TIDMCYAN 
 
RNS Number : 5611T 
Cyan Holdings Plc 
30 September 2010 
 
 
                                Cyan Holdings Plc 
                            ("Cyan" or "the Group") 
 
                                Half year report 
                      for the six months ended 30 June 2010 
 
Cyan Holdings plc (AIM:CYAN.L), the fabless semiconductor company providing 
wireless utility metering and lighting control products announces its half year 
results for the six months ended 30 June 2010. 
 
Summary 
 
 
·      Completed transition from fabless MCU manufacturer to system supplier to 
the wireless utility metering and street lighting control markets. 
 
·      Cyan's products have been designed into those of its customers, 
significantly improving the prospects for material orders over the next 12 
months. 
 
·      Raised circa GBP1.8 million in September 2010, net of expenses, in a 
placing to provide additional working capital. 
 
·      Offer of GBP450,000 convertible loan note to provide further working 
capital. 
 
·      Continued tight management of costs. 
 
 
Kenn Lamb, CEO of Cyan, commented: 
"After a slower than expected start to the year, the pace of new customer 
engagements accelerated at the end of Q2 as changes in the sales team and 
channels started to show results. In Q2 Cyan experienced significant new 
interest in our wireless meter reading products for electricity meters and this 
has been followed throughout the third quarter with broad interest in Cyan's 
streetlight control products particularly new variants for Sodium and HID 
lighting. Both of these new products built on features and customer feedback 
gained from Cyan's Gas meter and LED lighting products that were released during 
2009. There was a slower than expected uptake of LED street lighting in China 
and an unexpected requirement for a second version of our Gas meter to 
incorporate a feature dictated by a utility company. This work has been 
completed and Cyan now has wireless products for electricity and gas metering, 
LED, Sodium and HID lighting all of which are designed into customer meters and 
lights which we are told are being bid into tenders at an accelerating pace. 
Feedback from customers and partners supports our experience of the last few 
months in that the market demand for the products that Cyan has developed is 
growing rapidly and we have high expectations for the resulting growth of the 
company." 
 
Enquiries: 
+--------------------------------+--------------------------------+ 
| Cyan Holdings plc              | www.cyantechnology.com         | 
+--------------------------------+--------------------------------+ 
| Kenn Lamb, CEO                 | Tel: +44 (0) 1954 234 400      | 
+--------------------------------+--------------------------------+ 
| Cenkos Securities plc          |                                | 
+--------------------------------+--------------------------------+ 
| Stephen Keys / Adrian Hargrave | Tel: +44 (0) 20 7397 8900      | 
+--------------------------------+--------------------------------+ 
| Media - Hansard Group          |                                | 
+--------------------------------+--------------------------------+ 
| John Bick / Vikki Krause       | Tel: +44(0) 20 7245 1100       | 
+--------------------------------+--------------------------------+ 
 
 
Interim Statement 
Cyan has completed the transition from a fabless MCU manufacturer to a system 
supplier which offers an integrated suite of software and hardware products 
targeting the utility metering and street lighting sectors. These products can 
be retrofitted to customers' existing products, thus enabling them to benefit 
from wireless control, enhanced range and penetration within buildings using 
Cyan's mesh networking solution. Cyan has now reached the stage where its 
products have been designed into those of its customers, thereby significantly 
improving the prospects for material orders over the next twelve months. 
 
 We believe that the growth of Cyan's target markets is driven by a number 
of factors, including detection and minimisation of fraud and enforcement of 
payment for utility providers, which can generate financial returns for end 
customers far in excess of the cost of retrofitting Cyan wireless meter control 
products. In addition, we believe that energy and maintenance cost savings 
realised from individually monitoring, controlling and dimming street lighting 
can generate significant financial savings again far in excess of the cost of 
retrofitting Cyan wireless lighting control products. We expect this 
functionality to become a default requirement as governments become aware of the 
energy savings that can be realised from street lighting monitoring and control 
via mesh networks. 
 
