Provalis plc
Annual Report
and Accounts
2004
www.provalis.com Highlights
● Pharmaceutical sales advance to a record £11.4m (2003: £10.9m)
● Medical Diagnostics sales recover in second half, with full year sales
of £1.5m (2003: £3.1m)
● Group sales of £12.9m (2003: £14.0m)
● In line with market expectations, the Group operating loss widens
to £3.3m (2003: £2.1m) reducing to a final loss of £1.8m before taxation
(2003: £1.3m profit)
● in2it
™
chosen as the global brand name for G5, Provalis’ next
generation, fully automated, diagnostic testing platform
● in2it
™
A1c, the diabetes diagnostic test which is the first test developed
for the in2it
™
diagnostic platform, cleared by the FDA for sale in the US
in August 2004, and granted CLIA waiver shortly after
● Strong demand for in2it
™
from the US; more than twice expectations
● Period of major strategic progress for Medical Diagnostics with:
● Provalis Diagnostics USA formed and a sales office opened
in the US;
● experienced US Diagnostics sales team recruited to carry out
the direct sales and marketing of in2it
™
A1c in the US; and
● network of national or regional distributors being established for
non-US sales, rather than one or two global partners
● Sales of Glycosal
®
continue in world markets, albeit after difficult first
half year in US market
● Erdotin
™
in-licensed for Pharmaceuticals to sell into UK and Ireland
markets; Erdotin
™
has the potential to replace the profits from Provalis’
sales of the Dr Falk Pharma product range
● Vaccine deal signed with Chiron Vaccines
● Year end cash and short term deposits of £1.8m, with an unutilised
bank facility of up to £3.0m available
● Proposed placing to raise £2.6m, (before expenses of £0.1m),
in September 2004 Glossary
antigen
a foreign substance which induces
an immune response 
Budenofalk
®
an oral medicine for the treatment
of certain disorders of the intestines 
Calceos
®
a chewable calcium and vitamin
D3 tablet
CLIA waiver
a waiver allowing an operator to use
diagnostic tests in the US without
the need for specific qualifications 
Clotam Rapid
®
an oral medicine used to relieve pain 
diabetes
a disease that occurs when the supply
of blood glucose to the cell is disrupted
diagnostic
a chemical analysis carried out on
a specific analyte to determine the
presence, extent or lack of a disease 
diclofenac
a non-steroidal anti-inflammatory drug
Diclomax
®
an oral formulation of diclofenac
which is a well established therapy
for arthritis
FDA
the US Food and Drug Administration,
the authority responsible for granting
marketing authorisations in respect
of the US
hsCRP
high sensitivity C-reactive protein,
a key measure of the level of
inflammation in coronary arteries
in2it™
a new diagnostic platform (previously
code named “G5”) capable of carrying
out a range of diagnostic tests
in2it™ A1c
the first diagnostic test for in2it™
which will carry out a quantitative test
for HbA1c, anticipated for launch in
the US in autumn 2004
Glycosal
®
an instrument (HaemaQuant ™) with
disposable cartridges which carry out
a quantitative test for HbA1c, intended 
for use in the long-term management
of diabetes
Group B streptococcus
a species of bacteria causing severe
neonatal disease including meningitis, 
pneumonia and bacteremia in infants 
Haemophilus influenzae
a species of pathogenic bacteria,
associated with chronic lung infection
HbA1c
a haemoglobin molecule to which
glucose is specifically conjugated 
MicroG
a new HbA1c test to be made
available OTC
Moraxella catarrhalis
a species of bacteria, associated with
ear infections
NGSP
National Glycohaemoglobin
Standardisation Programme
Osteosal ™
a quantitative disposal test
for CrossLaps™ in urine, the results
of which can be measured using the
InstaQuant™ instrument
OTC
over the counter, meaning available
without prescription
point of care
a diagnostic test carried out in
the doctor’s office, clinic or
satellite laboratory
product licence or marketing
authorisation
licence required to promote, market
and sell pharmaceutical products and,
in certain circumstances, diagnostic
products
Streptococcus pneumoniae
a species of bacteria, associated with 
respiratory and ear infections 
Ursofalk
®
an oral medicine used to treat specific 
disorders of the liver
vaccine
a preparation used to stimulate the
immune system to precure immunity
from a disease Glycosal
®
in2it
™
Diclomax
®
high performance
expanding product range
successful technology
dedicated US and UK/Irish sales forces
fast and accurate diagnostics
serving high value markets
innovative product development
1 Provalis At a Glance 2 Chairman’s Statement 4 Chief Executive Officer’s Review of Operations 
10 Financial Review 12 Board of Directors 13 Senior Management 14 Directors’ Report 16 Corporate Governance Statement
18 The Board’s Remuneration Report 23 Independent Auditors’ Report 24 Consolidated Profit and Loss Account
25 Consolidated Balance Sheet 26 Company Balance Sheet 27 Consolidated Cash Flow Statement
28 Notes to Consolidated Cash Flow Statement 28 Statement of Total Recognised Gains and Losses 
28 Reconciliation of Movements in Shareholders’ Funds 29 Notes to Accounts 41 Corporate Information
42 Notice of Meeting 47 Form of Proxy Provalis At a Glance
●
Medical Diagnostics – develops medical diagnostic products for chronic disease
management for sale to world markets. The business’ principal products are
currently Glycosal
®
and Osteosal
®
in the areas of diabetes and osteoporosis
respectively, with in2it™ A1c, the business’ next generation diabetes
management system, on schedule for supply to the US in autumn 2004.
●
Pharmaceuticals – sells and markets its own, and third party, branded prescription
medicines in the UK and Ireland to GPs and hospitals through its own regionally
managed sales force. The business’ principal product is Diclomax
®
, a medicine
for use in the treatment of musculo-skeletal disorders, and it also sells products
in the areas of gastroenterology, osteoporosis, migraine and dermatology.
PROVALIS IS A DIVERSIFIED HEALTHCARE GROUP WITH TWO
OPERATING BUSINESSES:
2005 WILL BE AN EXCITING YEAR, WITH THE FIRST SALES OF IN2IT™ A1C
IN THE US AND THE LAUNCH OF ERDOTIN™ IN THE UK AND IRELAND,
FOLLOWED BY THE ANTICIPATED FDA FILING OF THE SECOND TEST FOR
USE ON THE IN2IT™ PLATFORM
Provalis plc Annual Report and Accounts 2004 1
Our strategy is to grow our Pharmaceuticals
business through the acquisition of new
products and the expansion into new
territories and to establish our Medical
Diagnostics business as a leading supplier
of point of care diagnostic tests, particularly
in the US market.
OUR STRATEGY
Provalis Diagnostics’ main products are
in2it™ A1c (pictured) and Glycosal
®
, both
of which are used in monitoring diabetes and
Osteosal
®,
the osteoporosis test.
Provalis Pharmaceuticals main products 
are Diclomax
®
and Calceos
®
, used in the
treatment of musculo-skeletal disorders 
and osteoporosis respectively. 
OUR PRODUCTS
Provalis Diagnostics develops diagnostic
products for the point of care testing of chronic
diseases, focussing particularly on the US
market. Provalis Pharmaceuticals markets
prescription medicines to GPs in the UK
and Ireland.
OUR MARKETS 2 Provalis plc Annual Report and Accounts 2004
Chairman’s Statement
I am pleased to report that our
Pharmaceuticals business achieved record
sales of £11.4m in 2004, 5% ahead of last
year. These sales were underpinned by
Diclomax
®
sales of £6.1m, additional
product launches midway through the
year, and our first full year of operation
in Ireland. The business recorded an
operating profit of £1.8m, despite
incurring increased costs associated
with bespoke projects to improve both
sales and margins on its product range.
These projects should begin to pay
back towards the end of the next
financial year.
2004 was a challenging year for our Medical
Diagnostics business, particularly following
the promising year we had in 2003. In the
first half of the year in particular, sales of
Glycosal
®
were influenced by supply chain
destocking in the US, the impact of a
weaker US Dollar and the global roll out
of the product to markets such as China,
India and Southern Europe being slower
than forecast by our distributors. However,
sales did recover in the second half of the
year and the business achieved sales of
£1.5m (2003: £3.1m).
As a result of the lower Medical Diagnostics
sales, Group sales of £12.9m were below
those in 2003 (£14.0m). As margins were
essentially similar, the Group operating
loss for the year increased from £2.1m
(2003) to £3.3m. Following the recognition
of a further exceptional profit of £1.0m
from the Dr Falk Pharma deal and of
the £0.7m (before costs of £0.3m)
received thus far from the successful
arbitration against Dimethaid, the Group
recorded a loss of £1.8m before taxation
(2003: profit before taxation of £1.3m).
Although 2004 was, at times, a frustrating
year for the Group, this should not mask
the considerable strategic and product
development successes achieved.
Strategic developments
Medical Diagnostics
2004 was a landmark year for the Medical
Diagnostics business with our new
diagnostics product in2it™ A1c filed with,
and subsequently cleared for sale by,
the FDA. With several diagnostic products
developed and approved, and with the US
“point of care” market better understood,
we had the experience to implement a
new commercialisation strategy. This
strategy was implemented as a result
of our experience in selling Glycosal
®
through two global distributors, which as
well as losing a significant amount of the
margin to these distributors, emphasised
how international sales through such a
network can, at times, be uncontrollable
and unpredictable, particularly with
extended supply chains and complex
sub-distribution networks.
This new strategy has led us to set up our
own sales and marketing organisation in
the US, and to appoint local distributors
on a regional or country basis for the rest
of the world. This is a bold move for
Provalis, but is one that we are confident
will lead to more control of the sales
process, better margins for the Group and
a smoother supply chain that will assist
both internal and external sales forecasting,
as well as ensuring that we understand
and meet customers’ needs by being
in closer contact with the end user –
the physician, nurse or patient.
In addition, this approach to selling will
provide Provalis with the opportunity to
establish its own diagnostics brand in
the US and other markets, and provide
the platform from which to introduce
future tests, without the complication
of these tests having to compete for
priority with any already sold by a third
party distributor.
We will operate in the US through
Provalis Diagnostics (U.S.A.) Ltd, which
has its headquarters in Orange County,
Florida. We have appointed Bert Valada
as Vice President and General Manager
of the US business. Bert, a US national
with extensive experience in the sales and
marketing of diagnostic products in the
US market with companies such as
Abbott and Behring, has already recruited
three Vice Presidents of Sales to manage
the West Coast, Mid West and East Coast
regions. Collectively, our sales team has
over 100 years of diagnostics sales
experience in the US market, and is now
building the network of national sub
distributors ready for the launch of in2it™
in the autumn of this year.
The establishment of our sales organisation
in the US will obviously lead to increased
costs, principally for salaries, advertising,
promotion and training. We anticipate
that this will add £1.1m to our cost base
in the first year, rising to £2.2m in the
second. In return, we will receive a greatly
increased margin and, we believe,
significantly higher returns than those
we would have received had we sold
in2it™ through one or two global
distributors, which was our previous
method of operation. We believe this
will generate significantly increased
sales and profits for our Medical
Diagnostics business.
Pharmaceuticals
Our strategy for the prescription
Pharmaceuticals business remains
the licensing-in, or acquisition, of new
products and the expansion of the
business’ operation into new markets.
Our short term goal is the generation of
profits to replace those from Provalis’
sale of the Dr Falk Pharma range,
which Provalis will stop selling on
31 December 2004. We continue to
make progress with all of these aims.
During the year, we secured the rights to
sell Erdotin™, one of the latest generation of
mucolytic agents with a wide application in
a number of respiratory diseases, in the UK
and Ireland. This product has the potential,
in time, to replace the profits previously
achieved on sales of the Dr Falk products.
In keeping with our stated strategy, Provalis
has also been granted the option to acquire
the product after it has been on the market
for three years.
THE HIGHLIGHT OF 2004 HAS BEEN THE COMPLETION OF IN2IT™ A1C
AND ITS CLEARANCE FOR US SALE AND GRANT OF CLIA WAIVER,
BOTH RECEIVED IN AUGUST.
Frank Harding, Chairman Diclomax
®
, Solvazinc
®
and certain
products in the Dr Falk Pharma range
were launched into Ireland for the
first time. At the same time we have
begun to build a relationship with Pfizer,
who have used our Irish sales force to
help promote their opthalmic product
range. This relationship is expected to
continue through the next year. 
We continue to have discussions with
a number of companies concerning
additional products, some of which
are at an advanced stage, and this will
remain a key focus of the year ahead.
Cash
Tight cash management has been
maintained throughout the year, with a low
cash burn of £4.8m, inclusive of the £4.6m
that was paid to Parke Davis in respect of
Diclomax
®
. During the year we received
a further £1.5m from Dr Falk Pharma
following the agreed early termination
of the distribution agreement with them,
and £0.6m (before costs of £0.3m) of the
£1.6m awarded against Dimethaid in the
successful arbitration claim Provalis
commenced for their wrongful termination
of the Pennsaid
®
distribution agreement,
with a further £0.1m recovered since
the year end.
Provalis ended the year with £1.8m in
cash and deposits, with a £3.0m revolving
bank facility available and a further £0.6m
of the grant from the Welsh Assembly
to be drawn down over the next two
years, conditional upon further capital
expenditure and job creation. This will be
supplemented by the receipt of the final
payment from Dr Falk in January 2005,
which is expected to be the full £2.0m.
In addition, the final payment for
Diclomax
®
will be made to Parke Davis
in November 2004, which will free up cash
to be used in the development of our
two businesses.
We keep our working and investment
capital under constant review. Having
now seen the initial market feedback for
in2it™ exceeding our expectations, we are
undertaking a placing to raise £2.6m,
before expenses of £0.1m, during
September 2004. This, together with
our cash balance and bank facility,
will enable the Group to expand its
manufacturing supply base, accelerate
the development of additional tests for
the in2it™ platform and ensure the
Company can meet the demand for,
and make the most of the opportunities
presented by, this product.
Looking forward
2005 will prove to be an exciting year,
with the launch of in2it™ A1c and its first
sales through our own US sales force,
the introduction of Erdotin™ in the UK
and the FDA filing of a second test for
high sensitivity CRP for use on the in2it™
diagnostic platform.
We remain committed to building a viable,
fast growing and diversified healthcare
group that will achieve profitability at
the earliest opportunity. We believe
that the step change in our diagnostics
sales potential in the US, coupled
with the sound profitable base of our
Pharmaceuticals business, will lead
to a revaluation of the Company by
the market.
Appreciation
Finally, I must thank all of our employees
for their dedication, determination and
sheer hard work this year. They have done
a great deal and have met important
milestones for the Group.
I and they are looking forward to
significant success for the Group and,
although much still needs to be done,
I believe we are now well placed to
achieve this.
Frank Harding
Chairman
WE REMAIN COMMITTED TO BUILDING A VIABLE, FAST GROWING AND
DIVERSIFIED HEALTHCARE GROUP THAT WILL ACHIEVE PROFITABILITY
AT THE EARLIEST OPPORTUNITY. 
Provalis plc Annual Report and Accounts 2004 3 4 Provalis plc Annual Report and Accounts 2004
Chief Executive Officer’s Review of Operations
In 2004 Provalis’ two key marketed
products remained the diabetes
management diagnostic Glycosal
®
, which
is sold worldwide, and the anti-arthritis
medication Diclomax
®
, which is sold in the
UK and Ireland. In the next few months we
expect that these products will be joined by
in2it™ A1c, our new fully automated
diabetes diagnostic aimed particularly
at the US, European and Japanese
markets. That will be followed by the
launch of Erdotin™, the next generation
pharmaceutical mucolytic product, onto
the UK and Ireland markets early in 2005.
