Proventec Plc
AIM : PROV

Proventec Plc

November 14, 2005 04:38 ET

Proventec Plc: Interim Results for the Six Months Ended 30 September 2005

LONDON, UNITED KINGDOM--(CCNMatthews - Nov. 14, 2005) - Proventec Plc (AIM:PROV), a provider of specialist steam cleaning and coatings technologies, today announces its maiden Interim Results for the six months ended 30 September 2005.

Highlights

- Successful completion of the acquisitions of OspreyDeepClean and InnoCleaning Magma Holdings

- Complements the business model with a successful trading operation

- Turnover up 182% to Pounds Sterling 1.22 million represents turnover generated by acquired companies

- Operating profit of Pounds Sterling 88,000 achieved

- First ever reported pre-tax profit

- Investment portfolio valuation up 19.7 per cent to Pounds Sterling 11.9 million

- Significant strategic commercial opportunities between the newly acquired businesses and the portfolio investment companies

David Chestnutt, Chief Executive of Proventec Plc, commented: "I am delighted to report the maiden set of interim results for Proventec. Following the successful acquisition of OspreyDeepClean and Magma, the Board looks forward to exploring the strategic commercial opportunities to further develop its expertise in these areas and another year of continued growth."



For further information, please contact:

Proventec Plc
David Chestnutt, Chief Executive Tel: + 44 (0) 20 7398 7700
dchestnutt@proventecplc.com www.proventecplc.com

Collins Stewart Limited
Andrew Smith / Martin Eales
Corporate Finance Tel: + 44 (0) 20 7523 8350
meales@collins-stewart.com www.cstplc.com

Media enquiries:

Abchurch
Henry Harrison-Topham / Tania Wild Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com


Notes to Editors:

Proventec is a specialist and innovative provider of steam cleaning and coatings technologies. The Company was formed as a result of the reverse takeover of Magma, a fire retardant coatings business and OspreyDeepClean, a specialist steam cleaning business, by Flintstone Technologies plc in August 2005. Proventec provides solutions to a number of markets including the food retail and preparation market, hospitality industries, and healthcare which includes hospitals and suppliers of hospital equipment, transport infrastructure, construction materials and consumer products. The cleanings solutions are designed to target and combat the spread of common food bacteria and HAI (Hospital Acquired Infections), including MRSA. The coating businesses have an emphasis on preventative environmentally friendly solutions for its clients delivering demonstrable health and/or cost benefits.

Proventec also provides coatings solutions such as fire retardants, anti-abrasion and corrosion materials for industrial use. In addition to developing the technology and supplying the products, Proventec also provides training support and financing options to its customers.

Through its subsidiary, Flintstone Management Services Limited, Proventec has investments in the following companies: Biocote Limited, Firestop Chemicals Limited, Hardide plc, Oxis Energy Limited, Keronite plc and the Ultra Motor Company Limited.

CHAIRMAN'S STATEMENT

I am pleased to report that the company successfully completed its acquisition of OspreyDeepClean and InnoCleaning Magma Holdings in August 2005 in a reverse takeover. As part of that transaction, I joined the Board as Chairman and Thomas Stuecken was appointed Commercial Director.

This Interim Report is the first to be released by the enlarged Group and I am pleased to report that the Group has broken into profit in the six-month period to 30 September 2005, compared with a loss before tax of Pounds Sterling 317,000 in the six-month period to 30 September 2004.

At the time of the reverse takeover, the company raised Pounds Sterling 542,000 before expenses at a price of 14 pence per share and in late September 2005, Proventec took in a further investment of Pounds Sterling 1 million by the allotment of 7,142,857 shares to a new investor, also at a price of 14 pence per share.

Elsewhere, Hardide's share price has shown steady growth since its admission to trading on AIM in April 2005 and the Group's stake in that company is currently worth approximately Pounds Sterling 2.5 million more than its carrying value in the Accounts. Over the last two months, there have been substantial fundraisings in Firestop Chemicals and Ultra Motor Company to develop the businesses of those investee companies and Keronite has announced its intention to float on AIM in the early part of 2006.