Cyan's products can have additional features such as meter tamper alarms and 
lighting power consumption reports. Importantly, Cyan's system solutions are 
designed for ease of use, which we believe has been an important factor in these 
products being integrated into customers' end products. 
We understand that Cyan's customers have tested competitors' products alongside 
those of Cyan and in these tests Cyan's products have operated consistently well 
in locations where those of competitors have failed. Demonstration of this has, 
we believe, assisted the Cyan's distributors greatly, thereby accelerating the 
pace of new business prospects. 
We believe that Cyan has a technological advantage that has been achieved 
through significant investment in development and field trials. Cyan's mesh 
networking protocol has been developed to operate in the sub 1GHz frequency 
bands which have good building penetration capability and has been further 
enhanced to maximise range at low signal strengths and data rates. The 
intellectual property is embedded across multiple products and we believe that 
duplication of this would require considerable time and expense from a 
competitor. We believe that Cyan's superior building penetration and signal 
range provides an opportunity for Cyan's products to become widely and quickly 
adopted, as well as being difficult to displace. 
 
 
 
Financials 
 
For the six months ended 30 June 2010 turnover was GBP66,207 (2009:GBP42,575). 
The loss for the period was reduced to GBP1,069,933 (2009:GBP1,612,050), mainly 
due to continuing effective cost controls and a reduced workforce. Cash balances 
at the period end were GBP721,746 (2009: GBP1,504,783). 
 
In order to fund the growth of the business and its resulting additional working 
capital requirements Cyan on 1 September 2010 announced that it had secured a 
further round of finance, successfully raising circa GBP1.8 million (net of 
expenses) as a result of a placing of shares with new and existing shareholders. 
In addition, the Company is currently in negotiation relating to the proposed 
issue of a Convertible Loan Note to the value of GBP450,000.The Board would like 
to take this opportunity to thank Cenkos Securities for their management of the 
placing, and the new and existing shareholders for their support. 
 
 
Outlook 
Cyan has developed new products specifically for the Indian Electricity Metering 
market and for the Sodium and Xenon HID lighting markets and has several 
customers with these embedded into their own products which have already been 
submitted into multiple tenders, some of which are understood to be for 100k 
units. These customers are established suppliers to the utilities and all have 
existing run rate manufacturing capacity in excess of one million units per 
annum. These customers have indicated to Cyan that significant costs are 
incurred in each tender bid and that they expect to win at least a portion of 
most of the tenders for which they bid. Specifically, Cyan has signed an MOU 
with an electronics customer to integrate Cyan's products into that customer's 
sodium/HID ballast and we expect this to result in a first order in Q4 2010 and 
to subsequently develop into further orders during 2011. 
 
With a product range that is now well developed and which is receiving increased 
levels of commercial traction from its primary customers, the Directors believe 
that the prospects for the Company for the remainder of 2010, and particularly 
2011, are promising. Given the number of prospective companies with which Cyan 
is actively engaged and the fact that several customers are tendering for major 
projects which, if successful, would result in significant orders in 2011, we 
are excited about Cyan's prospects and view the future with confidence. 
 
 
 
Kenn Lamb 
Chief Executive Officer 
30 September 2010 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Income Statement 
Six months ended 30 June 2010 
 