Medical Diagnostics
Glycosal
®
Our distributors continued to order 200–300
Glycosal
®
instruments per month during
2004, with Provalis now having sold over
10,000 instruments. The placement to end
users continues steadily, with more markets
now penetrated. This reinforces our belief
that there is considerable demand for point
of care diabetes management testing and
sets the stage for our introduction of
in2it™ A1c. 
The difficulty with Glycosal
®
over the last
year has been the low “pull-rate” of the
test cartridge as, despite Provalis having
shipped over two million test cartridges to
customers, the usage of the cartridges per
installed instrument has been behind our
expectations. The market research we have
carried out in the US has highlighted that
cartridge use has been impaired by the
perceived lack of ease of use of the test.
The semi-manual nature of the Glycosal
®
test, although not a problem for physicians
at the outset, has proved to be difficult to fit
into nurses’ work flows in busy practices.
This has led to them either changing their
work practices to accommodate use of
the product or, more usually, only using
Glycosal
®
on an infrequent basis. Pleasingly,
at no point have we found that technical
performance or adverse pricing has led
to a cessation of cartridge usage and
a reversion to using laboratory services.
Sales of Glycosal
®
test cartridges were also
unexpectedly influenced by distributor
destocking. This was as a response to
their own lengthy sub-distribution
networks being overstocked due, in part,
to forecasting inaccuracies and the skew
of demand caused by the large, one-off
order to Abbott Laboratories in the first
part of last year. Stock readjustment and
smoother forecasting has now taken place
and sales of the Glycosal
®
test cartridges
have returned to more consistent levels.
Glycosal
®
’s penetration of new markets
continues to provide additional revenues
and we expect our distributors to
concentrate their efforts on such activities
over the next few years. Some of the
markets in which the product has only
recently been introduced, such as India
and China, could be significant.
Having now sold Glycosal
®
for more than
four years through distributors, Provalis
understands the detailed sales and supply
chain for point of care diabetes diagnostics.
We know that physician office practices in
the US, particularly those with one to three
physicians, are keen to begin point of care
testing for glycated haemoglobin. They are
calling for a test that is fully automated,
as well as having the proven technical
competency and cost advantages of
Glycosal
®
, to ensure it fits smoothly
into physicians and nurses’ work flows.
in2it™ A1c is this test. 
in2it™ – Provalis’ new diagnostics platform
in2it™, previously code named G5, is a
fully automated point of care diagnostic
platform with the capability to run many
different diagnostic tests. The first test
developed for the platform is for glycated
haemoglobin or A1c. 
in2it™ A1c has been designed with the
needs of busy diabetes clinics and GP
surgeries in the US in mind and delivers
“real time” results, as accurate as those
obtained from a full clinical laboratory,
in less than seven minutes. Extensive
trials of the product have been carried
out at six centres in the US and Europe,
assessing hundreds of patients using
multiple instruments. Feedback from
physicians and nurses involved in these
trials confirmed that in2it™ A1c meets the
market needs of ease of use, accuracy,
robustness and economic pricing.
Provalis filed all necessary US regulatory
submissions in mid–June 2004 and we
were delighted to receive clearance from
the FDA to sell the product in the US less
than two months later and the grant of
CLIA waiver shortly after. Together, these
will allow the Company to rapidly exploit
the sales potential of in2it™ A1c into all
physicians’ offices and diabetes clinics
and eventually to diabetics for use at home.
We remain on track to supply in2it™ A1c
to the US before the end of 2004 and
remain very excited about the prospects
for the product. Indeed, we are delighted
with the considerable interest in the product
from a number of health management
groups, distributors, pharmacy chains
and pharmaceutical companies that has
exceeded our expectations. We believe
that in2it™ A1c will be the best product
for point of care testing of diabetics that
is commercially available.
Medical Diagnostics R&D
Over the year we expanded the R&D team
by bringing a number of engineering
functions, vital for instrument development,
in house. This will now allow us to
accelerate both the development of
additional tests for use on the system
and the advancement of the instrument
towards “home use” and “over the
counter” versions. However, because this
development work is mainly to be carried
out “in-house”, we expect a reduced R&D
spend over the next two years.
We are focusing the development of
additional tests on those which, like
in2it™ A1c, deal with chronic disease
and, importantly, have attractive levels 
IN2IT™ A1C HAS BEEN DESIGNED WITH THE NEEDS OF BUSY DIABETES
CLINICS AND GP SURGERIES IN THE US IN MIND AND DELIVERS “REAL TIME”
RESULTS, AS ACCURATE AS THOSE OBTAINED FROM A FULL CLINICAL
LABORATORY, IN LESS THAN SEVEN MINUTES.
Dr Philip Gould, Chief Executive Officer Provalis plc Annual Report and Accounts 2004 5
“Test results from
the in2it™ A1c
diagnostic product
have been very
positive, exceeding
our expectations
in terms of accuracy
and ease of use”
We expanded the R&D team over the year,
allowing us to accelerate the development 
of additional tests for the in2it™ platform.
Provalis will rapidly sell in2it™ A1c into
physicians’ offices and diabetes clinics. 6 Provalis plc Annual Report and Accounts 2004
Medical Diagnostics R&D (continued)
of reimbursement for the physician,
so giving them repeat usage and
a commercial return.
Our goal throughout the next two years will
be to introduce two new tests per year for
use on the in2it™ platform, with the first
intended to be for high sensitivity C-reactive
protein (“hsCRP”), for which US regulatory
filings are anticipated in the first half of
calendar 2005. hsCRP is a key measure of
the level of inflammation in coronary arteries
and is used in monitoring cardio-vascular
disease. A growing body of evidence
suggests that this inflammation plays
a key role in the biological processes
that can lead to the rupture of fatty deposits
in blood vessels which then hinders the
flow of blood to the heart, and is a leading
cause of heart attacks.
In addition, Provalis is developing a
revolutionary cartridge for use on the in2it™
platform that will conduct a number of
simultaneous diagnostic tests from a single
drop of blood. This work, which utilises
the micro-fluidics technology we are
developing for our future OTC platform,
Micro G, is ongoing with a technology
partner. We anticipate that this new
cartridge will be available from 2006, and
will accelerate the development of in2it™
into the point of care workstation of
choice for busy healthcare professionals.
Pharmaceuticals
The sales of our portfolio of prescription
drugs, which are sold in the UK and Ireland
through our own GP and hospital sales
force, advanced by 5% to £11.4m.
2004 was the first full year of operation
of our representative sales force in the
Republic of Ireland, where sales of €0.8m
were achieved – an excellent result.
Diclomax
®
Diclomax
®
, our lead pharmaceutical
product, produced a solid performance
in the year with sales of £6.1m and remains
highly profitable. Through marketing and
sales initiatives, Diclomax
®
’s market share
in the “plain” non-steroidal market has
continued to increase, and is now more
than 5%. Although the value of this market
segment has declined due to competition
from the newer COX2 inhibitors, we are
carrying out further sales initiatives and
new marketing programmes detailing
the benefits of Diclomax
®
to counter this
competition and we expect another solid
year of Diclomax
®
sales in the year ahead.
During the year we gained marketing
approval for Diclomax
®
in Ireland. Our Irish
sales force began detailing the product in
the fourth quarter and we are now seeing
an acceleration of the growth of sales as
physicians become aware of the benefits
of the product.
Other pharmaceutical products
The market for Calceos
®
, our product used
to treat and prevent osteoporosis, was
enhanced by the NICE recommendation
to limit the use of hormone replacement
therapy, which is used to prevent the
same condition. Provalis responded by
raising the priority of the product within
our own sales force and also using an
additional contracted sales force to
promote Calceos
®
. This, coupled with
a price reduction programme that we
shared with our suppliers, resulted in
a significant increase in the prescription
volume of the product and a growing
market share. We expect a strong year
for Calceos
®
in 2005 on the back of this
new marketing effort.
The Dr Falk range continued to sell steadily
in both the UK and Ireland and returned
sales of £3.6m. In particular we recorded
strong sales of Ursofalk
®
(£2.2m) and
Budenofalk
®
(£0.4m). We do, of course,
cease selling these products at the end
of 2004.
Erdotin™
In April we signed a distribution
agreement with Edmond Pharma for
the UK and Ireland rights to Erdotin™,
a second generation oral mucolytic.
The agreement also contains an option
for Provalis to acquire the product at any
time after the third year of sale. Erdotin™
(active ingredient erdosteine) will be used
to treat respiratory disease such as chronic
bronchitis and emphysema, chronic
obstructive pulmonary disease (“COPD”)
and conditions like glue ear in children.
Although products containing erdosteine
have been available in a number of
European markets for some time, the lack
of reimbursement in the UK made the
market unattractive. This changed when the
UK authorities reinstated reimbursement on
mucolytic agents in March 2003. Erdotin™
is currently undergoing European
registration, and launch of the product
is anticipated at the beginning of 2005,
making Erdotin™ one of the first of this
next generation of products available
in the UK.
This launch of Erdotin™ should coincide
with the time that we cease to distribute
the older Dr Falk range of products.
We expect the sales of Erdotin™ to grow
steadily as we promote it to doctors and
respiratory consultants such that, in the
medium term, it will generate profit to
replace that previously generated by the
sale of the Dr Falk range.
Vaccine technology licensing
Provalis conducted vaccine research and
development from 1998 and identified a
number of recombinant protein antigen
vaccine candidates to prevent common
infections. However, given the significant
costs required to fund the evaluation of
lead candidates into clinical trials, the
Group decided in mid-2002 that progress
of these programmes was beyond its
resources and that a number of the
programmes, together with all associated
rights, should be offered to potential
partners. Since that time the Group has
been reviewing proposals from a series
of interested parties and has now
concluded agreements on several of
them. In particular, our vaccine candidates
relating to haemophilus influenzae and
moraxella chatarrhalis antigens are
licensed to GlaxoSmithKline for the
development of an otitis media vaccine,
and an option to our Group B streptococcus
antigens programme has been granted to
Chiron Vaccines.
We are delighted to have reached these
agreements with these major worldwide
players in vaccine development.
Chief Executive Officer’s Review of Operations
(continued)
WE EXPECT THE SALES OF ERDOTIN™ TO GROW STEADILY SUCH THAT,
IN THE MEDIUM TERM, IT WILL GENERATE PROFIT TO REPLACE THAT
PREVIOUSLY GENERATED BY SALES OF THE DR FALK RANGE. Provalis plc Annual Report and Accounts 2004 7
The market for Calceos
®
was enhanced by
the NICE recommendations. We expect a
strong 2005.
Diclomax
®
had sales of £6.1m in the year,
and remains highly profitable.
“Pharmaceutical
sales advanced
to a record
£11.4m” 8 Provalis plc Annual Report and Accounts 2004
Chief Executive Officer’s Review of Operations
(continued)
“Feedback
from
physicians
involved in
the trials
confirm
in2it™ meets
the market
needs
of ease of
use, accuracy,
robustness
and economic
pricing”
Vaccine technology licensing (continued)
Collectively these provide long term
upside to our investors, potentially
involving multi-million pounds worth
of milestones and royalty payments.
Outlook
We remain very excited by the imminent
supply of in2it™ A1c to the US, where
we are seeing a true first for the
Company. We have taken a product from
conception through development to
regulatory approval, have developed
suppliers for low cost sourcing and
will be selling a product for diabetes,
a disease described as being at epidemic
proportions, into the world’s biggest
market, with our own sales organisation.
The forthcoming year should therefore
be transitional for the Group in terms of
diagnostics sales. With clearance from
the FDA obtained, and CLIA waiver now
granted, we fully expect to make our first
sales of in2it™ onto the US market in the
autumn. Given the significant interest we
have had from a number of parties thus
far, we anticipate that the early part of
the launch cycle may be limited by
product supply and we have already
brought forward the extension of our
manufacturing assembly and filling
capacity and are developing plans
to accelerate product supply.
At the same time we will manage a period
of transition for our Pharmaceuticals
business as we cease distributing the
older Dr Falk products and begin to focus
on our new primary care range of products. 
Our challenge remains the acquisition of
new products for the business, but with
the cessation in November of the payments
to Parke Davis for Diclomax
®
, and the
purchase option negotiated for Erdotin™,
we are now far more in control of our
future with our Pharmaceuticals business
than our previous pure distribution
business allowed. As the wave of
international consolidation of the
pharmaceutical industry continues,
we see good opportunities for the
business to develop both organically
and through the acquisition of products. 
With the operation now established in
the UK and Ireland, we are looking for
opportunities to take this business into
mainland Europe, either through an
alliance or joint-venture.
Current trading
Our sales in both businesses so far this new
financial year are meeting our expectations.
In our Pharmaceuticals business,
Diclomax
®
has entered a new marketing
cycle focused on countering the challenge
from the new COX2 inhibitors. Additionally,
the targeted promotion of Calceos
®
,
has resulted in increased market sales
growth. Sales of both products continue
to be strong.
In Medical Diagnostics, sales have got off
to a solid start and we continue to see
modest advances in the sale of Glycosal
®
to our two distributors. Bio-Rad continues
to make progress with the product largely
outside of the US, whilst Cholestech gains
most of its sales from the US. We are
noting improving sales to India, some
slightly greater volumes to Japan and
further South American countries coming
on stream. 
Following the recent US FDA 510K
clearance and grant of CLIA waiver for
in2it™ A1c, we have begun promoting
the product in the US. As part of the
launch programme, we unveiled in2it™
A1c at the American Diabetes Educators
Meeting in mid-August where interest from
potential distributors, health management
organisations, pharmacy chains,
pharmaceutical companies and healthcare
professionals was considerable. 
This level of interest has been sustained
since then, and indeed we have already
received firm and indicative orders
for over 1,700 systems, with further
distributors in the US being established
and new orders arriving steadily. This is
ahead of our expectations and we are
presently reviewing market forecasts.
We are in the final stages of completing
the manufacture of the launch batches
of product, which remain on track to be
shipped shortly, an event which will be a
further significant milestone for the Group.
Dr Philip Gould
Chief Executive Officer Provalis plc Annual Report and Accounts 2004 9
WE REMAIN VERY EXCITED BY THE IMMINENT SUPPLY OF IN2IT™ A1C ONTO
THE US MARKET. WE BELIEVE THIS PRODUCT WILL BE THE BEST POINT OF
CARE DIABETES TESTING PRODUCT COMMERCIALLY AVAILABLE.
Sales of Diclomax
®
are accelerating in Ireland
as physicians become aware of the benefits
of the product. 10 Provalis plc Annual Report and Accounts 2004
Financial Review
Turnover
Group turnover was £12.9m, a decrease
of £1.1m (8%) on the previous year. 
Pharmaceuticals sales grew £0.5m,
despite a slight decline of £0.3m in the
sales of Diclomax
®
.
Medical Diagnostics sales fell to £1.5m
from £3.1m. It should be remembered
that 2003 benefited from the one-off
supply of 1,300 instruments to Abbott
Laboratories which, as expected, did not
recur in 2004 and that sales of Glycosal
®
test cartridges were unexpectedly
influenced by distributor destocking
in the first half of the financial year.
Gross profit
At £7.3m the gross margin was 57%,
up 2% on the prior year.
The gross margin in Medical Diagnostics
fell as an unchanged manufacturing fixed
cost base was required despite the lower
levels of activity. As levels of activity
increase following the launch of in2it™,
margins should improve.
The Group gross profit percentage
improved as Medical Diagnostics
represented a lower proportion of
Group sales and it has a lower margin
than the Pharmaceuticals business.