I should like to take this opportunity to thank my colleagues at Proventec for their hard work in completing the acquisition of OspreyDeepClean and InnoCleaning Magma Holdings and providing the Group with exciting opportunities to build upon the trading successes of those businesses, as well as for continuing to provide support to the investee companies and other companies within the Group.

Peter Teerlink

Chairman

CHIEF EXECUTIVE'S REPORT

RESULTS

The six months to 30 September 2005 have been a busy and successful period for the group. Since I reported to you last, in July 2005:

- The Company acquired trading companies in a reverse takeover

- The Group made its first profit

- The Group generated a profit on ordinary activities before interest and taxation of Pounds Sterling 88,000 for the six months to 30 September 2005

- The Group's turnover reached Pounds Sterling 1.22 million for the six months to 30 September 2005

- The investment portfolio grew by 19.7 per cent

You will be aware that the company underwent substantial changes following the acquisition of the OspreyDeepClean specialist cleaning business and the Magma flame retardant business in the summer this year.

The turnover of Pounds Sterling 1.22 million for the six months to 30 September represents turnover generated in the quarter commencing 1 July 2005 by the companies we have acquired.

The progress made and potential of the OspreyDeepClean business in the last three months is very encouraging and we are aware that there is considerable opportunity for expansion of this specialist cleaning business and its brand, both in those countries where the business is currently trading, and in new markets. There have been strategic commercial meetings between OspreyDeepClean and Biocote and also between Magma and Firestop Chemicals and we will be looking for further commercial synergies to help expand all four businesses.

STRATEGY

Your board's ambition is for the group to be a leading provider of cutting edge hygiene solutions based on steam technologies and preventative coatings which are both environmentally friendly and cost effective. We will target those market sectors that require the highest hygiene and safety standards.

We will achieve this by autonomous growth, the development of new and compatible technologies and by strategic commercial acquisitions.

The group's revenue streams now comprise sales of:-

- equipment and coatings,

- total packaged solutions to key accounts,

- licenses to distributors and key accounts

and by this mix of product offering we will help our customers to achieve and sustain the very highest levels of hygiene and safety.

CLEANING SOLUTIONS

OspreyDeepClean Limited was established in 1995. Through its network of distributors, Osprey specialises in the sale and marketing of specialist cleaning machines which pump out low pressure dry steam onto surfaces which require vigorous cleaning. These machines demand less water than conventional cleaners and also require fewer chemical agents than traditional non-steam cleaning systems. The machines achieve a higher level of hygiene and, together with the time, material and labour savings, reduce cleaning overheads for customers. The cleaning systems combine patented and trade marked equipment with a training course and lease finance options. Each system is tailored to the individual customer's requirements.

- OspreyDeepClean is conducting scientific trials to verify the efficacy of steam cleaning providing the necessary data to pave the way for a successful roll out of the steam cleaning concept in the healthcare sector.

- OspreyDeepClean has developed a compact GumBusters chewing gum removal machine which is one of the key components of the retail cleaning concept which is being trialed in several Benelux retail outlets prior to its introduction in excess of 5,000 retail stores.

- As part of its international expansion programme Proventec has appointed a sales manager with responsibility for France and Spain to build on and to expand the existing sales in these countries. OspreyDeepClean is currently represented in USA, Australia, South Africa, Czech Republic, Germany, Benelux and the UK.

- Proventec Group has increased its Asian representation by appointing a new Australian consultant who has been tasked with developing the existing OspreyDeepClean network.

COATINGS

Magma develops, markets and sells fire retardant products which are environmentally friendly and comply with national and relevant international standards. Magma's products are designed to fire retard timber, paper, plywood and textiles and can be applied directly onto the surface of the object to be fire retarded. To date, roofing and building companies and paper manufacturers have formed the majority of Magma's customers.