+--------+--------+------+----------+----------+------+-------------+--------------+-------------+ 
|        |        |                 |                 |             |              |             | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
|        |        |                 |                 |   Unaudited |    Unaudited | Year ended  | 
|        |        |                 |                 |         six |   six months |31 December  | 
|        |        |                 |                 |      months |        ended |    2009     | 
|        |        |                 |                 |       ended | 30 June 2009 |             | 
|        |        |                 |                 |     30 June |              |             | 
|        |        |                 |                 |        2010 |              |             | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
|        |        |                 |      Notes      |         GBP |          GBP |    GBP      | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
| Continuing operations                               |             |              |             | 
+-----------------------------------------------------+-------------+--------------+-------------+ 
| Revenue                                             |      66,207 |       42,575 |   95,569    | 
+-----------------------------------------------------+-------------+--------------+-------------+ 
| Cost of sales   |                            |      |    (38,046) |     (27,313) |  (62,897)   | 
+-----------------+----------------------------+------+-------------+--------------+-------------+ 
|        |        |                            |      |             |              |             | 
+--------+--------+----------------------------+------+-------------+--------------+-------------+ 
| Gross Profit    |                            |      |      28,161 |       15,262 |   32,672    | 
+-----------------+----------------------------+------+-------------+--------------+-------------+ 
|                                              |      |             |              |             | 
+----------------------------------------------+------+-------------+--------------+-------------+ 
| Operating costs                              |      |   (744,774) |  (1,243,185) |(1,633,138)  | 
+----------------------------------------------+------+-------------+--------------+-------------+ 
| Research and development costs               |      |   (504,231) |    (528,289) |(1,532,669)  | 
+----------------------------------------------+------+-------------+--------------+-------------+ 
|                        |          |          |      |             |              |             | 
+------------------------+----------+----------+------+-------------+--------------+-------------+ 
| Operating loss                                      | (1,220,844) |  (1,756,212) |(3,133,135)  | 
+-----------------------------------------------------+-------------+--------------+-------------+ 
| Investment      |                 |                 |         911 |        1,085 |    1,639    | 
| revenue         |                 |                 |             |              |             | 
+-----------------+-----------------+-----------------+-------------+--------------+-------------+ 
| Finance costs   |                 |                 |           - |         (11) |    (11)     | 
+-----------------+-----------------+-----------------+-------------+--------------+-------------+ 
| Loss before tax                                     | (1,219,933) |  (1,755,138) |(3,131,507)  | 
+-----------------------------------------------------+-------------+--------------+-------------+ 
| Tax                                                 |     150,000 |      143,088 |  479,247    | 
+-----------------------------------------------------+-------------+--------------+-------------+ 
|        |        |                 |                 |             |              |             | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
| Loss for the period               |                 | (1,069,933) |  (1,612,050) |(2,652,260)  | 
+-----------------------------------+-----------------+-------------+--------------+-------------+ 
|        |        |                 |                 |             |              |             | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
| Loss per share (pence)            |                 |             |              |             | 
+-----------------------------------+-----------------+-------------+--------------+-------------+ 
| Basic and       |                 |        2        |      (0.17) |        (0.3) |     (0.5)   | 
| diluted         |                 |                 |             |              |             | 
+-----------------+-----------------+-----------------+-------------+--------------+-------------+ 
|        |        |                 |                 |             |              |             | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
|        |        |                 |                 |             |              |             | 
+--------+--------+-----------------+-----------------+-------------+--------------+-------------+ 
|        |        |      |          |          |      |             |              |             | 
+--------+--------+------+----------+----------+------+-------------+--------------+-------------+ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheet 
At 30 June 2010 
 