Selling and distribution costs
Selling and distribution costs at £4.0m
(2003: £3.1m) increased due to a full year
of expenditure on the business in Ireland
which commenced in February 2003
and additional investment in marketing
activity in the Pharmaceuticals business.
In particular, following a NICE
recommendation to limit the use
of hormone replacement therapy for
the treatment and prevention of
osteoporosis, a contracted sales force
was used to promote Calceos
®
which
is used to prevent that condition.
Amortisation of intangible assets
The amortisation charge on Diclomax
®
at £1.4m continued to be the largest
non-cash charge within the Profit and Loss
Account. The investment in Diclomax
®
is
being amortised over a ten year period.
Administration costs 
Administration costs are up £0.3m on
last year to £3.5m (2003: £3.2m) due to
increased regulatory costs and inflation.
R&D costs
R&D costs are down £0.3m to £1.7m
(2003: £2.0m). Spend in the vaccine
business has now ceased following
the decision in 2003 to discontinue our
activity in therapeutic research and
development. The recent agreement
with Chiron may provide long term
upside to investors at no further cost
to the Group. The Medical Diagnostics
business invested £1.7m (2003: £1.6m)
in R&D activities as the in2it™ diagnostics
platform and the in2it™ A1c test were
finalised and filed for registration with
the FDA in June 2004.
Discontinued activities
Discontinued activities relate to
programmes in the vaccines research
business of Therapeutics R&D, which
closed during the prior period.
Exceptional items
The variation of the distribution agreement
with Dr Falk Pharma has resulted in £1.5m
being received in February 2003, £1.5m in
January 2004 and up to a further £2.0m
in January 2005. £3.4m of these receipts
are unconditional and were recognised
in 2003, a further £1.0m has been
recognised in 2004 and the remaining
£0.6m may be recognised in 2005
contingent on the levels of sales of Falk
products in the second half of calendar
year 2004.
In December 2003 the Group announced
that the arbitration it commenced against
Dimethaid International Inc. following
Dimthaid’s termination of the Pennsaid
®
distribution agreement had been decided
in Provalis’ favour. The Group was
awarded a total of £1.6m although,
because of continued uncertainty in the
receipt of these monies, the award will
only be recognised to the extent that its
recovery is considered to be sufficiently
certain. In 2004 the Group has recognised
receipts of £0.7m offset by £0.3m of costs.
A further £0.9m may be recognised in the
financial year 2005, however Dimethaid
has been unable to meet the agreed
payment schedule and is in arrears.
We understand that Dimethaid will need
to raise additional funding in order to
make further payments, but do not know
when, or if, this will happen.
THE FINANCIAL OBJECTIVES OF THE GROUP ARE THE GENERATION OF
OPERATING PROFITS IN THE MEDICAL DIAGNOSTICS AND PHARMACEUTICALS
DIVISIONS AND THE RE-INVESTMENT OF A PROPORTION OF THOSE PROFITS
IN R&D PROJECTS.
Peter Bream, Finance Director
Turnover 2004 2003
£’m £’m
Diclomax
®
6.1 6.4
Other products 5.3 4.5
Total Pharmaceuticals 11.4 10.9
Medical Diagnostics 1.5 3.1
Total turnover 12.9 14.0 Provalis plc Annual Report and Accounts 2004 11
Pre-tax loss
The pre-tax loss of £1.8m is a deterioration
of £3.1m on the £1.3m profit reported
last year. The operating loss increased
by £1.2m to £3.3m.
Taxation
In December 2003 the Inland Revenue
rejected a claim for R&D tax credits in the
Medical Diagnostics business for the year
ended 30 June 2002. The Group is strongly
contesting the Inland Revenue’s decision.
Cumulatively, the Group had recognised
£0.4m in respect of the R&D tax credits
for the Medical Diagnostics business.
However if the Group’s appeals are
unsuccessful, £0.3m of cash received
to date in respect of tax credits may have
to be repaid, and a provision for this has
been included in the tax charge for the
period. The Inland Revenue accepted the
claim for the R&D tax credits for the
Therapeutics business at an amount of
£0.1m in excess of the credits previously
recognised in the accounts.
Cash and cash flow
The cash and short term deposits at the
end of the year were £1.8m. Cash outflow
from operating activities was £1.5m
(2003: £0.7m) due to the underlying
operating performance offset by improved
working capital management.
The other significant cash flows during
the year were; £4.6m repayments in
respect of Diclomax
®
(leaving £1.8m
outstanding which is payable by weekly
instalments until November 2004),
£0.8m of Medical Diagnostics capital
equipment expenditure, offset by the
receipt of the second instalment of £1.5m
from Dr Falk Pharma following the
variation of the distribution agreement
and £0.6m from Dimethaid (before costs
of £0.3m) as a result of the successful
arbitration proceedings against them.
During the year the Group received
the first instalment of the grant from
the Welsh Assembly. £0.2m has been
received from the total of £0.95m
awarded and is linked to capital
expenditure and employment creation
in relation to further development of
the cartridge manufacturing base
at Deeside.
The cash available to the Group will
be augmented by the proposed placing
during September 2004 of just under 10%
of the issued share capital of the Company
which will raise £2.6m, before expenses
of £0.1m. This will be used to support the
growth of in2it™ in the US.
Shareholders’ funds
The Group ended the year with
shareholders’ funds of £15.0m
(2003: £17.1m) reflecting the loss
for the year.
Treasury and funding 
In December 2003 the Group entered
into a £3.0m facility with Barclays Bank
committed for three years. Funds under
this revolving facility are available at 1.1%
over LIBOR. At the year end this facility
had not been utilised.
The Group continually reviews its cash
and debt management, with control over
treasury management exercised by
the Board through the setting of policy
and the reviewing of rolling cash flow
forecasts. The Group does not engage
in speculative transactions or derivatives
trading in respect of cash balances held
and the policy is to derive the maximum
interest return consistent with flexibility
to undertake ongoing activity whilst
safeguarding the asset.
The Group is exposed to US Dollar and
Euro currency exchange rate movements.
The Group has a net outflow of Euros
and a net inflow of Dollars. The Group
reviews these exposures on a frequent
basis and undertakes some limited
hedging activity to meet near term
future forecast requirements. 
International Financial Reporting
Standards (IFRS)
As a UK listed company, Provalis will be
required to adopt IFRS which will replace
UK GAAP for Group reporting for the year
ending 30 June 2006. During the year we
have conducted an initial assessment of
the potential impact of IFRS on Provalis’
reporting and identified the principal areas
potentially affected. Following completion
of this initial assessment we have
initiated a project plan to evaluate the
impact of IFRS in detail and to develop
changes in Provalis’ accounting policies
and processes.
Peter Bream
Finance Director 12 Provalis plc Annual Report and Accounts 2004
Board of Directors
Mr Frank Harding 
Non-executive Chairman aged 66
Frank Harding was appointed as a non-executive
director of the Company in November 1998 and became
Chairman in November 1999. He is also non-executive
Chairman of KLM Cityhopper UK Limited and a director
of Sitka Health Fund VCT plc. Mr Harding is a Chartered
Accountant who was a partner in KPMG from 1967 to
1996 and who from 1997 to 2000 was President of the
International Federation of Accountants.
Dr Philip Gould 
Chief Executive Officer aged 50
Phil Gould joined the Group in January 1998 as
Director of Research and Development and became
Chief Executive Officer in January 1999. He is also the
non-executive Chairman of Lectus Therapeutics Limited.
Prior to joining Provalis, he was Head of New Product
Introduction at GlaxoWellcome. Before GlaxoWellcome,
Dr Gould worked at a number of other pharmaceutical
companies, including Reckitt & Colman Pharmaceuticals,
Pfizer Central Research and Lederle Laboratories.
Dr Gould became a Fellow of the Royal Society of
Chemistry in 1990. He has a BSc (Hons) in Chemistry
and a PhD in Physical Chemistry from the University
of Hull and has published widely on drug delivery
systems. He is also an Honourary Professor of
Health Sciences at John Moore’s Liverpool University.
Dr Gould is also the inventor of four patented
pharmaceutical systems.
Mr Peter Bream
Finance Director aged 37
Peter Bream joined the Group in July 2003 as Finance
Director from API Group plc, a specialised packaging
group, where he was Finance Director for the Group’s
largest division. Following a degree in Engineering
and Management from Cambridge University,
he trained with Coopers & Lybrand Deloitte (now
PricewaterhouseCoopers) spending significant time
in management consultancy and on corporate finance
projects. After qualification as a Chartered Accountant
in 1991, he joined Esso UK, undertaking financial
accounting, management accounting and strategic
planning roles before joining Gestetner Group plc as
Group Accountant and subsequently API Group plc.
Ms Christine Soden 
Non-executive director aged 47
Christine Soden was appointed as a non-executive
director of the Company and as Chairman of the
Audit Committee in March 2000. Ms Soden, who
currently holds the position of Chief Financial Officer
of Oxagen Ltd, was previously Finance Director of
Chiroscience Group plc and, following its merger
with Celltech Group plc, Chief Financial Officer of
Celltech Chiroscience plc. Ms Soden, who qualified
as a Chartered Accountant in 1981, has extensive
experience in the pharmaceutical industry in finance,
business development and investor relations.
Dr David Bloxham 
Non-executive director aged 57
David Bloxham was appointed as a non-executive
director of the Company in May 2000. Dr Bloxham
is the Chairman of Evolutec Group plc and was
previously Chief Executive of Cobra Therapeutics
Limited, now a wholly owned subsidiary of
ML Laboratories plc. Dr Bloxham has formerly held
positions of Research and Development Director
and Chief Operating Officer of Celltech Group plc.
Dr Bloxham obtained a degree in Biochemistry
in 1971 at the University of Southampton, and
has held a number of senior industrial positions.
Frank Harding, Chairman Dr Philip Gould, Chief Executive Officer Peter Bream, Finance Director
Christine Soden, Non-executive director Dr David Bloxham, Non-executive director Provalis plc Annual Report and Accounts 2004 13
Senior Management
Mr Lee Greenbury
Company Secretary aged 40
Lee Greenbury joined the Company as Group Legal
Counsel in July 1998. He became Company Secretary
in November 1998, and has subsequently taken on
the additional role of Director of Corporate Affairs.
Mr Greenbury joined Provalis from The Boots
Company plc where he was Commercial Legal
Adviser. Mr Greenbury qualified as a Solicitor
in 1989.
Mr John Curtis
Managing Director, Provalis Diagnostics aged 53
John Curtis joined the Group in October 1996 as
Managing Director of Provalis Diagnostics Limited.
Between 1979 and 1996 Mr Curtis was Managing
Director of Wilj International Limited, before
which he was Product Director for Wellcome
Diagnostics from 1976 to 1979. He has founded
and co-founded a number of companies in the
pharmaceutical and diagnostics sectors including
Clinical Innovations Limited, Meduser Systems
Limited and Anagen plc. Mr Curtis is the inventor
of several novel systems in medical diagnostics,
including closed system genetic probe analysis,
decontamination of dispensing systems, computer
control of multiple precision movement mechanics
and measurement of ultra-low amounts of light
derived from chemi-luminescent reactions.
Mr Mark Keeling
Managing Director, Provalis Healthcare aged 44
Mark Keeling joined the Group in April 1993 as
General Manager of Provalis Healthcare Limited and
he was promoted to Managing Director in September
1999. Mr Keeling has a BSc in Pharmacology from
the University of Aberdeen and is a member of the
Pharmaceutical Marketing Society. Before joining the
Group Mr Keeling was Marketing Manager for Kent
Pharmaceuticals. He has also worked at a number of
pharmaceutical companies including Evans-Kerfoot,
Berk Pharmaceuticals and Rorer Healthcare.
Lee Greenbury, Company Secretary John Curtis, Managing Director,
Provalis Diagnostics
Mark Keeling, Managing Director,
Provalis Healthcare
Board Committees
Audit Committee
Christine Soden (Chairman)
Dr David Bloxham
Frank Harding
Nominations Committee
Frank Harding (Chairman)
Christine Soden
Dr David Bloxham
Remuneration Committee
Dr David Bloxham (Chairman)
Christine Soden
Frank Harding 14 Provalis plc Annual Report and Accounts 2004
Directors’ Report
The directors present their Annual Report on the affairs of the Group, together with the accounts and Auditors’ Report, for the year
ended 30 June 2004.
Principal activities and business review
The Group’s activities are organised into two divisions; Medical Diagnostics and Pharmaceuticals. Details of the activities within each
of these divisions, of the Group’s performance during the year and of expected future developments are contained in the Chairman’s
Statement and the Chief Executive Officer’s Review of Operations on pages 2 to 9. The subsidiary undertakings principally affecting
the results of the Group in the year are listed in note 12 to the accounts. 
Results and dividend 
The audited accounts for the year ended 30 June 2004 are set out on pages 24 to 40. The Group loss for the year, after taxation,
was £2.1m (2003 profit: £1.3m). The directors do not recommend the payment of a dividend.
Directors
The directors who served during the year were as follows:
Mr Frank Harding Chairman
Dr Philip Gould Chief Executive Officer
Mr Peter Bream Finance Director
Dr David Bloxham Non-executive Director
Ms Christine Soden Non-executive Director
Details of the current directors of the Company are shown on page 12.
Dr Philip Gould retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for reappointment.
Details of directors’ interests in the share capital of the Company, as shown in the register maintained in accordance with section 325
of the Companies Act 1985, together with details of share options granted and awards made to directors, are included in the Board’s
Remuneration Report on pages 18 to 22.
Internal controls 
The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’ investment and the Group’s
assets and for reviewing its effectiveness. The approach adopted is described in the Corporate Governance Statement on pages 16
and 17. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can only
provide reasonable, and not absolute, assurance against material misstatement or loss.
The Board has reviewed the operation and effectiveness of the Group’s system of internal control for the financial year and the period
up to the date of approval of the financial statements. The Audit Committee assists the Board in discharging its review responsibilities
and also reviews the content and consistent application of accounting policies.
Stakeholder report – employees, environmental and corporate citizenship 
All senior managers can earn bonuses upon the achievement of exacting individual and corporate objectives. Further details are set
out in the Board’s Remuneration Report on pages 18 to 22.
The Group seeks to be a good corporate citizen by supporting local good causes via staff sponsorship. However, to preserve investor
funds the Group did not make any direct charitable donations in the year, nor did it make any political donations.
The Group has strict environmental policies on the discharge of waste and attempts to recycle as much paper, board and plastics
material as is practically possible.
Supplier payment policy
The Group has not agreed to follow any code or standard on payment practice. The Group’s policy is to settle terms of payment with
suppliers when agreeing the terms of each transaction, to ensure that suppliers are made aware of the terms of payment and to
endeavour to abide by the terms of payment. Trade creditors of the Group at 30 June 2004 were equivalent to 46 days (2003: 50 days)
purchases, based on the average daily amount invoiced by suppliers during the year. The Company itself does not trade and so does
not have any supplier payment terms.
Substantial shareholdings 
As at 16 September 2004, the Company had been notified, in accordance with sections 198 to 208 of the Companies Act 1985, of the
following interests in the ordinary share capital of the Company:
Shareholder %
Yggdrasil AB 15.83
Schroder Investment Management 9.59
Barclays Personal Investment Management 7.13
TD Waterhouse Investor Services 5.28 Provalis plc Annual Report and Accounts 2004 15
Buy-back of shares
Under its Articles of Association, the Company has the ability to buy-back its own shares.