Magma's strategy has been to drive sales through a network of distributors who service end users, whilst industrial users are serviced directly by Magma's in-house sales team. As part of its product development, Magma is working with a specialist paint manufacturer to produce fire retardant paint.

- Magma has made significant commercial and technical progress in the treatment of timber for the construction industry.

INVESTMENT PORTFOLIO

The company's investment portfolio continues to grow and the admission of Hardide to trading on AIM in April 2005 has raised the profile of that technology and the investment value of our holding in it. Keronite plc is preparing itself for admission to trading on AIM in the first half of 2006 and we look forward to that, as we believe it will raise awareness of that exciting technology.

Firestop Chemicals took in a further investment from its shareholders, including Proventec, by way of Convertible Debenture in September 2005 and on a fully diluted basis following conversion of the debentures, our holding would be 41.1%. Oxis Energy is currently undergoing a small fundraising round which is nearing completion and will provide that company with much needed financial resources to continue its development of its battery technology.

The main increase in our portfolio has been achieved in Ultra Motor Company following a recent fundraising of Pounds Sterling 1.43m. After dilution by the incoming investment, our percentage shareholding reduces to 36.7% but the value of the holding is enhanced to just under Pounds Sterling 3m.

I am pleased with the performance of all our investments. Biocote has now been in profit on a monthly basis for a number of months and has continued to expand its business. It currently has 38 partners and continues to sign more partners each month.

Since July 2005, the value (unaudited) of our investments - which is calculated in accordance with BVCA valuation methods - has increased from just under Pounds Sterling 10m to Pounds Sterling 11.9m. At the same time the OspreyDeepClean and Magma businesses have contributed over Pounds Sterling 400,000 operating profit to the group.

The six months covered by this report have been exceptionally busy for my colleagues and me, during which time we have assimilated the acquisition of the OspreyDeepClean and Magma businesses. Much remains to be done to fully integrate these companies but the support my team and I have received from Peter Teerlink, Chairman, and Thomas Stuecken, Commercial Director, is making this task less daunting and the prospects for your company bode well for the future.

David Chestnutt

Chief Executive



Table of Investment Values (unaudited)
------------------------------------------------------------------------
Value of
Last third party Valuation Proventec
investment in of Proventec shareholding
Investee investee investee equity (Pounds
Company company company shareholding (%) Sterling '000)
------------------------------------------------------------------------
Biocote
Limited May 2003 Pounds 31.5 835
Sterling
2.65m
------------------------------------------------------------------------
Firestop
Chemicals
Limited September 2005 (i)Pounds (i)41.1 2,393
Sterling
5.82m
------------------------------------------------------------------------
Hardide plc April 2005 (ii)Pounds 31.4 5,012
Sterling
15.94m
------------------------------------------------------------------------
Oxis Energy
Ltd August 2005 Pounds 8.8 100
Sterling
1.14m
------------------------------------------------------------------------
Keronite
plc September 2005 Pounds 12.6 604
Sterling
4.8m
------------------------------------------------------------------------
Ultra
Motor
Company
Limited October 2005 Pounds 36.7 2,956
Sterling
8.1m
------------------------------------------------------------------------
Total 11,900
------------------------------------------------------------------------

Valuation based on last price paid for equity, in line with BVCA
valuation methodology.

(i) Valuation and holding based on March 2004 and September 2005 issue
of convertible debentures at 50p and 33.34p per share respectively on a
fully diluted basis.

(ii) Valuation based on market value on 11 November, 12.5p.


PROVENTEC PLC

INDEPENDENT REVIEW REPORT TO PROVENTEC PLC

Introduction

We have been instructed by the company to review the financial information for the six months ended 30 September 2005 which comprises the group profit and loss account, group balance sheet, group cash flow statement and the related notes.

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. The other information comprises only the Chairman's Statement and the Chief Executive's Report.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4 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 excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom 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 30 September 2005.