+-------------+----------+---------+----------+----------+--------------+--------------+--------------+ 
|             |          |                    |          |    Unaudited |    Unaudited |              | 
|             |          |                    |          |              | 30 June 2009 |           31 | 
|             |          |                    |          |      30 June |              |     December | 
|             |          |                    |          |         2010 |              |         2009 | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
|             |          |                    |          |     GBP      |              |              | 
|             |          |                    |          |              |     GBP      |     GBP      | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
| Non-current assets     |                    |          |              |              |              | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Intangible assets      |                    |          |            - |            - |            - | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Property, plant and equipment               |          |       37,373 |       48,680 |       39,729 | 
+---------------------------------------------+----------+--------------+--------------+--------------+ 
|             |          |                    |          |              |              |              | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
|             |          |                    |          |       37,373 |       48,680 |       39,729 | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
| Current Assets         |                    |          |              |              |              | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Inventories |          |                    |          |      890,876 |      902,658 |      893,087 | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
| Trade and other receivables                 |          |      568,491 |      242,840 |      569,601 | 
+---------------------------------------------+----------+--------------+--------------+--------------+ 
| Cash and cash equivalents                   |          |      721,746 |    1,504,783 |    1,968,072 | 
+---------------------------------------------+----------+--------------+--------------+--------------+ 
|             |          |                    |          |    2,181,113 |    2,650,281 |    3,430,760 | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
| Total assets           |                    |          |    2,218,486 |    2,698,961 |    3,470,488 | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Current                |                    |          |              |              |              | 
| liabilities            |                    |          |              |              |              | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Trade and other        |                    |          |      229,782 |      331,937 |      229,332 | 
| payables               |                    |          |              |              |              | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Total liabilities      |                    |          |      229,782 |      331,937 |      229,332 | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Net assets             |                    |          |    1,988,704 |    2,367,024 |    3,241,157 | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
|             |          |                    |          |              |              |              | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
| Equity      |          |                    |          |              |              |              | 
+-------------+----------+--------------------+----------+--------------+--------------+--------------+ 
| Share capital          |                    |          |    1,309,565 |    1,118,259 |    1,309,565 | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Share premium account                       |          |   19,026,290 |   17,353,068 |   19,026,290 | 
+---------------------------------------------+----------+--------------+--------------+--------------+ 
| Own shares held        |                    |          |    (690,191) |    (690,191) |    (690,191) | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Share option           |                    |          |      379,886 |      316,537 |      379,886 | 
| reserve                |                    |          |              |              |              | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Translation            |                    |          |    (410,634) |    (214,580) |    (228,114) | 
| reserve                |                    |          |              |              |              | 
+------------------------+--------------------+----------+--------------+--------------+--------------+ 
| Retained loss                               |          | (17,626,212) | (15,516,069) | (16,556,279) | 
+---------------------------------------------+----------+--------------+--------------+--------------+ 
|             |                    |          |          |              |              |              | 
+-------------+--------------------+----------+----------+--------------+--------------+--------------+ 
| Total equity being               |          |          |    1,988,704 |    2,367,024 |    3,241,157 | 
| attributable to equity           |          |          |              |              |              | 
| holders of the parent            |          |          |              |              |              | 
+----------------------------------+----------+----------+--------------+--------------+--------------+ 
|             |          |         |          |          |              |              |              | 
+-------------+----------+---------+----------+----------+--------------+--------------+--------------+ 
 
 
 
 
 
 
 
Consolidated Statement of Comprehensive Income 
Six months ended 30 June 2010 
 
+------+------+---------------------+----------+-------------+--------------+-------------+ 
|      |      |                     |          |   Unaudited |    Unaudited |  Year ended | 
|      |      |                     |          |         six |   six months |          31 | 
|      |      |                     |          |      months |        ended |    December | 
|      |      |                     |          |       ended | 30 June 2009 |        2009 | 
|      |      |                     |          |     30 June |              |             | 
|      |      |                     |          |        2010 |              |             | 
+------+------+---------------------+----------+-------------+--------------+-------------+ 
|      |      |                     |          |         GBP |          GBP |         GBP | 
+------+------+---------------------+----------+-------------+--------------+-------------+ 
|                                   |          |             |              |             | 
+-----------------------------------+----------+-------------+--------------+-------------+ 
| Exchange differences on           |          |   (186,679) |      159,368 |     145,834 | 
| translation of foreign operations |          |             |              |             | 
+-----------------------------------+----------+-------------+--------------+-------------+ 
| Loss for    |                     |          | (1,069,933) |  (1,612,050) | (2,652,260) | 
| period      |                     |          |             |              |             | 
+-------------+---------------------+----------+-------------+--------------+-------------+ 
| Total comprehensive income for    |          | (1,256,612) |  (1,452,682) | (2,506,426) | 
| the period                        |          |             |              |             | 
+------+------+---------------------+----------+-------------+--------------+-------------+ 
 
 
 
 
 