Employment
The Group recognises, and places considerable value on, the contribution made by all employees to the development of the Group
and the achievement of its goals. The Group seeks to keep all of its employees informed on matters affecting them as employees
and affecting the Group as a whole.
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned.
In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues
and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled
persons should be identical, as far as possible, with that of other employees.
Accounts, including adoption of going concern basis 
Company law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of affairs
of the Company and Group and of the profit or loss of the Group for that period.
After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing
the accounts.
In preparing the accounts, the directors are required to:
● select suitable accounting policies and then apply them consistently;
● make judgements and estimates that are reasonable and prudent; and
● state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained
in the accounts.
The directors confirm that they have complied with the above requirements in preparing the accounts.
Other matters 
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the Company and Group and enable them to ensure that the accounts comply with the Companies Act 1985. They are
also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Auditors
A resolution will be proposed at the Annual General Meeting to reappoint KPMG Audit Plc as auditors for the ensuing year, and to
authorise the directors to fix their remuneration.
By order of the Board,
L Greenbury 
Secretary
Newtech Square
Deeside Industrial Park
Deeside
Flintshire CH5 2NT
16 September 2004 16 Provalis plc Annual Report and Accounts 2004
Corporate Governance Statement
In July 2003, the Financial Reporting Council in the UK issued the revised Combined Code on Corporate Governance which supersedes
the Combined Code published by the Hampel Committee in 1998. The revised Combined Code applies for reporting years beginning
on or after 1 November 2003, and so will be reported on in the Company’s next Annual Report. This Report has been prepared with
reference to the original Combined Code.
Statement of compliance with the Code of Best Practice 
The Board believes that the Company complies with the Provisions of the Code of Best Practice set out in section 1 of the Combined Code.
Code Provision D.3.1 requires the members of the Audit Committee to be named in the Report and Accounts. Ms Christine Soden
(Chairman of the Audit Committee), Dr David Bloxham and Mr Frank Harding are the current members of the Audit Committee. All three
have experience of Audit Committee activities in other groups, and both Ms Soden and Mr Harding are Chartered Accountants. At all
times during the year, the Audit Committee, in compliance with Code provision D.3.1, comprised of three non-executive directors, all of
whom attended each meeting of the Audit Committee held during the year.
Statement about applying the principles of good governance 
The Board has applied principle D.2 of the Combined Code by establishing a continuous process for identifying, evaluating and
managing the significant risks the Group faces. The Board regularly reviews the process, which has been in place from the start
of the year to the date of approval of this Report and which is in accordance with Internal Control: Guidance for Directors on the
Combined Code published in September 1999.
The Board’s monitoring covers all controls, including financial, operational and compliance controls and risk management. The Board
has also performed a specific assessment for the purpose of this Annual Report. This assessment considers all significant aspects
of internal control arising during the period covered by the Report. Further explanation of how the principles have been applied is
set out below and, in connection with directors’ remuneration, in the Board’s Remuneration Report on pages 18 to 22.
Non-executive directors
The Company currently has three non-executive directors, all of whom are independent. The Company has named Ms Christine Soden
as its senior independent director.
Division of responsibilities between Chairman and Chief Executive Officer 
The Board has divided the responsibilities for running the Board and running the Company’s business between the non-executive
Chairman and the Chief Executive Officer respectively.
Board balance 
The Company’s commitment to achieving a balance of executive and non-executive directors remains. There are currently three
non-executive directors and two executive directors.
Timeliness and quality of Board information 
The Board has sought to ensure that directors are properly briefed on issues arising at Board meetings. Board papers are completed
and are distributed well in advance of meetings. The Board considers the adequacy of the information provided before making decisions
and adjourns meetings or defers decisions when concerns exist about the information available to them. The Board has adopted a
formal schedule of matters specifically reserved for decision by the Board.
Transparency of Board appointments 
Mr Frank Harding (Chairman of the Nominations Committee), Ms Christine Soden and Dr David Bloxham are the current members
of the Nominations Committee. The Nominations Committee is responsible for identifying appropriate candidates for the Company’s
executive and non-executive posts and for recommending such candidates to the Board. 
Regular re-election of Directors
Code Provision A.6.2 of the Code of Best Practice set out in section 1 of the Combined Code requires all directors to submit themselves
for re-election at intervals of no more than three years. The Company’s Articles of Association ensure the Company complies with
this provision of the Code. As disclosed in the Directors’ Report, Dr Philip Gould is retiring by rotation at the forthcoming Annual
General Meeting and is offering himself for re-election. Provalis plc Annual Report and Accounts 2004 17
Dialogue with shareholders 
The directors seek to build on a mutual understanding of objectives between the Company and its shareholders, in particular by
communicating regularly throughout the year. The Company website www.provalis.com also provides up to date information to
existing and potential investors.
Maintenance of a sound system of internal control 
In applying the principle that the Board should maintain a sound system of internal control to safeguard shareholders’ investment
and the Company’s assets, the directors recognise that they have overall responsibility for ensuring that the Group maintains a
system of internal control to provide them with reasonable assurance regarding effective and efficient operations, internal control
and compliance with laws and regulations. As reported below, the Board has delegated responsibility to the Audit Committee for
more regular reviews of both key risks and internal controls and the Audit Committee has kept these areas under review during the
year. The Board has also reviewed both the key risks faced by the Group and the effectiveness of the Group’s internal control
procedures during the year.
In addition, the Group has an ongoing process for identifying, evaluating and managing the significant risks that it faces. This process
includes analysis of the impact on the operation of key risks and the action being taken to avoid or reduce each risk. The risk
schedule allocates responsibility for management of each key risk to appropriate senior executives. The Group also has a system
of control procedures, including annual budgeting and monthly reporting (in which actual results are compared to budget and
significant variances highlighted), and capital and other expenditure being subject to review in accordance with authorisation
procedures measuring both the financial and legal impact. Compliance with these processes and systems is monitored and any
significant issues are reported to the Audit Committee.
These processes have been in operation throughout the year and up to date of signing this Report and have identified the launch
of in2it™A1c onto the US market, the finding of replacement products for the Pharmaceuticals business, reliance on key suppliers
to both of the operating businesses, competitor activity in general and the availability of funding to ensure the future growth of the
business as the key risks facing the Group. Each of these risks has been evaluated and actions have been put in place to address
them that the Board considers appropriate. 
Although the Board and the Audit Committee have implemented the above systems of internal controls, there are inherent
limitations in any system of internal control and accordingly even the most effective system can provide only reasonable, and not
absolute, assurance against material misstatement or loss.
Audit Committee
The Audit Committee has detailed and specific terms of reference covering such matters as membership of the Committee, frequency
of meetings and roles and responsibilities.
The Audit Committee meets at least three times a year, once each to review the interim and final accounts, and once to review internal
controls and other operating matters. The Committee will also meet on an ad hoc basis if and when necessary.
The Committee reviews the internal controls and risk management assessments at least twice a year. It ensures that any perceived
weaknesses in internal controls are addressed as effectively as possible and that suitable actions are taken to control, manage
or limit business risks. The Committee ensures that the external audit focuses on those areas of most significant risk to the
Group’s business.
The Committee reviews the Group’s monthly management accounts, budgets and forecasts and compares these with external
evidence in order to ensure that the financial statements appear reasonable. 
The Interim and Annual Reports are reviewed by the Committee, in conjunction with information supplied by the external auditors
and other external sources of advice, in order to ensure they reflect the Group’s business operations and comply with current laws,
regulations and standards.
The Audit Committee recommends the appointment of auditors, and reviews the independence of the auditors both before their
appointment and regularly thereafter. The auditors provide the Committee with confirmation of their independence and of their
processes for ascertaining that independence.
The Audit Committee has a policy on those non-audit services that may be provided by the auditors. In essence, the external
auditors may not provide any service which would put them in the position of having to give an audit opinion either upon services
they have provided, or on any areas where they might be required to form a material judgement on which the Group would act.
The Audit Committee regularly reviews the need to appoint a dedicated internal audit function. Given the small size and low
complexity of the Group, the Audit Committee currently believes that such a function is not necessary.  18 Provalis plc Annual Report and Accounts 2004
The Board’s Remuneration Report
As well as complying with the Provisions of the Code of Best Practice as disclosed in the Company’s Corporate Governance
Statement, the Board has applied the Principles of Good Governance relating to directors’ remuneration as described below.
Statement of remuneration policy 
The remuneration policy is set by the Board and is described below. Individual remuneration packages are determined by the
Remuneration Committee within the framework of this policy. Dr David Bloxham (Chairman of the Remuneration Committee),
Ms Christine Soden and Mr Frank Harding are the current members of the Remuneration Committee. Throughout the year,
the members of the Remuneration Committee have all been non-executive directors of the Company. 
The Remuneration Committee is responsible for setting the remuneration of all executive directors and senior executives earning
a basic salary in excess of £75,000 per annum. It investigates and takes account of remuneration paid to the directors and senior
executives of other companies of a similar size and comparable industry sector, and the relative performance of such companies,
to ensure that the levels of remuneration paid by the Group are appropriate. The Remuneration Committee has access to independent
advice where it considers it appropriate but has not done so this year, as a report detailing executive remuneration in comparable
UK companies was commissioned by the Remuneration Committee and received from Halliwell Consulting during the previous year. 
The main objective of the Remuneration Committee is to ensure that the Company pays total compensation packages to its directors
and senior executives that:
● are competitive within its sector;
● enable the Company to attract and retain high calibre staff; and
● provide an incentive to achieve long term growth of the Company as reflected in improved returns to shareholders.
As reported in last year’s Remuneration Report, the Remuneration Committee is pursuing a policy that maintains the relative levels
of basic salary and increases the level of performance related pay and equity participation for directors and senior executives as
detailed below.
Basic salaries
Directors and senior executives should receive basic salaries that are around the median level of compensation in the comparator
group, taking into account their job description, level of performance and experience.
Performance Related Bonus Scheme and Long Term Incentive Plan
A Performance Related Bonus Scheme linked to a Long Term Incentive Plan was introduced, after approval from shareholders at last
year’s Annual General Meeting, with effect from 1 July 2003. The objective behind the introduction of this scheme is to increase UK
directors’ and senior executives’ shareholding in the Company so that the interests of shareholders and employees are better aligned.
Under this scheme:
● all directors and selected senior executives will be entitled to receive a performance related bonus of up to 50% of basic salary
(45% in the financial year 2003–2004). The performance criteria for the bonus payment are determined annually by the Remuneration
Committee at the commencement of each year and are based on quantitative parameters linked to the Group’s budget and qualitative
parameters relating to the strategic development of the business;
● the amount of the bonus payable is determined by the Remuneration Committee following the end of the financial year based upon
performance against the objectives;
● each executive receiving such a performance related bonus is required to invest between 25% and 50% of any after tax bonus
payment in the purchase of shares in the Company on the open market; and
● the Company will provide a long term incentive linked to this share purchase under which each executive could receive further
shares in the Company if;
● the executive remains employed by the Group for at least three years;
● the executive retains beneficial ownership of all shares purchased by him using the bonus payment until the additional shares
are transferred to him; and
● the Company’s share price increases by a pre-determined percentage during the three year period.  Provalis plc Annual Report and Accounts 2004 19
Performance Related Bonus Scheme and Long Term Incentive Plan (continued)
There are currently five senior executives participating in the scheme although it is intended to extend participation to some executives
outside this senior level but with lower potential levels of bonus payments. The maximum number of participants, given the Company’s
current size, should be no more than ten.
In the last financial year, each executive director was entitled to a discretionary bonus of up to 45% of basic salary. The Committee
had established an individual set of quantitative and qualitative objectives for each director at the start of the year based on the level
of sales and operating profit, the in-licensing of products, the outcome of the arbitration with Dimethaid, the commercialisation strategy
for in2it™, the setting up of manufacturing facilities for in2it™, the out-licensing of vaccine programmes and the adequacy of finance
for 2004 and 2005. The Remuneration Committee decided that discretionary bonuses of £41,496 and £12,600 should be paid to
Dr Philip Gould and Mr Peter Bream respectively, based upon the extent to which each of these objectives had been met. 
These first annual bonuses to the executive directors and to the three other participating executives were paid in August 2004.
Each of them has complied with his obligation to purchase shares in the Company. The Remuneration Committee has determined
that provided the individual executive complies with the requirements set out on page 18 the long term incentive linked to these share
purchases shall be that he shall receive one lot of matching shares if the Company’s share price increases by 100% or more (but by less
than 200%), two lots if the share price increases by 200% or more (but by less than 300%) or three lots if the share price increases by
300% or more, the increase in each case being determined over the three year period commencing on 30 June 2004.
It is expected that during the period of operation of this proposed scheme there will be no further grants of share options to directors
or senior executives under the existing Provalis 1997 Employee Share Option Scheme other than to new employees. 
Share Incentive Plan
It is ultimately intended to introduce a Share Incentive Plan, which will replace the Provalis plc Savings-Related Share Option
Scheme 2001, to incentivise those employees who are not eligible to participate in the Long Term Incentive Plan. The details
of this plan are still under consideration.
Bonus scheme for US employees
The Group operates a discretionary bonus scheme for its US employees linked to meeting both US business and individual objectives.
This scheme is under the general control of the Remuneration Committee. The objectives for the General Manager of the US business
are determined by the Remuneration Committee at the commencement of each financial year, with the objectives for the remaining
US employees being determined by the Group’s executive management. The amount of any bonus payable is determined following
the end of that financial year based upon performance against these objectives.
Existing Share Option Schemes
The Company has operated the Provalis plc 1997 Employee Share Option Scheme and the Provalis plc Enterprise Management
Incentive Scheme to provide a longer term incentive for directors and senior executives, as well as other employees of the Company.
The only options granted during the year under these schemes were those to Mr Peter Bream under the Provalis plc Enterprise
Management Incentive Scheme following his appointment as Finance Director. The number of options granted to him was
determined by reference to initial grants made to the previous Finance Directors of the Company.
The exercise of all options granted under this scheme on or after 16 April 2000 is subject to the achievement of performance conditions
which were determined by the Remuneration Committee, but there are no performance criteria applicable to grants made before
that date. These performance conditions are detailed on page 22, and were considered appropriate and demanding indicators of the
performance and growth of the Company.
The Company has also operated the Provalis plc Savings-Related Share Option Scheme 2001 in which all employees of the Company
employed for one year or more are entitled to participate. In common with most other schemes of this type, the exercise of options
granted under this scheme are not subject to performance conditions. This scheme is intended to be replaced by the Share Incentive
Plan referred to above.
Non-executive directors
The remuneration of the non-executive directors is determined by the Board as a whole, based on outside advice and review of current
practices in other companies. 
Full details
Full details of the remuneration packages of individual directors and information on share options, pensions and other benefits are
set out in this Report on pages 20 to 22. 20 Provalis plc Annual Report and Accounts 2004
The Board’s Remuneration Report
(continued)
Total shareholder return
The following graph charts the total cumulative shareholder return of the Company since 1 July 1999: 
The indices selected were the FTSE 350 index and the FTSE Pharmaceuticals and Biotechnology sector index as they are considered
to be broad indices which are appropriate comparators for the Company.
Directors’ service contracts and remuneration 
All senior executives of the Company have service contracts. None of the service contracts is for a fixed term. All of these service
contracts are terminable by the Company or by the executive on giving the specified period of notice. In each such contract,
the Company reserves the right to terminate the employment without notice and to make a payment of salary in lieu of such
notice. No such contract contains any provision quantifying the level of compensation payable to an executive for loss of office.
