SOURCE: Provalis PLC

June 10, 2005 02:01 ET

Provalis PLC Announces Trading Update

Deeside, Flintshire, UK -- (MARKET WIRE) -- June 10, 2005 --

                                                           10 June 2005


Provalis plc

Trading Update

Provalis plc (LSE: PRO; NASDAQ: PVLS), the international medical diagnostics and
pharmaceuticals group, is today providing a year-end trading review and an
update on the roll out of its new in2it(TM) diagnostics product.

Diagnostics

The supply of analysers and commissioning of automated cartridge manufacturing
for the Group's flagship product, in2it(TM), has gone well.  However, as is
common with new product development in such complex technologies, the Group has
encountered several "teething problems" with both the analyser and the A1c test
cartridge. These have necessitated a number of enhancements to improve
significantly the performance and robustness of the product which will also
enhance its competitive position.

The Board decided to implement and validate all of the enhancements before
larger quantities of the cartridges are shipped to the US. Production of the
upgraded analyser has now resumed and the improved cartridge will follow
shortly, targeting a full US roll-out of in2it during the early Summer. The
interest in the product and demand for the A1c cartridge remain strong.

Pharmaceuticals

The impact on Diclomax(R) sales from generic competition and turbulence in the
COX II / non-steroidal anti-inflammatory market, which the Group highlighted at
the Interim Results on 1 March 2005, has been somewhat worse than originally
anticipated.  However, the situation for the last two months has stabilised with
more predictable prescribing and ordering patterns emerging.

Erdotin(R), a muco-modulatory drug used to treat respiratory disease, is
advancing through the regulatory process, with approval now expected in late
2005. Respiratory diseases cost the NHS more than any other disease area and
Erdotin(R) has generated great interest with respiratory physicians.

Discussions continue in relation to two other extremely promising pharmaceutical
products. If these discussions are successfully concluded, the first of the
products could be launched before the end of this calendar year.

Year end review

As a result of the issues raised above, the Board now expects Group sales for
the financial year to 30 June 2005 to be circa £10.3m.

The Board has already taken action to address the resultant reduction in
profitability, in particular by reducing expenditure and actively managing the
cost base. The Group is likely to report an operating loss slightly increased
compared to that previously forecast but will start the new financial year with
a reduced cost base.

The Board expects the Group to have borrowings of some £1m at the end of the
financial year; it has a banking facility of up to £5m.

Outlook

With in2it(TM) already launched in the US market, the Board believes that the
Group has the platform for significant growth in 2006 and thereafter for the
following reasons:
     
-    The already large market for diabetic diagnostics continues to grow with 
     17 million Americans diagnosed with the disease; the demand for a 
     cost-effective and easy-to-use glycated haemoglobin testing product for 
     disease management in this market is very apparent;

-    Market demand for in2it(TM) from the US remains strong;

-    Recent evaluation of in2it(TM) by distributors and key customers has gone 
     well, reinforcing the order base for the product;
     
-    The introduction of the UK based automated cartridge manufacturing facility 
     for in2it(TM) test cartridges, delivering a several fold increase in 
     capacity, remains on track for completion during the Summer;
     
-    The development of the high sensitivity CRP test, the second for the 
     in2it(TM) platform, is accelerating;
     
-    Positive discussions continue with a number of potential in2it(TM) 
     distributors for Europe and Japan; and
     
-    The pharmaceuticals business will be extended by one or more significant 
     portfolio additions in 2006.

                                 -------------


For further information:-

Provalis plc
Dr Phil Gould, Chief Executive Officer                      01244 833463
Mr Peter Bream, Finance Director                            01244 833552

College Hill
Adrian Duffield/Corinna Dorward,                      020 7457 2815/2803


Notes to Editors

Provalis plc (LSE: PRO; NASDAQ: PVLS) is an international healthcare group with
two operating businesses:-
     
-    Medical Diagnostics - develops medical diagnostic products for chronic 
     disease management for sale to world markets. The business' principal
     products are in2it(TM) A1c and Glycosal(R), both diabetes diagnostic tests.
     
-    Pharmaceuticals - sells and markets its own, and third party, branded, 
     prescription medicines in the UK and Ireland to GPs and hospitals through 
     its regionally managed sales force. The business' principal product is
     Diclomax(R), a medicine for use in the treatment of musculo-skeletal 
     disorders, and it also sells products in the areas of osteoporosis, 
     migraine and dermatology.

Visit Provalis' Revised Website at 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
viability of the Group's products, which are at various stages of development;
the generation of sufficient operating cash flow by the Group's pharmaceutical
and medical diagnostic businesses to finance the ongoing development of these
businesses as well as the Group's research and development activities; the
success of the Group's research and development strategy and activities;
uncertainties related to future clinical trial results and the associated
regulatory process; the execution and success of collaborative agreements with
third parties; availability and level of reimbursement for the Group's products
from government health administration authorities or other third-party payors;
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
Group's intellectual property position and the success of patent applications
for its products and technologies; the Group's dependence on key personnel;
general business and economic conditions; the impact of future laws, regulations
and policies; stock market trends in the Group's sector; 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.


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