Consolidated Cash Flow Statement 
Six months ended 30 June 2010 
 
+------+-------+--+--------+----+----------+----------+----------+----------+-------------+-------------+-------------+ 
|      |       |                |                                           |   Unaudited |   Unaudited |        Year | 
|      |       |                |                                           |         six |         six |       ended | 
|      |       |                |                                           |      months |      months |          31 | 
|      |       |                |                                           |       ended |       ended |    December | 
|      |       |                |                                           |     30 June |     30 June |        2009 | 
|      |       |                |                                           |        2010 |        2009 |             | 
+------+-------+----------------+-------------------------------------------+-------------+-------------+-------------+ 
|      |       |                |                                     Notes |         GBP |         GBP |         GBP | 
+------+-------+----------------+-------------------------------------------+-------------+-------------+-------------+ 
| Net cash outflow from         |                                         3 | (1,013,617) | (1,287,671) | (2,400,080) | 
| operating activities          |                                           |             |             |             | 
+-------------------------------+-------------------------------------------+-------------+-------------+-------------+ 
| Investing    |                |                                         4 |     (1,362) |     (1,200) |     (9,288) | 
| activities   |                |                                           |             |             |             | 
+--------------+----------------+-------------------------------------------+-------------+-------------+-------------+ 
| Financing    |  |        |                                              4 |           - |   1,125,062 |   2,989,591 | 
| activities   |  |        |                                                |             |             |             | 
+--------------+--+--------+------------------------------------------------+-------------+-------------+-------------+ 
| Net (decrease)/increase in cash and cash equivalents                      | (1,014,979) |   (163,809) |     580,223 | 
+---------------------------------------------------------------------------+-------------+-------------+-------------+ 
| Cash and cash equivalents at beginning of period               |          |   1,968,072 |   1,356,886 |   1,356,886 | 
+----------------------------------------------------------------+----------+-------------+-------------+-------------+ 
| Effect of foreign  exchange rate changes |          |          |          |   (231,347) |     311,706 |      30,963 | 
+------------------------------------------+----------+----------+----------+-------------+-------------+-------------+ 
| Cash and cash equivalents at end of period                                |     721,746 |   1,504,783 |   1,968,072 | 
+---------------------------------------------------------------------------+-------------+-------------+-------------+ 
|      |       |                |                                           |             |             |             | 
+------+-------+----------------+-------------------------------------------+-------------+-------------+-------------+ 
|      |       |  |        |    |          |          |          |          |             |             |             | 
+------+-------+--+--------+----+----------+----------+----------+----------+-------------+-------------+-------------+ 
 
 
Notes to Accounts 
Six months ended 30 June 2010 
 
 
1.   Basis of preparation 
The interim financial information has been prepared in accordance with the IFRS 
accounting policies used in the statutory financial statements for the year 
ended 31 December 2009. 
 
These interim financial statements do not constitute statutory financial 
statements within the meaning of section 435 of the Companies Act  2006. Results 
for the six month periods ending 30 June 2010 and 30 June 2009 have not been 
audited. The results for the year ended 31 December 2009 have been extracted 
from the statutory financial statements of Cyan Holdings plc. 
 
Statutory financial statements for the year ended 31 December 2009 are available 
on the Company's website www.cyantechnology.com and have been filed with the 
Registrar of Companies. The Company's auditors issued a report on those 
financial statements that was unqualified and did not contain a statement under 
section 498(2) or section 498(3) of the Companies Act 2006; however the 
auditor's report was modified to emphasise the uncertainty around the company's 
ability to continue as a going concern. 
 