Details of the service contracts currently in place for directors are as follows:
(a) Dr Philip Gould was appointed a director on 30 November 1998. His service contract is with Provalis UK Limited and specifies
a notice period of twelve months on either side. His annual salary with effect from 1 July 2004 is £224,000 and he is entitled to
pension contributions of 12% of his annual salary into a money purchase scheme, the provision of a motor car or allowance,
private healthcare, permanent health and life insurance. In addition, he may also be entitled, depending on the achievement
of corporate and individual objectives which will be set by the Company’s Remuneration Committee, to bonus payments under
the Group’s discretionary bonus scheme up to a maximum of 50% of his salary. As a director, Dr Gould has been entitled to
participate in the Provalis plc 1997 Employee Share Option Scheme, the Provalis plc Savings-Related Share Option Scheme 2001
and the Provalis plc Enterprise Management Incentive Scheme. Details of the options granted to Dr Gould, and of the performance
conditions relating to each, are set out on page 22. Dr Gould is now entitled to participate in the Long Term Incentive Plan in
place of these earlier schemes.
(b) Mr Peter Bream was appointed a director on 1 July 2003. His service contract is with Provalis UK Limited and specifies a notice
period of six months on either side. His annual salary with effect from 1 July 2004 is £115,000 and he is entitled to pension
contributions of 12% of his annual salary into a money purchase scheme, the provision of a motor car or allowance, private
healthcare, permanent health and life insurance. In addition, he may also be entitled, depending on the achievement of corporate
and individual objectives which will be set by the Company’s Remuneration Committee, to bonus payments under the Group’s
discretionary bonus scheme up to a maximum of 50% of his salary. As a director, Mr Bream has been entitled to participate in the
Provalis plc 1997 Employee Share Option Scheme, the Provalis plc Savings-Related Share Option Scheme 2001, and the Provalis
plc Enterprise Management Incentive Scheme. As a new employee, Mr Bream was granted options during the year, details of
which, and of the related performance conditions, are set out on page 22. Mr Bream is now entitled to participate in the Long Term
Incentive Plan in place of these earlier schemes.
(c) The Chairman and other non-executive directors do not have service agreements. However, each has been appointed pursuant
to letters of appointments dated 11 November 1998 in respect of Mr Frank Harding, 5 May 2000 in respect of Ms Christine Soden
and 12 May 2000 in respect of Dr David Bloxham. Mr Harding, as Chairman of the Company, is paid £50,000 per annum. Ms Soden
and Dr Bloxham are each paid £21,000 per annum in respect of their directorship, together with an additional £5,000 per annum
in respect of their Chairmanship of the Audit Committee and Remuneration Committee respectively. No non-executive director
receives any other benefits. The appointment of each non-executive director can be terminated by one month’s notice on either
side. No letter of appointment contains any provision quantifying any compensatory payment on loss of office. Provalis plc Annual Report and Accounts 2004 21
The auditors of the Company are required to report on the information contained in the remainder of this Board’s Remuneration Report.
Directors’ emoluments 
Details of the directors’ emoluments for the year are as follows:
Salaries/ 2004 2003 2004 2003
Fees Bonus Benefits Total Total Pension Pension
£££ £ £ £ £
Current executive
Dr P Gould 218,400 41,496 13,068 272,964 254,823 26,208 25,200
Mr P Bream 105,000 12,600 8,496 126,096 — 12,600 —
Current non-executive
Mr F Harding 50,000 — — 50,000 50,000 — —
Ms C Soden 26,000
(1)
—— 26,000 26,000 — —
Dr D Bloxham 26,000
(2)
—— 26,000 23,500 — —
Former executive
Mr N Kirkby (resigned 04.04.03) — — — — 106,832 — 10,562
Total 425,400 54,096 21,564 501,060 461,155 38,808 35,762
Money purchase
pension contributions — — — 38,808 35,762
Aggregate remuneration 425,400 54,096 21,564 539,868 496,917
Notes
(1) Includes £5,000 per annum in respect of her Chairmanship of the Audit Committee.
(2) Includes £5,000 per annum in respect of his Chairmanship of the Remuneration Committee.
Directors’ interests 
The beneficial interests of the directors in the shares of the Company at 30 June 2004 were as follows:
2004 2003
Number Number
Executive
Dr P Gould 235,927 235,927
Mr P Bream 75,000 —
Non-executive
Mr F Harding
(3)
141,058 141,058
Dr D Bloxham 76,700 76,700
Ms C Soden 17,280 17,280
Notes
(3) In addition, Mr F Harding has a non-beneficial interest in 40,000 shares.
There has been no change in these beneficial interests between 30 June 2004 and 16 September 2004. The directors have agreed to
subscribe for shares as part of the proposed placing referred to on pages 3 and 11, under which Dr Gould, Mr Bream, Mr Harding,
Dr Bloxham and Ms Soden would acquire 114,762, 46,462, 125,000, 25,000 and 37,500 shares respectively. 22 Provalis plc Annual Report and Accounts 2004
The Board’s Remuneration Report
(continued)
Directors’ share options
The interests of the directors in share options of the Company at 30 June 2004 together with details of applicable performance
criteria were as follows:
At 1 July Granted in Lapsed in At 30 June Exercise Date from
2003 year year 2004 price which Expiry
Number Number Number Number £ exercisable date
Executive
Dr P Gould
1997 Employee Share
Option Scheme 65,000 — — 65,000 0.50 26.10.01 25.10.05
125,000 — — 125,000 0.50 26.10.02 25.10.05
250,000 — — 250,000 0.25 26.04.00 25.04.06
250,000 — — 250,000 0.25 26.04.01 25.04.06
250,000 — — 250,000 0.25 26.04.02 25.04.06
50,000
(1)
—— 50,000 0.25 19.04.02 18.04.07
50,000
(2)
—— 50,000 0.25 19.04.03 18.04.07
200,000
(1)
—— 200,000 0.13 29.03.04 28.03.08
60,000 — — 60,000 0.50 26.10.01 25.10.08
510,963
(3)
—— 510,963 0.0685 15.10.05 14.10.12
1,810,963 — — 1,810,963
Savings-Related Share
Option Scheme 2003 84,821 — — 84,821 0.112 01.06.05 30.11.05
Enterprise Management
Incentive Scheme 1,021,883
(3)
— 1,021,883 0.0685 15.10.05 14.10.12
Mr P Bream
Enterprise Management
Incentive Scheme — 250,000
(4)
— 250,000 0.117 14.10.06 13.10.13
The market price of the Company’s ordinary shares at 30 June 2004 was 7.375 pence and the range during the year was 5.750 pence
to 14.875 pence.
No options were exercised in the year ended 30 June 2003, and consequently no director made a gain on the exercise of share options
in that year.
Notes
(1) These options may be exercised provided that the closing price of the Company’s shares on the trading day immediately preceding
the date of exercise is not less than one and a half times greater than the closing price of the Company’s shares on the day which
is two years before the date of exercise.
(2) These options may be exercised provided that the closing price of the Company’s shares on the trading day immediately preceding
the date of exercise is not less than two times greater than the closing price of the Company’s shares on the day which is three
years before the date of exercise.
(3) The maximum number of these options that may be exercisable is determined by reference to the pre-tax earnings per share (“EPS”)
of the Company for the financial year which last ended prior to the date of exercise. In the financial year ending 30 June 2005,
the lowest threshold, at which 25% of the options may be exercised, is an EPS of 0.52 pence and the maximum threshold,
at which 100% of the options may be exercised, is an EPS of 2.22 pence. These thresholds will increase over the exercise
period until the options lapse in 2012.
(4) The maximum number of these options that may be exercisable is determined by reference to the EPS of the Company for the
financial year which last ended prior to the date of exercise. In the financial year ending 30 June 2006, the lowest threshold,
at which 25% of the options may be exercised, is an EPS of 0.52 pence and the maximum threshold, at which 100% of the
options may be exercised, is an EPS of 2.22 pence. These thresholds will increase over the exercise period until the options
lapse in 2013.
The Board’s Remuneration Report was approved by the Board of directors on 16 September 2004 and was signed on its behalf by:
Dr David Bloxham
Chairman of Remuneration Committee Provalis plc Annual Report and Accounts 2004 23
Independent Auditors’ Report
To the members of Provalis plc
We have audited the financial statements on pages 24 to 40. We have also audited the information in the Board’s Remuneration
Report that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state
to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report and the Board’s Remuneration Report. As described on page 15,
this includes responsibility for preparing the financial statements in accordance with applicable United Kingdom law and accounting
standards. Our responsibilities, as independent auditors, are established in the United Kingdom by statute, the Auditing Practices
Board, the Listing Rules of the Financial Services Authority, and by our profession’s ethical guidance.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and
the part of the Board’s Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985.
We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the Company has not
kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and transactions with the Group is not disclosed.
We review whether the statement on pages 16 and 17 reflects the Company’s compliance with the seven provisions of the Combined
Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the Board’s
statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance
procedures or its risk and control procedures.
We read the other information contained in the Annual Report, including the Corporate Governance Statement and the unaudited
part of the Board’s Remuneration Report and consider whether it is consistent with the audited financial statements. We consider the
implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Board’s Remuneration
Report to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation
of the financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Board’s Remuneration
Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion
we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Board’s
Remuneration Report to be audited.
Opinion
In our opinion:
● the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 30 June 2004 and of the
loss of the Group for the year then ended; and
● the financial statements and the part of the Board’s Remuneration Report to be audited have been properly prepared in accordance
with the Companies Act 1985.
KPMG Audit Plc 
Chartered Accountants
Registered Auditor
8 Princes Parade
Liverpool L3 1QH
16 September 2004 24 Provalis plc Annual Report and Accounts 2004
Consolidated Profit and Loss Account
For the year ended 30 June 2004
Before Exceptional Before Exceptional
exceptional items exceptional items
items note 4 Total items note 4 Total
2004 2004 2004 2003 2003 2003
Notes £’m £’m £’m £’m £’m £’m
Turnover
– Continuing activities 2, 3 12.9 — 12.9 14.0 — 14.0
Cost of sales 2 (5.6) — (5.6) (6.3) — (6.3)
Gross profit 7.3 — 7.3 7.7 — 7.7
Selling and distribution expenses 2 (4.0) — (4.0) (3.1) — (3.1)
Administration expenses —
Amortisation of intangible assets 2, 10 (1.4) — (1.4) (1.5) — (1.5)
Administration costs 2 (3.5) — (3.5) (3.2) — (3.2)
Research and development costs 2 (1.7) — (1.7) (2.0) — (2.0)
(6.6) — (6.8) (6.7) — (6.7)
Operating loss
– Continuing activities 2 (3.3) — (3.3) (1.7) — (1.7)
– Discontinued activities 2 ——— (0.4) — (0.4)
(3.3) — (3.3) (2.1) — (2.1)
Loss on termination of
discontinued activities 4—— — (0.2) (0.2)
Profit on variation of distribution
agreement – continuing activities 4 — 1.0 1.0 — 3.4 3.4
Compensation arising from Dimethaid
arbitration – continuing activities 4 — 0.4 0.4 ———
(Loss) profit on ordinary activities
before interest (3.3) 1.4 (1.9) (2.1) 3.2 1.1
Interest receivable and similar income 0.1 — 0.1 0.2 — 0.2
(Loss) profit on ordinary activities
before taxation 3, 6 (3.2) 1.4 (1.8) (1.9) 3.2 1.3
Tax on loss on ordinary activities 7 (0.3) — (0.3) ———
(Loss) profit for the financial year (3.5) 1.4 (2.1) (1.9) 3.2 1.3
(Loss) profit per share
– basic and diluted 9 (1.1)p 0.5p (0.6)p (0.6)p 1.0p 0.4p
The notes on pages 29 to 40 form an integral part of this Consolidated Profit and Loss Account. Provalis plc Annual Report and Accounts 2004 25
Consolidated Balance Sheet
At 30 June 2004
2004 2003
Notes £’m £’m
Fixed assets
Intangible assets 10 11.1 12.5
Tangible assets 11 1.8 1.6
12.9 14.1
Current assets
Stocks 13 2.1 1.9
Debtors 14 3.7 4.0
Cash and deposits 1.8 6.6
7.6 12.5
Creditors: Amounts falling due within one year 15 (5.4) (7.7)
Net current assets 2.2 4.8
Total assets less current liabilities 15.1 18.9
Creditors: Amounts falling due after more than one year 16 (0.1) (1.8)
Net assets 3 15.0 17.1
Capital and reserves
Called-up share capital 17 3.3 3.3
Share premium account 18 24.1 24.1
Merger reserve 18 96.3 96.3
Profit and loss account 18 (108.7) (106.6)
Equity shareholders’ funds 18 15.0 17.1
The accounts were approved by the Board of directors on 16 September 2004 and were signed on its behalf by:
Dr Philip Gould Peter Bream
Chief Executive Officer Finance Director
The notes on pages 29 to 40 form an integral part of this Consolidated Balance Sheet. 26 Provalis plc Annual Report and Accounts 2004
Company Balance Sheet
At 30 June 2004
2004 2003
Notes £’m £’m
Fixed assets
Investments 12 30.6 30.6
Current assets
Debtors 14 1.4 16.7
Cash and deposits 2.1 8.3
3.5 25.0
Creditors: Amounts falling due within one year 15 (2.0) (2.0)
Net current assets 1.5 23.0
Net assets 32.1 53.6
Capital and reserves
Called-up share capital 17 3.3 3.3
Share premium account 18 24.1 24.1
Profit and loss account 18 4.7 26.2
Equity shareholders’ funds 18 32.1 53.6
The accounts were approved by the Board of directors on 16 September 2004 and were signed on its behalf by:
Dr Philip Gould Peter Bream
Chief Executive Officer Finance Director
The notes on pages 29 to 40 form an integral part of this Company Balance Sheet. Provalis plc Annual Report and Accounts 2004 27
Consolidated Cash Flow Statement
For the year ended 30 June 2004
Reconciliation of operating loss to net cash 2004 2003
outflow from operating activities £’m £’m
Operating loss (3.3) (2.1)
Depreciation of tangible fixed assets 0.6 0.5
Amortisation of intangible fixed assets 1.4 1.5
(Increase) in stocks (0.2) (0.5)
Increase in creditors 0.1 0.2
(Increase) in debtors (0.1) (0.3)
Net cash outflow from operating activities (1.5) (0.7)
Cash Flow Statement
Net cash outflow from operating activities (1.5) (0.7)
Returns on investments and servicing of finance
Interest received 0.1 0.2
Net cash inflow from returns on investments and servicing of finance 0.1 0.2
Taxation
Research and development tax credit received — 0.6
Net cash inflow from taxation — 0.6
Capital expenditure and financial investment
Purchase of intangible fixed assets (4.6) (4.6)
Purchase of tangible fixed assets (0.8) (0.5)
Compensation arising from Dimethaid arbitration 0.3 —
Proceeds on variation of distribution agreement 1.5 1.5
Deferred income – Welsh Assembly Grant 0.2 —
Net cash outflow from capital expenditure and financial investment (3.4) (3.6)
Acquisitions and disposals
Termination of discontinued businesses — (0.2)
Net cash outflow from acquisitions and disposals — (0.2)
Net cash outflow before management of liquid resources and financing (4.8) (3.7)
Management of liquid resources
Decrease in short term deposits 4.9 3.5
Net cash inflow from management of liquid resources 4.9 3.5
Financing
Unsecured loan repayments — (0.1)
Net cash (outflow) from financing — (0.1)
Increase (decrease) in cash 0.1 (0.3)
The notes to the Consolidated Cash Flow Statement on page 28 and the notes on pages 29 to 40 form an integral part of this
Consolidated Cash Flow Statement. 28 Provalis plc Annual Report and Accounts 2004
Statement of Total Recognised Gains and Losses
For the year ended 30 June 2004
Reconciliation of Movements in Shareholders’ Funds
For the year ended 30 June 2004
2004 2003
Reconciliation of net cash flow to movement in net funds £’m £’m
Increase (decrease) in cash in the year 0.1 (0.3)
Repayments of unsecured loan — 0.1
Decrease in short term deposits (4.9) (3.5)
Movement in net funds in the year (4.8) (3.7)
Net funds at 1 July 2003 6.6 10.3
Net funds at 30 June 2004 1.8 6.6
Analysis of changes in net funds As at As at
1 July 30 June
2003 Cash flow 2004
£’m £’m £’m
Cash 1.6 0.1 1.7
Short term deposits 5.0 (4.9) 0.1
Net funds 6.6 (4.8) 1.8
Short term deposits have a maturity of more than 24 hours but less than twelve months. Cash includes cash in hand and deposits
repayable on demand.