Liverpool, UK

Registered Auditors



PROVENTEC PLC

GROUP PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 SEPTEMBER 2005

Unaudited Unaudited Audited
6 months to 6 months to 12 months
30 September 30 September to 31
2005 2004 March 2005
Notes Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Turnover 1,221 67 154
Cost of Sales (512) (-) (-)

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

Gross profit 709 67 154
Administrative expenses (621) (414) (895)

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

Operating profit / (loss) 88 (347) (741)

Profit on disposal of
operations - - -
Amounts written off
investments - - (175)

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

Profit/(loss) on ordinary
activities before investment
income, interest and taxation 88 (347) (916)
Other interest receivable 18 30 100
Interest payable and similar
charges (105) - -

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

Profit/(loss) on ordinary
activities before taxation 1 (317) (816)
Taxation on loss on ordinary
activities - - -

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

Profit/(loss) on ordinary
activities after taxation 1 (317) (816)
Dividends received - - (7)

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

Profit/(loss) for the financial
year attributable to members
of the parent company 1 (317) (823)

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

Profit/(loss) per share: basic
and diluted (pence per share) 2 0.0 (0.6) (1.26)

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

There are no recognised gains or losses other than the profit for the
period.



PROVENTEC PLC

GROUP BALANCE SHEET
AS AT 30 SEPTEMBER 2005

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Notes Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Fixed assets
Intangible assets 9 30,551 - -
Tangible assets 72 7 7
Investments 3 5,456 4,801 4,758

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

36,079 4,808 4,765

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

Current assets
Stock 556 - -
Debtors 4 1,747 868 840
Cash at bank and in hand 2,387 1,338 937

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

4,690 2,206 1,777

Creditors: amounts falling
due within on year 5 (2,253) (63) (98)

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

Net current assets 2,437 2,143 1,679

Creditors: amounts falling
due after one year 6 (10,515) - -

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

Net assets 28,001 6,951 6,444

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

Capital and reserves
Called up share capital 11,535 3,567 3,567
Share premium reserve 20,188 6,600 6,600
Merger reserve 147 147 147
Profit and loss account (3,869) (3,363) (3,870)

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

Total shareholders' funds 7 28,001 6,951 6,444

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

The interim financial report was approved by the board of directors on
11 November 2005 and was signed on their behalf by:

D M A Chestnutt
Director



PROVENTEC PLC

GROUP CASH FLOW STATEMENT
AT 30 SEPTEMBER 2005

Unaudited Unaudited Audited
6 months to 6 months to 12 months
30 September 30 September to 31
2005 2004 March 2005
Notes Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Cash inflow/(outflow) from
operating activities 8 857 (122) (583)

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

Returns on investment and
servicing of finance
Interest paid (15) - -
Interest received 16 30 100
Dividends received - - (7)

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

1 30 93

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

Taxation
Taxation paid - - -

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

Capital expenditure and
financial investment
Payments to acquire tangible
fixed assets (17) (3) (4)
Payments to acquire investments (698) (113) (114)

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

(715) (116) (118)

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

Acquisitions and disposals
Net cash transferred with
subsidiary undertakings 240 - -

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

240 - -

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

Net cash inflow/(outflow)
before financing 383 (208) (608)

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

Financing
Issue of shares 1,578 1,259 1,427
Cost of issue (508) - (169)
Repayment of finance lease (3) - -

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

1,067 1,259 1,258

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

Increase in cash 1,450 1,051 650

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



PROVENTEC PLC

NOTES TO THE INTERIM REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2005


1. ACCOUNTING POLICIES

(i) Basis of preparation

The interim report for the six months ended 30 September 2005 and 2004 is unaudited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. It has been prepared under the historical cost convention and on a basis consistent with the accounting policies for the year ended 31 March 2005. The results for the year ended 31 March 2005 and the balance sheet of that date are an extract from the statutory financial statements for that year, which have been filed with the Registrar of Companies and on which the company's auditors gave an unqualified report and did not contain a statement under Section 237 (2) or (3) of that Act.