2.     Going Concern 
The directors have prepared a business plan and cash flow forecast for the 
period to 30 September 2011.  The forecast contains certain assumptions about 
the level of future sales and the level of gross margins. The directors 
acknowledge that the Group is trading in a difficult economic environment and in 
markets that are relatively new to the Group. This may impact both the Group's 
ability to generate positive cash-flow and to raise new finance.  There is a 
risk that the level of sales achieved is materially lower than the level 
forecast or at materially lower margins.  The directors have taken steps to 
satisfy themselves about the robustness of sales forecasts but acknowledge that 
the timing of customer orders in the Group's target markets is inherently 
uncertain.  The directors are of the opinion that this business plan is 
achievable. On this basis, the directors have assumed that the company is a 
going concern. 
There is however, material uncertainty related to the assumptions described 
above which may cast significant doubt on the company's ability to continue as a 
going concern and, therefore, it may be unable to realise its assets and 
discharge its liabilities in the normal course of business.  The financial 
statements do not include the adjustments that would result if the Group was 
unable to continue as a going concern.  In the event the Group ceased to be a 
going concern, the adjustments would include writing down the carrying value of 
assets to their recoverable amount and providing for any further liabilities 
that might arise. 
 
3.   Post balance sheet event 
Since the end of the period, the Group has raised additional equity funding of 
circa GBP1.8 million after expenses. In addition the Group is in negotiation 
relating to the proposed issue of a convertible loan note for GBP450,000. The 
placing and acceptance of the convertible were authorised by existing 
shareholders on 16 September 2010. 
 
4.  Loss per share 
Basic and diluted loss per ordinary share has been calculated by dividing the 
loss after taxation for the periods as shown in the table below. 
 
+------+------+-------------+-----+-------------+-------------+-------------+ 
|      |      |             |     |   Unaudited |   Unaudited |    Year     | 
|      |      |             |     |             |             |    ended    | 
|      |      |             |     |         six |         six |     31      | 
|      |      |             |     |      months |      months |  December   | 
|      |      |             |     |      ended  |       ended |    2009     | 
|      |      |             |     |    30 June  |    30 June  |             | 
|      |      |             |     |        2010 |        2009 |             | 
+------+------+-------------+-----+-------------+-------------+-------------+ 
|      |      |             |     |         GBP |         GBP |    GBP      | 
+------+------+-------------+-----+-------------+-------------+-------------+ 
|      |      |             |     |             |             |             | 
+------+------+-------------+-----+-------------+-------------+-------------+ 
| Losses      |             |     |   1,069,933 |   1,612,050 |  2,652,260  | 
| (GBP)       |             |     |             |             |             | 
+-------------+-------------+-----+-------------+-------------+-------------+ 
| Weighted average number   |     | 617,279,500 | 597,095,436 |528,453,250  | 
| of shares                 |     |             |             |             | 
+---------------------------+-----+-------------+-------------+-------------+ 
|                                                                           | 
| IAS33 "Earnings per share" requires presentation of diluted               | 
| EPS when a company could be called upon to issue shares that              | 
| would decrease net profit or increase net loss per share.                 | 
| For a loss making company with outstanding share options,                 | 
| net loss per share would only be increased by the exercise                | 
| of out of the money options. Since it seems inappropriate to              | 
| assume that option holders would act irrationally and there               | 
| are no other diluting future share issues, diluted EPS                    | 
| equals basic EPS.                                                         | 
+---------------------------------------------------------------------------+ 
|      |      |             |     |             |             |             | 
+------+------+-------------+-----+-------------+-------------+-------------+ 
5. Reconciliation of operating loss to operating cash flows 
 