2004 2003
£’m £’m
(Loss) profit for the financial year (2.1) 1.3
Currency translation differences on foreign currency net investments — (0.1)
Total recognised gains and losses relating to the year (2.1) 1.2
The notes on pages 29 to 40 form an integral part of this Statement of Total Recognised Gains and Losses.
2004 2003
£’m £’m
Shareholders’ funds at the beginning of the year 17.1 15.9
(Loss) profit for the financial year (2.1) 1.3
Currency translation differences on foreign currency net investments — (0.1)
Shareholders’ funds at the end of the year 15.0 17.1
The notes on 29 to 40 form an integral part of this Reconciliation of Movements in Shareholders’ Funds.
Notes to the Consolidated Cash Flow Statement
For the year ended 30 June 2004 Provalis plc Annual Report and Accounts 2004 29
Notes to Accounts
For the year ended 30 June 2004
1. Accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the year and the preceding
year, are set out below:
(a) Basis of accounting and preparation
The accounts have been prepared under the historical cost convention and in accordance with applicable UK accounting standards.
(b) Basis of consolidation
The Group accounts consolidate the accounts of Provalis plc and all its subsidiary undertakings. All inter-company balances,
transactions and profits are eliminated on consolidation.
(c) Intangible fixed assets
Acquisition of product distribution rights, technology rights and brands are shown at cost less amortisation and provision is made
for any impairment. Costs are amortised over the period in which future benefits are expected to arise.
(d) Research and development (“R&D”)
R&D expenditure is written off in the year of expenditure.
(e) Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided at rates
calculated to write off the cost, less estimated residual value, of each asset on a straight-line basis over its expected useful life,
as follows:
Plant and machinery 2–10 years
Equipment, fixtures and fittings 5–10 years
Computer equipment 3 years
(f) Leased assets
Payments under operating leases are charged to the Profit and Loss Account in the period in which they are incurred.
(g) Government grants
Government grants in respect of capital expenditure are credited to a deferred income account and are released to profit over the
expected useful lives of the relevant assets by equal annual instalments. Grants of a revenue nature are credited to income so as
to match them with the expenditure to which they relate.
(h) Investments
Fixed asset investments are shown at cost less provision for impairment.
(i) Stocks
Stocks are valued at the lower of cost and net realisable value. The cost of manufactured goods includes materials, direct
labour and an appropriate portion of fixed and variable overheads, based on normal levels of activity. Costs are assigned
on a first-in-first-out basis.
(j) Cash and short term deposits
Short term deposits have a maturity of more than 24 hours but less than 12 months. Cash and cash equivalents includes cash in hand
and deposits repayable on demand.
(k) Taxation
Corporation tax payable is provided on taxable profits at the current rate.
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for
taxation and accounting purposes which have arisen but not reversed by the Balance Sheet date, except as otherwise required
by FRS 19 ‘Deferred Tax’. As the Group has an unprovided deferred tax asset there has been no impact in the financial statements.
Deferred tax assets are recognised to the extent that on the basis of all available evidence, it can be regarded as more likely than not
that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
(l) Pensions
The Group operates a defined contribution fund for all employees. Contributions are accounted for when they become payable. 30 Provalis plc Annual Report and Accounts 2004
Notes to Accounts (continued)
For the year ended 30 June 2004
1. Accounting policies (continued)
(m) Foreign exchange
Foreign currency transactions during the year are recorded using the rate of exchange prevailing at the date of the transaction.
At the Balance Sheet date, amounts receivable and payable in foreign currencies are translated at the exchange rates prevailing at
that date other than those transactions to be settled at a contracted rate and trading transactions covered by a related or matching
forward contract which are translated at those contracted rates. 
For the purposes of consolidation, the closing rate method is used, translating assets and liabilities at the rate prevailing at the
Balance Sheet date and under which translation gains and losses are shown as a movement to reserves. Profit and Loss Accounts
of overseas subsidiary undertakings are translated at the average exchange rate for the year.
Exchange differences relating to monetary items are brought to account in the Profit and Loss Account in the period in which
they arise.
(n) Derivative instruments
The Group uses forward foreign currency contracts to reduce exposure to foreign exchange rates.
The Group considers its derivative instruments qualify for hedge accounting when certain criteria are met.
Forward foreign currency contracts
The criteria for forward foreign currency contracts are:
● the instrument must be related to a foreign currency asset or liability that is probable and whose characteristics have
been identified;
● it must involve the same currency as the hedged item; and
● it must reduce the risk of foreign currency exchange movements on the Group’s operations.
The rates under such contracts are used to record the hedged item. As a result, gains and losses are either offset against the foreign
exchange gains and losses on the related financial assets and liabilities or, where the instrument is used to hedge a committed or
probable future transaction, are deferred until the transaction occurs.
(o) Turnover
Group turnover comprises the value of sales (excluding VAT and similar taxes, trade discounts and intra-group transactions) of goods
and services in the normal course of business. Turnover also includes the sale of product rights, royalties and milestone payments
which are recognised in accordance with contractual terms.
2. Continuing/discontinued activities
2004 2003
Continuing Discontinued Total Continuing Discontinued Total
£’m £’m £’m £’m £’m £’m
Turnover 12.9 — 12.9 14.0 — 14.0
Cost of sales (5.6) — (5.6) (6.3) — (6.3)
Gross profit 7.3 — 7.3 7.7 — 7.7
Selling and distribution expenses (4.0) — (4.0) (3.1) — (3.1)
Administration expenses
Amortisation of intangible assets (1.4) — (1.4) (1.5) — (1.5)
Administration costs (3.5) — (3.5) (3.2) — (3.2)
Research and development costs (1.7) — (1.7) (1.6) (0.4) (2.0)
(6.6) — (6.6) (6.3) (0.4) (6.7)
Operating loss (3.3) — (3.3) (1.7) (0.4) (2.1) Provalis plc Annual Report and Accounts 2004 31
3. Segmental analysis
(a) Analysis by geographical segment
The analysis by geographical segment of the Group’s turnover, profit on ordinary activities before taxation and net assets is set
out below:
Turnover
By destination By origin
2004 2003 2004 2003
£’m £’m £’m £’m
UK 10.9 10.6 12.9 14.0
Europe 0.7 0.5 — —
US 1.3 2.8 — —
Rest of World — 0.1 — —
12.9 14.0 12.9 14.0
(Loss) profit on ordinary activities before taxation
2004 2003
£’m £’m
UK (1.9) 1.1
Rest of World — —
(Loss) profit on ordinary activities before interest (1.9) 1.1
Net interest receivable 0.1 0.2
(1.8) 1.3
Net assets
2004 2003
£’m £’m
UK 15.0 10.4
Rest of World — 0.1
Net operating assets 15.0 10.5
Unallocated assets including cash and deposits — 6.6
Net assets 15.0 17.1
(b) Analysis by class of business
The analysis by class of business segment of the Group’s turnover, profit on ordinary activities before taxation and net assets is set
out below:
Turnover
2004 2003
£’m £’m
Continuing activities
– Medical Diagnostics 1.5 3.1
– Pharmaceuticals 11.4 10.9
12.9 14.0 32 Provalis plc Annual Report and Accounts 2004
Notes to Accounts (continued)
For the year ended 30 June 2004
3. Segmental analysis (continued)
(b) Analysis by class of business (continued)
(Loss) profit on ordinary activities before taxation
2004 2003
Ordinary Exceptional Ordinary Exceptional
activities items Total activities items Total
£’m £’m £’m £’m £’m £’m
Continuing activities
– Medical Diagnostics
(1)
(3.1) — (3.1) (2.3) — (2.3)
– Pharmaceuticals 1.8 — 1.8 2.5 — 2.5
– Common costs (2.0) — (2.0) (1.9) — (1.9)
– Compensation arising from Dimethaid arbitration — 0.4 0.4 ———
– Net interest receivable 0.1 — 0.1 0.2 — 0.2
Profit on variation of distribution agreement — 1.0 1.0 — 3.4 3.4
(3.2) 1.4 (1.8) (1.5) 3.4 1.9
Discontinued activities
(2)
——— (0.4) — (0.4)
Loss on termination of discontinued activities
(2)
——— — (0.2) (0.2)
(3.2) 1.4 (1.8) (1.9) 3.2 1.3
Notes
(1) Medical Diagnostics’ loss is stated inclusive of R&D spend of £1.7m (2003: £1.6m).
(2) Discontinued activities relate to programmes in the Vaccines research business of Therapeutics R&D, which closed in 2003.
The costs of closure are included in the “Loss on termination of discontinued activities”.
Net assets
2004 2003
£’m £’m
– Medical Diagnostics 1.3 0.5
– Pharmaceuticals 4.1 7.2
Net operating assets 5.4 7.7
Unallocated assets including cash and deposits 9.6 9.4
Net assets 15.0 17.1
4. Exceptional items
2004 2003
£’m £’m
Profit on variation of distribution agreement – continuing activities
(1)
1.0 3.4
Dimethaid arbitration – continuing activities
(2)
0.4 —
Loss on termination of discontinued activities
(3)
— (0.2)
Notes
(1) This relates to profit recognised on receipts arising from the variation of the distribution agreement with Dr Falk Pharma.
£1.5m was received in February 2003, and £1.5m in January 2004 and a further £0.4m is due to be received in January 2005.
Up to a further £1.6m may be received in January 2005 contingent on the levels of sales of Falk products in calendar year 2004.
Of this last receipt, £1.0m was recognised in the year ended 30 June 2004, and £0.6m remains to be recognised.
(2) In December 2003 the Group announced that the arbitration it commenced against Dimethaid International Inc. following Dimethaid’s
termination of the Pennsaid
®
distribution agreement had been decided in Provalis’ favour, and that as a result Provalis had been
awarded the compensatory sum of £1.2m, together with costs and interest of £0.4m. Subsequent to this announcement the Group
negotiated a payment schedule with Dimethaid resulting in an initial receipt of £0.2m in February 2004 and a series of monthly
payments ending in April 2005. Due to the continued uncertainty in the receipt of these monies the award will only be recognised
in the Group accounts to the extent that its recovery is considered to be sufficiently certain. £0.7m has been recognised in the period
offset by £0.3m of costs incurred in connection with this arbitration.
(3) This relates to the redundancy and closure costs of Therapeutic R&D’s vaccine programmes.
(4) There are no taxation consequences of the above exceptional items due to the availability of tax losses. Provalis plc Annual Report and Accounts 2004 33
5. Staff costs
2004 2003
£’m £’m
Employee costs during the year (including executive directors) amounted to:
Wages and salaries 3.4 3.5
Social security costs 0.4 0.4
Other pension costs 0.2 0.2
4.0 4.1
The average number of persons (including executive directors) employed by the Group during the year was:
2004 2003
Number Number
By activity
R&D 12 13
Sales, marketing and distribution 47 48
Production 19 20
Administration 28 26
106 107
Detailed information concerning directors’ emoluments, shareholdings and options is shown in the Board’s Remuneration Report
on pages 18 to 22.
6. (Loss) profit on ordinary activities before taxation
(Loss) profit on ordinary activities before taxation is stated after charging:
2004 2003
£’m £’m
Depreciation and amortisation
– Tangible owned assets 0.6 0.5
– Intangible assets 1.4 1.5
Operating lease rentals
– Plant and machinery 0.2 0.3
– Land and buildings 0.2 0.2
Auditors’ remuneration
– Audit services 0.2 0.1
– Non-audit services — —
Fees for non-audit services of £19,800 were payable to the auditors in respect of tax compliance services and of £8,525 in respect of tax
advisory services. The fee for the Company audit was £5,000. 34 Provalis plc Annual Report and Accounts 2004
Notes to Accounts (continued)
For the year ended 30 June 2004
7. Taxation
In December 2003 the Inland Revenue rejected a claim for R&D tax credits in the Medical Diagnostics business for the year ended
30 June 2002. The Group is strongly contesting the Inland Revenue’s decision. Cumulatively, the Group had recognised £0.4m in
respect of the R&D tax credits for the Medical Diagnostics business. However if the Group’s appeals are unsuccessful, £0.3m of cash
received to date in respect of tax credits may have to be repaid, and a provision for this has been included in the tax charge for the
period. The Inland Revenue accepted the claim for the R&D tax credits for the Therapeutics business at an amount of £0.1m in
excess of the credits previously recognised in the accounts.
There are taxable losses of approximately £70.7m (2003: £68.4m) available for carrying forward against suitable future taxable profits
of Group companies. The agreement of the relevant Revenue authorities will be required before any such tax losses can be utilised.
Accumulated tax losses have not been recognised as deferred tax assets.
(a) Analysis of charge in year
2004 2003
£’m £’m
R&D tax credit (0.3) —
(b) Factors affecting the tax charge for the year
2004 2003
£’m £’m
(Loss) on ordinary activities before taxation (1.8) (1.3)
(Loss) on ordinary activities multiplied by standard rate of taxation (30%) (0.6) (0.4)
Effects of:
– Non tax deductible expenses and income not taxable for tax purposes 0.3 0.6
– Capital allowances for period in excess of depreciation (0.1) —
– Impact of additional tax relief for R&D — 0.2
– Impact of R&D tax credit cash claim (0.3) —
– Increase (decrease) in losses carried forward 0.4 (0.4)
Tax charge on (profit) loss on ordinary activities (0.3) —
(c) Deferred tax assets not provided
2004 2003
£’m £’m
Accelerated capital allowances 0.1 0.3
Tax losses carried forward 21.2 20.5
Deferred tax assets not provided 21.3 20.8
8. (Loss) profit attributable to parent company
The (loss) profit for the financial year dealt with in the accounts of Provalis plc, the parent company, was £(21.5)m (2003: £3.5m).
As provided for by section 230 of the Companies Act 1985, no Profit and Loss Account is presented in respect of that company.
9. Earnings per share
2004 2003
£’m p £’m p
Earnings per share are based on:
(Loss) profit after exceptional items attributable to ordinary shareholders (2.1) (0.6) 1.3 0.4
Exceptional items (1.4) (0.5) (3.2) (1.0)
Loss before exceptional items attributable to ordinary shareholders (3.5) (1.1) (1.9) (0.6)
2004 2003
Number Number
Basic and diluted weighted average number of ordinary shares 330,644,450 330,360,181 Provalis plc Annual Report and Accounts 2004 35
10. Intangible fixed assets
Group
product rights
and licences
£’m
Cost
At 1 July 2003 14.9
At 30 June 2004 14.9
Amortisation
At 1 July 2003 2.4
Charge for year 1.4
At 30 June 2004 3.8
Net book value
At 30 June 2004 11.1
At 30 June 2003 12.5
The intangible assets represent the total cost of acquisition of Diclomax
®
from Parke Davis, a subsidiary of Pfizer Inc.,
on 3 December 2001, for £14.9m (including £0.4m of transaction costs). The asset is being amortised over a period of ten years
and the Consolidated Profit and Loss Account for the year ended 30 June 2004 contains amortisation of £1.4m (2003: £1.5m).