(ii) Basis of consolidation

The group financial statements consolidate the financial information of the company and of its subsidiaries. The financial information for each company in the group has been prepared to 30 September 2005.The effective date of acquisition of InnoCleaning Magma Holdings B.V and OspreyDeepClean Limited was 1 July 2005 and the results of these two companies have been consolidated from that date.

(iii) Investments

Certain investments within the group's investment fund fall within the definition of associated undertakings, as contained in the Companies Act 1985. As these investments are held as part of an investment portfolio, in accordance with FRS9 "Associates and Joint Ventures", they are treated consistently with other investments in the fund, and consequently are not equity accounted for.

2. EARNINGS PER SHARE

The calculation of basic and diluted profit per share is based on profit of Pounds Sterling 1,000 for the 6 months ended 30 September 2005 (31 March 2005: loss of Pounds Sterling 823,000, 30 September 2004: loss of Pounds Sterling 317,000), and on the weighted average number of ordinary shares in the period of 126,833,157 (31 March 2005: 65,533,321, 30 September 2004: 53,677,392).



3. INVESTMENTS

(a) Non Subsidiary Undertakings

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Shares
Brought forward 4,186 4,030 4,030
Additions 778 199 331
Amounts written off - - (175)

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

Carried forward 4,964 4,229 4,186

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

Loan Notes
Brought forward 572 422 422
Additions 342 150 150
Converted (422) - -

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

Carried forward 492 572 572

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

Total investments 5,456 4,801 4,758

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



Nominal
Value of
investments
No. of Type of Holding Pounds Nature of
Company Shares Shares (%) Sterling business

Biocote
Limited 696,693 Ordinary 31.5% 697 Powder coating
Firestop
Chemicals Ltd 6,651,456 Ordinary 42.2% 66,515 Fire retardant
Loan notes 492,000 chemicals

Hardide Plc 40,098,075 Ordinary 31.4% 7,035 Surface
engineering
(heavy metals)

Oxis Energy
Ltd (formerly
Intellikraft
Ltd) 12,061,124 Ordinary 8.8% 12,061 Battery
development

Keronite
Limited 6,047,029 Ordinary 12.6% 604,703 Surface
engineering
(light alloys)

Ultra Motor
Company Ltd 70,182 Ordinary 44.6% 70,182 Electric Motor
Wheel
technology


(b) Subsidiary Undertakings

Nominal
Value
per share
No. of Type of Share Pounds Nature of
Company Shares Shares Capital Sterling business

Ceraheat Ltd
(formerly Oxis
Energy Ltd) 1 Ordinary 100% 1 Dormant

Hydrodynamic
Solution Ltd 1 Ordinary 100% 1 Development
and
commercialisation
of water
desalination
technologies

OspreyDeepClean
Ltd 2 Ordinary 100% 1 Marketing and
selling of
specialist
cleaning
systems

Innocleaning
Magma Holdings
B.V 20,000 Ordinary 100% 0.68p (1EUR) Marketing,
selling and
development of
specialist
cleaning
systems and
flame retardant
products

Flintstone
Management
Services Ltd 1 Ordinary 100% 1 Surfacing,
development and
commercialisation
of new
technologies

CFB (Isle of
Man) Ltd 1,130,500 Ordinary 100% 1 Dormant


(c) Analyses of the aggregate share of the results of all investments
falling within the definition of associates are as follows:-

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Share of associate profit and
loss account
Turnover 327 146 358
Operating loss (477) (i)(459) (818)
Retained loss (455) (455) (1,122)

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

Share of associate balance sheets
Fixed assets 3,738 573 702
Current assets 837 585 518
Current liabilities (278) (750) (600)

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

Net assets 3,584 408 290

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

(i) The comparative period figures include the group's share of the
retained loss in Firestop Chemicals Limited and Ultra Motor Company
Limited for the 6 months ended 30 September 2004 of Pounds Sterling
271,536. These companies were subsidiary undertakings until the group
decreased its shareholding from 63% to 42.2% and 80% to 44% respectively
in March 2004. From this date the companies have been accounted for in
the consolidations as associated investments.

