 for services provided in connection with the issue. The market price of the shares on the date of issue was GBP1.24. The services provided had a fair value of GBP239,000. For the first 1,000,000 the exercise price is GBP1.15, the next 1,000,000 at GBP1.265 and the remaining 1,500,000 at GBP1.38. These warrants expire on the fifth anniversary of the issue date 6 October 2009.

The bond can be converted into ordinary shares at any time during its term at the option of the bondholder at a conversion price of GBP1.52. The bondholder has the option to subscribe for an additional GBP5.0 million.


                                                    2004         2003 
                                                     GBP          GBP 

  180,000,000 (2003: 150,000,000) ordinary      
  shares of GBP0.01 each                       1,800,000    1,500,000
  80,000 convertible 4% preference shares      
  of GBP0.005 each                                     -          400
  90,000 4% preference shares of GBP0.005 each         -          450 
                                               1,800,000    1,500,850 

  Allotted, called up and fully paid                                  
  117,797,637 (2003: 102,438,071) ordinary    
  shares of GBP0.01 each                       1,177,976    1,024,381
  Nil (2003: 79,000) convertible 4%           
  preference shares of GBP0.005 each                   -          395
  Nil (2003: 88,000) 4% preference shares            
  of GBP0.005 each                                     -          440 
                                               1,177,976    1,025,216 

Preference shares

The company has redeemed all 167,000 of the outstanding convertible and non-convertible preference shares at a price of GBP2.90 per share (US $5.19). The total payment amounted to GBP484,207.

Allotments during the period

On the 5 March 2004 the company issued 10 million ordinary shares of GBP0.01 each at an issue price of GBP1.10 per share proceeds being GBP11 million less expenses.

On 1 April 2004 options were exercised in respect of 625,000 ordinary shares of GBP0.01 each at an issue price of GBP0.18 (US$0.35) per ordinary share, total proceeds were GBP121,528. Warrants were also exercised on that date in respect of 2,327,086 ordinary shares of GBP0.01 each at prices ranging from GBP0.55 (US$1.00) to GBP1.38 (US$2.50) per ordinary share, total proceeds were GBP1,379,790.

On 30 April 2004 options and warrants were exercised over 320,000 ordinary shares of GBP0.01 each, at issue prices between GBP0.18 (US$0.33) and GBP0.55 (US$1.00) per share, total proceeds were GBP91,644.

On 5 October 2004 options were exercised over 420,158 ordinary shares of GBP0.01 at issue prices ranging from GBP0.55 (US$1.00) to GBP1.38 (US$2.50) per share, total proceeds were GBP262,375.

On 18 October 2004 warrants were exercised over 225,949 ordinary shares of GBP0.01 at prices ranging from GBP0.55 (US$1.00) to GBP0.84 (US$1.50) per share, total proceeds were GBP200,184.

On 31 October 2004 options were exercised over 100,000 ordinary shares of GBP0.01 at an issue price of GBP0.84, total proceeds were GBP84,269.

On 16 November 2004 the company issued 341,373 ordinary shares of GBP0.01 at an issue price of GBP0.84 (US $ 1.59) in consideration for the transfer to the company of an equivalent number of shares of series C preferred stock in BioProgress Technology International Inc.

On 31 December 2004 options were exercised over 1,000,000 ordinary shares of GBP0.01 at an issue price of GBP0.26 (US $0.50). GBP261,575 is due to be received.

The share issues in the year have resulted in total proceeds to the company of GBP13,688,000. The difference between proceed received and the nominal value of shares issued amounting to GBP13,535,000 has been credited to the share premium account.


                                                   2004       2003 
                                                GBP'000    GBP'000 

    Loss for the period                         (7,131)    (1,672) 
    Issue of shares                              13,233     20,733 
    Redemption of preference shares               (484)          - 
    Warrants granted in the year                    239          - 
    Exchange differences                             64         26 
                                                  5,921     19,087 
    Shareholders' funds at 1 January 2004        19,087          - 
    Shareholders' funds at 31 December 2004      25,008     19,087 

                                                   2004     Period 
                                                           from 13 
                                                        2002 to 31 
                                                GBP'000    GBP'000 

  Operating loss                                (7,588)    (1,880) 
  Depreciation and amortisation                   1,074        435 
  Increase in stocks                            (1,512)          - 
  Increase in debtors                             (688)      (370) 
  Increase/(decrease) in creditors                  648    (1,970) 
  Exchange rate movements                           260        336 
  Net cash outflow from operating activities    (7,806)    (3,449) 

                                                  2004     Period 
                                                          from 13 
                                                       2002 to 31 
                                               GBP'000    GBP'000 

       Increase in cash in the period           12,575      1,872 
       Cash inflow from financing              (4,956)          - 
       Non-cash issue costs                        239          - 
       Net funds at 1 January 2004               1,872          - 
       Net funds at 31 December 2004             9,730      1,872 

                    At 1                                    At 31
                 January                   Non-cash      December 
                    2004    Cash flow         items          2004 
                 GBP'000      GBP'000       GBP'000       GBP'000 

  Cash at bank     
  and in hand      1,872       12,575             -        14,447 
  Convertible bond     -      (4,956)           239       (4,717)
                   1,872        7,619           239         9,730

Non-cash items represent warrants issued for services provided in
relation to the issue of convertible bonds. 


In March 2004, the company acquired part of the trade and assets of Aquafilm LLC (Aqua) for a total cost of GBP5.9 million (US $11 million) comprising GBP1.9 million (US $3.5 million) of cash, and an earn out of GBP4.0 million (US $7.5 million) based on the business' acquired net earnings from 2004 until the additional GBP4.0 million (US $7.5 million) has been paid. The payments from the Company will match the net earnings of the business acquired on a dollar for dollar basis. The operating results of the business acquired (now known as BioTec Films LLC) have been included in the consolidated financial statements from the date of the acquisition.

An earn-out provision of GBP2,861,000 has been made as the directors' estimate of the probable liability. A further GBP1,139,000 of the contingent consideration has not been provided for.

The fair values of the assets acquired were as follows: 

Purchased Assets 

                  Book value         Adjustment       Fair value
              US $'000 GBP'000  US $'000 GBP'000 US $'000  GBP'000 

  Plant and      
  machinery      1,644     867       649     344    2,293    1,211
  Stock (not      
  valued)          730     385     (258)   (136)      472      249

  Goodwill                                                   3,302 
  Fair value of                                              
  consideration                                              4,762

The valuation shows the fair value of assets recorded in the opening balance sheet as at 1 April 2004 of BioTec Films LLC as determined by an independent appraisal firm, except for stock. The value of plant and machinery is based on estimated open market values. Stock has been valued at estimated net realisable values.

The purchased goodwill is being amortised over 20 years.

The results of the trade acquired in the year for the period prior to acquisition are not available as the trade formed part of a larger entity and cannot be separately identified.


The consolidated profit and loss account, consolidated balance sheet and consolidated cash flow statement and associated notes for the year ended 31 December 2004 are unaudited and have been extracted from the group's financial statements. These financial statements have not yet been delivered to the Registrar, nor have the auditors reported on them.

This information is provided by RNS The company news service from the London Stock Exchange