The cash outflow associated with the acquisition of Diclomax
®
was £4.6m in the year. The remaining £1.8m of acquisition cost is held
within creditors (less than one year) and will be payable in weekly instalments until November 2004. As security for the payment of
the deferred consideration Parke Davis has a fixed and floating charge over the assets (excluding book debts) of Provalis Healthcare
Limited. The security offered by Provalis plc lapsed on 3 December 2002 but Provalis plc continues to guarantee the debt of Provalis
Healthcare Limited to Parke Davis Limited.
11. Tangible fixed assets
Group
Equipment,
Plant and fixtures
machinery and fittings Total
£’m £’m £’m
Cost
At 1 July 2003 2.6 1.0 3.6
Additions 0.6 0.2 0.8
Disposals (0.1) (0.1) (0.2)
At 30 June 2004 3.1 1.1 4.2
Depreciation
At 1 July 2003 1.5 0.5 2.0
Charge for year 0.4 0.2 0.6
Disposals (0.1) (0.1) (0.2)
At 30 June 2004 1.8 0.6 2.4
Net book value
At 30 June 2004 1.3 0.5 1.8
At 30 June 2003 1.1 0.5 1.6 36 Provalis plc Annual Report and Accounts 2004
Notes to Accounts (continued)
For the year ended 30 June 2004
12. Fixed asset investments
(a) Principal subsidiary undertakings
The directors consider that to give full particulars of all subsidiary undertakings would lead to a statement of excessive length.
The following information relates to those subsidiary undertakings whose results or financial position, in the opinion of the directors,
principally affected the results or net assets of the Group.
Proportion of nominal
value of issued shares
Country of held by Group at 
incorporation/ Description of 30 June 2004 
Name of undertaking registration shares held % Activity
Provalis UK Limited England Ordinary 100 1,4
Provalis Healthcare Limited England Ordinary 100 3
Provalis Diagnostics Limited England Ordinary 100 2,4,5
All of the above companies operate principally in their country of incorporation or registration.
Principal business activities of these subsidiary undertakings are:
1. Investment/holding company
2. R&D company
3. Pharmaceutical sales and distribution company
4. Intellectual property holding company
5. Diagnostic manufacturing and sales company
The cost of the Company’s investment in subsidiary undertakings is £40.6m. Provision for impairment is £10.0m. Net book value
is £30.6m. There were no movements in this investment or in this provision for impairment during the year.
13. Stocks
Group
2004 2003
£’m £’m
Raw materials and consumables 1.2 1.2
Finished goods and goods for resale 0.9 0.7
2.1 1.9
14. Debtors
Group Company
2004 2003 2004 2003
£’m £’m £’m £’m
Amounts falling due within one year:
Trade debtors 2.0 1.8 — —
Other debtors 1.5 1.9 1.4 1.9
Prepayments 0.2 0.3 — —
Amounts owed by subsidiary undertakings — — — 14.8
3.7 4.0 1.4 16.7 Provalis plc Annual Report and Accounts 2004 37
15. Creditors: Amounts falling due within one year
Group Company
2004 2003 2004 2003
£’m £’m £’m £’m
Trade creditors 1.5 1.6 — —
Taxation and social security 0.8 0.5 — —
Other creditors 1.8 4.6 — —
Accruals 1.2 1.0 — —
Amounts owed to subsidiary undertakings — — 2.0 2.0
Deferred income 0.1 — — —
5.4 7.7 2.0 2.0
16. Creditors: Amounts falling due after more than one year
Group
2004 2003
£’m £’m
Other creditors — 1.8
Deferred income 0.1 —
0.1 1.8
17. Called-up share capital
2004 2003
£’m £’m
Authorised
500,000,021 ordinary shares of £0.01 each 5.0 5.0
Allotted, called-up and fully paid
330,660,929 fully-paid ordinary shares of £0.01 each (2003: 330,360,181 fully-paid
ordinary shares of £0.01 each) 3.3 3.3
Options
(a) Summary of employee options
As at As at
1 July 30 June
Note 2003 Granted Exercised Lapsed 2004
Approved scheme b 4,576,142 51,094 — (437,292) 4,189,944
Unapproved scheme b 3,619,196 — — (28,000) 3,591,196
Mr Travers c 2,000,000——— 2,000,000
Share Save Scheme 2001 d 1,180,081 — — (191,925) 988,156
Enterprise Management Incentive Scheme e 4,641,907 250,000 (300,748) — 4,591,159
16,017,326 301,094 (300,748) (657,217) 15,360,455 38 Provalis plc Annual Report and Accounts 2004
Notes to Accounts (continued)
For the year ended 30 June 2004
17. Called-up share capital (continued)
Options (continued)
(b) The Company’s 1997 Employee Option Scheme
The following options have been granted over ordinary shares of £0.01 in the Company under the 1997 Employee Option Scheme:
As at As at Exercise
1 July 30 June price
Date exercisable 2003 Granted Lapsed 2004 £
Approved scheme
From 26 October 2001 to 25 October 2008 270,000 — — 270,000 0.50
From 26 April 2002 to 25 April 2009 45,000 — — 45,000 0.25
From 19 April 2003 to 18 April 2010 229,000 — (28,000) 201,000 0.25
From 19 April 2003 to 18 October 2003 26,500 — (26,500) — 0.25
From 16 October 2003 to 15 April 2004 50,000 — (50,000) — 0.25
From 29 March 2004 to 28 March 2011 777,767 — (72,000) 705,767 0.13
From 29 March 2004 to 28 September 2004 224,615 — — 224,615 0.13
From 18 April 2005 to 17 April 2012 175,000 — — 175,000 0.14
From 15 October 2005 to 14 October 2012 2,778,260 — (260,792) 2,517,468 0.0685
From 15 October 2005 to 15 April 2006 — 51,094 — 51,094 0.0685
Total 4,576,142 51,094 (437,292) 4,189,944
Unapproved scheme
From 26 October 2001 to 25 October 2005 130,000 — — 130,000 0.50
From 26 October 2002 to 25 October 2005 400,000 — — 400,000 0.50
From 26 April 2000 to 25 April 2006 475,000 — — 475,000 0.25
From 26 April 2001 to 25 April 2006 420,000 — — 420,000 0.25
From 26 April 2002 to 25 April 2006 375,000 — — 375,000 0.25
From 19 April 2002 to 18 April 2007 389,000 — (28,000) 361,000 0.25
From 19 April 2003 to 18 October 2007 160,000 — — 160,000 0.25
From 29 March 2004 to 28 March 2008 759,233 — — 759,233 0.13
From 15 October 2005 to 14 October 2012 510,963 — — 510,963 0.0685
Total 3,619,196 — (28,000) 3,591,196
(c) Mr Travers’ options
Mr G Travers was entitled to exercise options in respect of two million ordinary shares at £1.85 per share. These options lapsed
on 9 July 2004. 
(d) Share Save Scheme 2001
The following options have been granted over ordinary shares of £0.01 in the Company under the Provalis plc Savings-Related Share
Option Scheme 2001:
As at As at Exercise
1 July 30 June price
Date exercisable 2003 Granted Lapsed 2004 £
From 1 June 2005 to 30 November 2005 651,077 — (55,980) 595,097 0.112
From 1 June 2007 to 30 November 2007 529,004 — (135,945) 393,059 0.112
Total 1,180,081 — (191,925) 988,156 Provalis plc Annual Report and Accounts 2004 39
17. Called-up share capital (continued)
Options (continued)
(e) Enterprise Management Incentive Scheme
The following options have been granted over ordinary shares of £0.01 in the Company under the Enterprise Management
Incentive Scheme:
As at As at Exercise
1 July 30 June price
Date exercisable 2003 Granted Exercised Lapsed 2004 £
From 15 October 2005 to 14 October 2012 4,641,907 — (300,748) — 4,341,159 0.0685
From 14 October 2006 to 13 October 2013 — 250,000 — — 250,000 0.117
Total 4,641,907 250,000 (300,748) — 4,591,159
300,748 options were exercised in accordance with the scheme rules on the death of a member of the scheme.
18. Movements in share capital and reserves
Called-up Share Profit
share premium Merger and loss
capital account reserve account Total
£’m £’m £’m £’m £’m
Group
Balance at 1 July 2003 3.3 24.1 96.3 (106.6) 17.1
Loss for the year — — — (2.1) (2.1)
Balance at 30 June 2004 3.3 24.1 96.3 (108.7) 15.0
Called-up Share Profit
share premium and loss
capital account account Total
£’m £’m £’m £’m
Company
Balance at 1 July 2003 3.3 24.1 26.2 53.6
Loss for the year — — (21.5) (21.5)
Balance at 30 June 2004 3.3 24.1 4.7 32.1
19. Guarantees and other financial commitments
(a) Lease commitments
Annual commitments under non-cancellable operating leases are as follows:
2004 2003
Land and Land and
buildings Other buildings Other
£’m £’m £’m £’m
Expiry:
– within one year —— — 0.1
– within one to two years —— — 0.1
– within two to five years 0.1 0.1 0.1 —
– after five years 0.1 — 0.1 —
0.2 0.1 0.2 0.2
(b) Capital commitments
There were unprovided capital commitments of £0.3m at 30 June 2004 (2003: £0.1m).
(c) Guarantees
The Group operates under a duty deferment scheme with HM Customs and Excise for which a £0.1m guarantee is in place. 40 Provalis plc Annual Report and Accounts 2004
Notes to Accounts (continued)
For the year ended 30 June 2004
20. Derivatives and other financial instruments
The numeric disclosures in this note deal with financial assets and liabilities as defined in FRS 13 ‘Derivatives and other Financial
Instruments Disclosures’.
As permitted by FRS 13, short term debtors and creditors have been excluded from the disclosures. Certain financial assets such
as investments in subsidiary companies are also excluded from the scope of these disclosures.
Further explanation of the Group’s policy on treasury and funding is contained within the Financial Review on pages 10 and 11.
Interest rate profile
The Group has no interest bearing financial assets other than Sterling cash deposits of £0.1m (2003: £5.0m). The Sterling cash
deposits comprise deposits placed on the money market, for variable periods, with rates fixed for the duration of the deposit.
The average interest rate on Sterling deposits during the year was 3.10%, and at the year end was 3.13%.
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities as at 30 June 2004 is given in notes 15 and 16.
Borrowing facilities
The Group had £3.0m of undrawn committed borrowing facilities at 30 June 2004 (2003: nil).
Fair values of financial assets and liabilities
There is no material difference between the book value and the fair value of the Group’s financial assets or liabilities.
Currency exposures
The table below shows the Group’s current exposures; in other words, those transactional (or non-structural) exposures that give rise
to the net currency gains and losses recognised in the Profit and Loss Account. Such exposures comprise the monetary assets and
monetary liabilities of the Group that are not denominated in the operating (or “functional”) currency of the operating unit involved,
other than certain non-Sterling borrowings treated as hedges of net investments in overseas operations. As at 30 June 2004 these
exposures were as follows:
Net foreign currency monetary assets (liabilities)
US
Dollar Euro Total
Functional currency of Group operation £’m £’m £’m
Sterling (0.1) (0.8) (0.9)
The exposures at 30 June 2003 for comparison purposes were as follows:
Net foreign currency monetary assets (liabilities)
Australian
Dollar Euro Total
Functional currency of Group operation £’m £’m £’m
Sterling 0.1 (0.2) (0.1)
2004
Book value Fair value
£’m £’m
Off Balance Sheet
Foreign currency contracts 1.2 1.2
Interest rate instruments and foreign currency contracts and options have been marked to market to produce a fair value figure.
Gains and losses on hedges
There are no unrecognised gains or losses on hedges.
The Group has no financial assets/liabilities held for trading purposes and holds no cash settled commodity contracts.
The disclosures in the Treasury section of the Financial Review form part of the financial statements.
21. Pension arrangements
The Group operates a defined contribution scheme for which the pension cost for the year amounted to £0.3m (2003: £0.2m).
There are no prepayments or accruals relating to pension costs at either 30 June 2004 or at 30 June 2003. Provalis plc Annual Report and Accounts 2004 41
Corporate Information
Officers
Directors
Mr Frank Alexander Harding
Dr Philip Leon Gould
Mr Peter Edward Bream
Ms Christine Helen Soden
Dr David Philip Bloxham
Company Secretary 
Mr Lee Greenbury
Registered Address
Newtech Square
Deeside Industrial Park
Deeside
Flintshire CH5 2NT
Company Number
3321624
Advisers
Financial Adviser
N M Rothschild & Sons Limited
1 Park Row
Leeds LS1 5NR
Broker
Evolution Securities Limited
100 Wood Street
London EC2V 7AN
Auditors
KPMG Audit Plc
8 Princes Parade
Liverpool L3 1QH
Lawyers
Richards Butler
Beaufort House
15 St Botolph Street
London EC3A 7EE 
Foley Hoag LLP
Seaport World Trade Center West
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Bankers
Barclays Bank plc
Barclays Business Centre
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Hounslow TW3 1DL
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU 42 Provalis plc Annual Report and Accounts 2004
Notice of Meeting
Notice is hereby given that the eighth Annual General Meeting of Provalis plc (“the Company”) will be held at Beaufort House,
15 St Botolph Street, London EC3A 7EE on 4 November 2004 at 10.30am to transact the following business:
Ordinary business
Accounts
1. To receive and adopt the accounts for the year ended 30 June 2004 and the reports of the directors and auditors
contained therein.
Directors
2. To reappoint Dr Philip Gould (who is retiring by rotation) as a director of the Company.
Special business
To consider and if thought fit pass as ordinary resolutions:
Auditors
3. THAT KPMG Audit Plc, Chartered Accountants, be reappointed as auditors of the Company and to authorise the Board of
directors to fix their remuneration.
Executive remuneration
4. THAT the Annual Report of the Remuneration Committee be approved.
Authority to allot shares
5. THAT:
(a) the directors be and they are hereby generally and unconditionally authorised for the purpose of section 80 of the Companies Act
1985 to allot and grant rights to subscribe for or to convert securities into unissued shares of the Company up to an aggregate
nominal amount of £1,212,423, provided that this authority shall expire 15 months after the date of passing of this resolution
or, if earlier, at the conclusion of the Annual General Meeting of the Company to be held in 2005;
(b) the Company be allowed to make any offer or agreement which will or might require any such shares to be allotted or any such
rights to be granted after the expiry of this authority and the directors may, notwithstanding such expiry, allot shares and
grant such rights in pursuance of any such offer or agreement made by the Company before the expiry of this authority; and
(c) this authority be in substitution for all subsisting authorities given by the Company for the purpose of section 80 of the
Companies Act 1985 to the extent that such authorities are unused.