As explained in note 1 (iii), as these investments are held as part of
an investment portfolio, they are not equity accounted for.


4. DEBTORS

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Trade debtors 1,191 688 335
Other debtors 556 180 505

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

1,747 868 840

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

Included in the above are the following amounts which are due after more
than one year:

Trade debtors - 407 -

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


5. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Amounts owed to debt factor 50 - -
Trade creditors 1,162 44 43
Amounts due under finance lease &
hire purchase 12 - -
Other tax and social security 66 13 16
Corporation tax 159 - -
Other creditors 27 - -
Accruals and deferred income 777 6 39

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

2,253 63 98

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

The amounts due under finance leases are secured against the relevant
assets


6. CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Amounts due under finance lease &
hire purchase 15 - -
Loan notes 10,500 - -

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

10,515 - -

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

The amounts due under finance leases are secured against the relevant
assets.


The loan notes were issued on 24 August 2005 at par value. Interest is payable at a rate of 8.5% per annum and shall be paid half yearly in arrears of 30 June and 31 December each year provided that after such redemption Proventec shall have sufficient surplus cash as defined under the loan note agreement.

The first interest payment is due on 30 June 2006.

The loan notes shall be redeemable by fourteen equal trenches of Pounds Sterling 750,000 beginning on 30 June 2006 and every six months thereafter provided that after such redemption Proventec shall have sufficient surplus cash as defined under the loan note agreement.

The loan notes can be redeemed at any time on prior reasonable notice; can be converted into ordinary shares at a price per share of 14 pence at any time after 31 December 2006 and be transferable at any time after 31 December 2006.



7. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Group

Profit/(loss) for the period 1 (317) (823)
On issue of shares 21,556 1,259 1,258
On share for share exchange - - -

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

Increase in shareholders' funds 21,557 942 435

Opening shareholders' funds 6,444 6,009 6,009

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

Closing shareholders' funds 28,001 6,951 6,444

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


8. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES

Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Pounds Pounds Pounds
Sterling Sterling Sterling
'000 '000 '000

Operating profit/(loss) 88 (347) (741)
Depreciation of tangible fixed assets 8 2 3
(Increase)/decrease in operating
debtors and prepayments (248) 366 265
Increase in stock (23) - -
Increase/(decrease) in operating
creditors and accruals 1,032 (143) (110)
Amortisation of goodwill - - -

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

Cash inflow/(outflow) from
operating activities 857 (122) (583)

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


9. PURCAHSE OF SUBSIDIARIES

On 24 August 2005, Proventec plc acquired 100% of InnoCleaning Magma
Holdings B.V and 100% of OspreyDeepClean Limited for a combined
consideration of Pounds Sterling 30,986,000. Goodwill arising on the
acquisitions amounted to Pounds Sterling 4,419,000

Analysis of the acquisitions is as follows
Pounds Sterling '000
Tangible fixed assets 53
Stock 533
Trade debtors 510
Other debtors 1,013
Cash 240
Trade creditors (1,720)
Other creditors (164)
Finance lease obligations (30)
------------
435
Intangible fixed assets acquired 26,132
Goodwill arising on acquisition 4,419
------------
Intangible fixed assets 30,551

------------
Total consideration 30,986
------------

Consideration split by:

Loan notes 10,500
Shares issued 20,486

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

30,986

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


10. POST BALANCE SHEET EVENTS

On 9 November 2005 Ultra Motor Limited completed a successful private placing raising Pounds Sterling 1.43 million. Following this placing Proventec's holding is 36.7% and is valued at Pounds Sterling 2.956 million.

Contact Information