+-------+-----------+---------+-------+-----+----------+-------------+-------------+-------------+ 
|       |           |                       |          |   Unaudited |   Unaudited |        Year | 
|       |           |                       |          |  six months |         six |       ended | 
|       |           |                       |          |       ended |      months |          31 | 
|       |           |                       |          |     30 June |       ended |    December | 
|       |           |                       |          |        2010 |     30 June |        2009 | 
|       |           |                       |          |             |        2009 |             | 
+-------+-----------+-----------------------+----------+-------------+-------------+-------------+ 
|       |           |                       |          |         GBP |         GBP |         GBP | 
+-------+-----------+-----------------------+----------+-------------+-------------+-------------+ 
| Operating loss    |                       |          | (1,220,844) | (1,756,212) | (3,133,135) | 
| for the period    |                       |          |             |             |             | 
+-------------------+-----------------------+----------+-------------+-------------+-------------+ 
| Adjustments for:  |                       |          |             |             |             | 
+-------------------+-----------------------+----------+-------------+-------------+-------------+ 
| Depreciation of property, plant and       |          |      14,576 |      44,520 |      62,232 | 
| equipment                                 |          |             |             |             | 
+-------------------------------------------+----------+-------------+-------------+-------------+ 
|    Share-based payment expense            |          |           - |      47,685 |     111,034 | 
+-------------------------------------------+----------+-------------+-------------+-------------+ 
| Operating cash flows before movements in  |          | (1,206,268) | (1,664,007) | (2,959,869) | 
| working capital                           |          |             |             |             | 
+-------------------------------------------+----------+-------------+-------------+-------------+ 
| Decrease/(increase) in inventories        |          |       2,211 |    (55,308) |    (45,734) | 
+-------------------------------------------+----------+-------------+-------------+-------------+ 
| Decrease/ (increase) in receivables                  |       1,110 |     374,734 |      48,035 | 
+------------------------------------------------------+-------------+-------------+-------------+ 
| Increase/ (decrease) in payables    |                |         450 |      56,921 |    (45,363) | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Cash reduced by operations          |                | (1,202,497) | (1,287,660) | (3,002,931) | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Income taxes received               |                |     188,880 |           - |     602,851 | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Interest paid                       |                |           - |        (11) |           - | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Net cash outflow from operating     |                | (1,013,617) | (1,287,671) | (2,400,080) | 
| activities                          |                |             |             |             | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
|       |           |                 |                |             |             |             | 
+-------+-----------+-----------------+----------------+-------------+-------------+-------------+ 
|       |           |                 |                |             |             |             | 
|       |           |                 |                |             |             |             | 
|       |           |                 |                |             |             |             | 
|       |           |                 |                |             |             |             | 
|       |           |                 |                |             |             |             | 
|       |           |                 |                |             |             |             | 
|       |           |                 |                |             |             |             | 
+-------+-----------+-----------------+----------------+-------------+-------------+-------------+ 
| 6.   Analysis of cash flows         |                |             |             |             | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
|       |           |                 |                |   Unaudited |   Unaudited |        Year | 
|       |           |                 |                |  six months |         six |       ended | 
|       |           |                 |                |       ended |      months |          31 | 
|       |           |                 |                |     30 June |       ended |    December | 
|       |           |                 |                |        2010 |     30 June |        2009 | 
|       |           |                 |                |             |        2009 |             | 
+-------+-----------+-----------------+----------------+-------------+-------------+-------------+ 
|       |           |                 |                |         GBP |         GBP |         GBP | 
+-------+-----------+-----------------+----------------+-------------+-------------+-------------+ 
| Investing         |                 |                |             |             |             | 
| activities        |                 |                |             |             |             | 
+-------------------+-----------------+----------------+-------------+-------------+-------------+ 
| Interest receivable and similar     |                |         922 |       1,085 |       1,639 | 
| income                              |                |             |             |             | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Purchase of property, plant and     |                |     (2,284) |     (2,285) |    (10,927) | 
| equipment                           |                |             |             |             | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Net cash used by/from investing     |                |     (1,362) |     (1,200) |     (9,288) | 
| activities                          |                |             |             |             | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Financing         |                 |                |             |             |             | 
| activities        |                 |                |             |             |             | 
+-------------------+-----------------+----------------+-------------+-------------+-------------+ 
| Proceeds on issue of shares         |                |           - |   1,125,073 |   2,989,602 | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Interest paid                       |                |           - |        (11) |        (11) | 
+-------------------------------------+----------------+-------------+-------------+-------------+ 
| Net cash from financing     |       |                |           - |   1,125,062 |   2,989,591 | 
| activities                  |       |                |             |             |             | 
+-----------------------------+-------+----------------+-------------+-------------+-------------+ 
|       |           |         |       |     |          |             |             |             | 
+-------+-----------+---------+-------+-----+----------+-------------+-------------+-------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IR VKLFLBKFXBBL 
 

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