To consider and if thought fit pass as a special resolution:
Disapplication of pre-emption rights on allotment
6. THAT the directors be empowered to allot any equity securities of the Company under the authority conferred on them by this
meeting for the purpose of section 80 of the Companies Act 1985 as if section 89(1) of that Act did not apply to any such
allotment provided that this power be limited to:
(a) the allotment of equity securities which are offered for cash to those persons who are registered on such date as the
directors may prescribe as the holders of the issued ordinary shares of the Company (as nearly as may be in proportion to
the number of ordinary shares respectively held by them) other than those holders resident outside the UK to whom an offer
would be, in the opinion of the directors, impracticable or unlawful in any jurisdiction in the world;
(b) the allotment of equity securities which are not offered to any holders of ordinary shares of the Company resident outside the
UK pursuant to any such offer as aforesaid or which may represent fractional interests arising in connection with any such
offer; and
(c) any other allotments of equity securities for cash up to an aggregate nominal amount of £363,727
and shall expire 15 months after the date of passing of this resolution or, if earlier, at the conclusion of the Annual General Meeting
of the Company to be held in 2005, save that the Company may before such expiry make an offer or agreement which would or
might require securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or
agreement as if the power conferred hereby had not expired; the expression “equity securities” having, for the purpose of this
resolution, the meaning given to it by section 94 of the Companies Act 1985. Provalis plc Annual Report and Accounts 2004 43
Special business (continued)
7. Electronic communications
THAT the Company’s Articles of Association be amended as follows:
(a) in Article 2 the following definitions be added in alphabetical order:
“‘address’ in relation to electronic communications includes any number or address used for the purposes
of such communications;”
“‘communication’ means the same as in the Electronic Communications Act 2000;” and
“‘electronic communication’ means the same as in Electronic Communications Act 2000;”
(b) the following be added at the end of Article 47(5) as a new paragraph:
“References in this article and in Article 48 to the notice shall include notice sent by electronic communications and notice
published on a website in accordance with the Act”.
(c) in Article 55 the words “lodged at the office” be deleted from the end and replaced by the following
“sent to the Company at the office or an address notified by the Company for the purpose of receiving
electronic communications.”
(d) Article 71 be deleted and replaced by the following:
“71 To be valid, the appointment of a proxy and the authority (if any) under which it is executed, or a copy of the
authority certified notarially, in accordance with the Powers of Attorney Act 1971 or in another way approved
by the directors, shall:
(a) in the case of an instrument in writing be deposited at the office or at such other place in the United Kingdom as is
specified in, or in any document accompanying, the notice convening the meeting not less than 48 hours before the
time appointed for the meeting or adjourned meeting or (in the case of a poll taken more than 48 hours after it was
demanded) the time appointed for taking the poll at which it is to be used. Unless the contrary is stated in the
instrument, it shall be valid also for any adjournment of the meeting to which it relates. Delivery of an instrument
appointing a proxy shall not preclude a member from attending or voting at the meeting or poll concerned; or
(b) in the case of an appointment contained in an electronic communication, where an address has been specified for
the purpose of receiving electronic communications:
(i) in the notice convening the meeting, or
(ii) in any instrument of proxy sent out by the company in relation to the meeting, or
(iii) in any invitation contained in an electronic communication to appoint a proxy issued by the Company in relation
to the meeting,
be received at such address not less than 48 hours before the time for holding the meeting or adjourned meeting
at which the person named in the appointment proposes to vote;
unless the contrary is stated in the appointment of a proxy, it shall be valid also for any adjournment of the meeting to
which it relates. Delivery or receipt of an appointment of a proxy shall not preclude a member from attending or voting
at the meeting or poll concerned.”
(e) in Article 72 after “deposit of instruments of proxy for use at the meeting” the following be inserted:
“or, where the appointment of the proxy was contained in an electronic communication at the address at which such
appointment was duly received,”.
(f) in Article 77 paragraph (2) be deleted and replaced by the following:
“(2) not less than seven nor more than 42 clear days before the day appointed for the meeting, notice be executed by a
member entitled to vote at the meeting of the intention to propose the person for appointment and notice executed by
the person to be proposed indicating his willingness to be appointed and stating the particulars which would be required
to be entered in the Company’s register of directors were he so appointed have been deposited at the office, or, where
the notices are contained in electronic communications, have been duly received at the address specified by the
Company for the purposes of receiving such communications.”. 44 Provalis plc Annual Report and Accounts 2004
Special business (continued)
7. Electronic communications (continued)
(g) in Article 104 the following be added after the words “or any other address given to him by the Company for this purpose”:
“or given to him using electronic communications to an address for the time being notified by him to the Company for the
purposes of such communications”.
(h) Article 111 be deleted and replaced by the following:
“111 A resolution in writing or contained in electronic communications executed by all the directors for the time being in
the United Kingdom entitled to vote thereon, being directors sufficient to form a quorum of the directors, shall be as
effective as a resolution passed at a meeting of the directors duly convened and held, and may consist of several
documents in the like form or be contained in several electronic communications, each executed by one or more
directors; but the resolution need not be executed by a director if it is executed by his alternate director or by an
alternate director, in that capacity, if it is executed by the director appointing him.”
(i) Article 137 be deleted and replaced by the following:
“137 Any notice to be given to or by any person pursuant to these articles (other than a notice calling a meeting of the
directors) shall be in writing or shall be given using electronic communications to an address for the time being
notified for that purpose to the person giving the notice.”
(j) in Article 138 after the words “to him at his registered address” the following be added:
“or by giving it using electronic communications to an address for the time being notified to the Company by the member”.
(k) the existing Article 140 be re-numbered Article 141 and subsequent articles be re-numbered accordingly and the following
new Article 140 be inserted:
“140 (1) Proof that a notice contained in an electronic communication was sent in accordance with guidance issued by the
Institute of Chartered Secretaries and Administrators shall be conclusive evidence that the notice was given.
(2) A notice in an electronic communication shall be deemed to be given at the expiration of 48 hours after the time
it was sent.
(3) A member who (having no registered address within the United Kingdom) has not supplied to the Company either
an address within the United Kingdom or an address for the purposes of electronic communications for the service
of notices shall not be entitled to receive notices from the Company. A member who has supplied the Company
only with the address for the purposes of electronic communications shall not be entitled to receive notices from
the Company if the directors, in their absolute discretion determine that to do so would infringe the laws of
another country.”
(l) in the existing Article 140 (to be re-numbered Article 141) the words “left at or sent by post to the registered address of”
be deleted and replaced by the words “duly given to”.
By order of the Board,
L Greenbury 
Secretary
Registered Office:
Newtech Square
Deeside Industrial Park
Deeside
Flintshire CH5 2NT
16 September 2004
Notice of Meeting (continued) Provalis plc Annual Report and Accounts 2004 45
Notes
1. A member of the Company entitled to attend and vote at the Annual General Meeting may appoint one or more proxies to attend
and, on a poll, vote on his/her behalf. A proxy need not be a member of the Company. The instrument appointing a proxy to be
effective must be deposited with the Company’s Registrars, Capita Registrars, Proxy Department, The Registry, 34 Beckenham
Road, Beckenham, Kent BR3 4TU, not less than 48 hours before the time appointed for the Annual General Meeting (i.e. no later
than 10.30am on 2 November 2004).
2. The completion of a proxy form does not preclude a member from attending the Annual General Meeting and voting in person.
3. Copies of the directors’ service agreements or letters of appointment are available for inspection at the registered office of the
Company, Newtech Square, Deeside Industrial Park, Deeside, Flintshire CH5 2NT during usual business hours on each business
day. All such documents will also be available at the place of the Annual General Meeting for at least 15 minutes prior to and
during the Annual General Meeting.
4. The register of directors’ interests will be available for inspection at the commencement of, and during, the Annual General Meeting.
5. As permitted by regulation 41 of the Uncertificated Securities Regulations 2001, only those shareholders who are registered on
the Company’s register of members at 10.30am on 2 November 2004 or, in the event that the Annual General Meeting is adjourned,
on the register of members 48 hours before the time of any adjourned meeting, shall be entitled to attend the Annual General
Meeting and to vote in respect of the number of ordinary shares registered in their names at that time. Changes to entries on the
register of members after 10.30am on 2 November 2004 or, in the event that the Annual General Meeting is adjourned, on the
register of members 48 hours before the time of any adjourned meeting, shall be disregarded in determining the rights of any
person to attend and/or vote at the Annual General Meeting.
6. By attendance at the Annual General Meeting (or any adjournment thereof) the attendees confirm that they are requesting, and
are willing to receive, all communications made at that meeting relating to the Company’s shares. 46 Provalis plc Annual Report and Accounts 2004
Notice of Meeting (continued)
Explanatory notes
1. Resolution 1: Accounts
The directors must lay the Company’s accounts, the Directors’ Report and the Auditors’ Report before the members at a general
meeting. This is a legal requirement once the directors have approved the accounts and the directors and the auditors have
prepared their report.
2. Resolution 2: Reappointment of director retiring by rotation
Article 74 of the Company’s Articles of Association states that one third of the directors subject to retirement by rotation shall retire
from office at each Annual General Meeting, but that if any director has been in office for more than three years since his
appointment or reappointment he shall retire. The only director subject to retirement by rotation this year is Dr Philip Gould and,
being eligible, he offers himself for reappointment. Biographical details of Dr Gould are set out in the Report and Accounts.
3. Resolution 3: Reappointment of auditors
At each Annual General Meeting, the Company is required to appoint auditors to serve until the next such meeting. The Company’s
current auditors, KPMG Audit Plc, have stated they are willing to continue in office for a further year. Resolution 3 proposes their
reappointment and that, in accordance with normal practice, the directors should be authorised to agree their remuneration.
4. Resolution 4: Executive remuneration
The Company has disclosed in its Annual Report how it has applied the principles and complied with the detailed provisions
of the Combined Code on Corporate Governance. The directors invite members of the Company to approve the Board’s Report
on Remuneration.
5. Resolution 5: Renewal of directors’ authority to allot shares
Section 80 of the Companies Act 1985 provides that the directors may not allot new shares (other than for Employee Share Schemes)
without shareholder approval. Resolution 5 empowers the Board to allot shares with a nominal value of up to £1,212,423 being one
third of the aggregate of the issued ordinary share capital of the Company at 16 September 2004 and the 33,066,000 ordinary shares
conditionally allotted on that date pursuant to a placing due to be announced the following day. The authority would last until
15 months after the passing of this resolution or, if earlier, the conclusion of the Annual General Meeting in 2005. The resolution
is to renew the power granted to the directors at the Annual General Meeting held on 23 October 2003. The directors have no
present intention of exercising the authority conferred by this resolution.
6. Resolution 6: Renewal of directors’ authority to allot shares for cash
Section 89 of the Companies Act 1985 requires ordinary shares allotted for cash (other than pursuant to Employee Share Schemes)
to be offered to existing shareholders on a pro rata basis. Resolution 6 allows the directors to allot shares other than in accordance
with section 89 in connection with rights issues and otherwise up to a maximum nominal amount of £363,727, representing
approximately 10% of the aggregate of the Company’s issued share capital as at 16 September 2004 and the 33,066,000 ordinary
shares conditionally allotted on that date pursuant to a placing due to be announced the following day. The authority would last
until 15 months after the passing of this resolution or, if earlier, the conclusion of the Annual General Meeting in 2005.
The resolution is to renew the power granted to the directors at the Annual General Meeting held on 23 October 2003.
7. Resolution 7: Electronic voting at General Meetings
The Companies Act 1985 (Electronic Communications) Order 2000 (“the Order”) came into force on 22 December 2000. Under the
Order, a company can deal directly with its shareholders by electronic means and, in particular, can send accounts and annual
reports, notices of meetings and proxy forms electronically to an address provided by the shareholder, or have notices posted on its
website. Resolution 7 allows the Company to put in place these procedures by making relevant changes to the Articles of Association.
Until such procedures are put in place, shareholders will continue to receive or send communications by post. Thereafter, those
who do not wish to send or receive communications electronically will continue to receive or send such communications by post,
unless they request otherwise. I/We ..........................................................................................................................................................................................................
of ..............................................................................................................................................................................................................
being (a) member(s) of the above-named Company, hereby appoint the Chairman of the Meeting or (see note (3) below)
................................................................................................................ of ............................................................................................
as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at 10.30am
on Thursday 4 November 2004 and at any adjournment thereof.
I/We direct my/our proxy to vote on the under mentioned resolutions as follows:
P l eas e i n s er t an X i n t h e ap p r o p r i at e b o x es al o n gs i de t h e r es o l u t i o n s
Vote
Resolutions For Against withheld
1. To receive and adopt the Report and Accounts for the year ended 
30 June 2004
2. To reappoint Dr Philip Gould as a director
3. To reappoint KPMG Audit Plc as auditors of the Company 
and to authorise the directors to fix their remuneration
4. To approve the Report of the Remuneration Committee
5. To renew the directors’ authority to allot shares
6. To disapply pre-emption rights on allotment
7. To amend the Company’s Articles of Association to facilitate electronic communications
If this form is signed and returned without any indication as to how the proxy shall vote, the proxy will exercise discretion
both as to how the proxy votes and whether or not the proxy abstains from voting. The proxy will also exercise discretion
as to voting (and whether or not the proxy abstains from voting) on any other business transacted at the Meeting.
Signature ..................................................................................................................................................................................................
Notes:
1. To be effective this form of proxy (together with the power of attorney (if any) under which it is signed (or a notarially
certified copy of that power of attorney)), must be lodged with the Proxy Department of Capita Registrars, the Company’s
Registrars at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not less than 48 hours before the time appointed
for the holding of the Annual General Meeting or any adjournment of the Meeting.
2. Any alteration to this form should be initialled.
3. If you wish to appoint someone other than the Chairman of the Meeting as your proxy, you should complete in block capitals
his or her full name and address in the space provided and delete the words “the Chairman of the Meeting or” and initial
these amendments. Such proxy need not be a member of the Company.
4. In the case of joint holders, the signature of any holder will be sufficient but the names of the joint holders should be stated.
If more than one joint holder votes in person or by proxy, the vote of the senior holder who tenders a vote whether by
proxy or in person shall be accepted to the exclusion of the votes of the other joint holders, seniority being determined
by the order in which their names stand in the register of members.
5. In the case of a corporation, the proxy must be under the common seal or signed on its behalf by an attorney or a duly
authorised officer of the corporation as a deed.
6. Completion of the form of proxy will not preclude a member from attending and voting in person at the Meeting if the
member so wishes.
7. Every holder of ordinary shares present in person and entitled to vote shall have one vote on a show of hands and
every holder of ordinary shares present in person or by proxy shall on a poll be entitled to one vote for every ordinary
share held.
8. A “vote withheld” option has been included in this form of proxy. Withheld votes will be counted, but will be disregarded
in calculating votes for and against a resolution.
9. A member entitled to attend and vote at the Annual General Meeting may appoint one or more proxies to attend and vote
on his behalf and a proxy need not be a member of the Company. If a member appoints more than one proxy the form
of proxy must specify the number of ordinary shares in respect of which the proxy is entitled to vote and no member
is permitted to appoint more than one proxy (save in the alternate) to vote in respect of any one ordinary share held
by the member.
10. By attendance at the Annual General Meeting (or any adjournment thereof) the attendees confirm that they are requesting,
and are willing to receive, all communications made at that Meeting relating to the Company’s shares.
Form of Proxy
For use at the Annual General Meeting of Provalis plc on Thursday 4 November 2004
✂ BUSINESS REPLY SERVICE
Licence No. MB 122
Capita Registrars
Proxy Department
PO Box 25
Beckenham
Kent BR3 4BR
FOLD 3 AND TUCK IN
FOLD 2
FOLD 1 T HE D ESIGN P ORTFOLIO
a member of the flathill communications group plc
www.flathillplc.com
designed & produced by Provalis plc 
Newtech Square, Deeside Industrial Park, Deeside, Flintshire CH5 2NT
Telephone: +44 (0) 1244 288888  Fax: +44 (0) 1244 280221  Website: www.provalis.com