London, 20 December 2006, Conival, the specialist branded food and beverage company announces, preliminary results for the year ended 30 June 2006.

Highlights - 2006

• Development of SPARKY BRAND^TM and a  range of everyday food and drink products incorporating Omega 3.
• First juice products launched into Sainsbury, Tesco and Selfridges stores.
• New SPARKY BRAND^TM  cranberry, blueberry & raspberry juice  with Omega 3 launched.
• Development of Blenheim Palace Provisions brand.
• Turnover for the period was £198,000 and after a non-cash goodwill impairment charge of £8.57 million there was a loss before and after tax of £10.74 million.  Loss per share was 6.77p   (2005 loss per share of 1.30p

Operation Highlights – Post Reporting Period

• Placing of new shares and consolidation of loan.
• Launched new SPARKY SUPER JUICES wild acai berry & mango with Omega 3 juice drink and listing with Tesco.
• Recently secured listing for new SPARKY SUPER JUICES wild acai berry 100ml shot with Omega 3  in Tesco stores.
• SPARKY SUPER FOODS super fruit and oat bars enriched with Omega 3- pomegranate & strawberry and Blueberry & raspberry trial launched into Boots stores.
• Blenheim Palace Provisions brand in final stages of securing listings with the retailers and food service companies.
• Marco Pierre White brand in final development and in process of securing listings with retailers.
  
  

Commenting, Jeremy Schwartz, Chief Executive of Conival plc, said:

“We are encouraged by the progress achieved in developing and establishing the core brands of the Company. We are pleased that Conival plc can increasingly move from a product development focus to a sales development focus to leverage the portfolio of brands and products we now have ready for market. Each brand is targeting categories that are in growth, especially those addressing the increased consumer demand for healthier lifestyle products, and is supported by innovative products that are in demand. With the infrastructure now in place to develop, supply and grow each brand we are looking forward to accelerating our activities.  We are hopeful for an improved financial performance in 2007 as we launch our existing portfolio of brands and seek to acquire more licences and potentially existing synergistic business’s. Finally, I would like to thank our suppliers, retailers and employees who have supported us in this initial operating year.” 

DEPUTY CHAIRMAN'S STATEMENT

I am pleased to present our accounts for the year ended 30 June 2006. During this period the Company has built the commercial infrastructure necessary to operate as a food company and has focused on the development of innovative and functional new food products for consumers via multiple and independent retail outlets. 

The first half of the year was principally employed in developing the first of two new food brands and the commissioning of our third party sourcing, manufacture, packaging, EDI order processing and distribution. Once this infrastructure was established we achieved early success with the launch of our Omega 3 enriched chilled juices by securing listings in Sainsbury’s and Selfridges stores in the UK.  This was one of the first Omega 3 enriched products to reach supermarket shelves, which despite the recent launch of a number of other Omega 3 products onto the market, SPARKY BRAND^TM  remains unique within the juice category. 

The SPARKY BRAND juice products, carrying the distinctive and contemporary packaging design, received positive consumer feedback on launch and we secured further listings with Tesco in the UK in the second half of the year.  During the remainder of the year the Company developed and launched a cranberry, blueberry & raspberry juice with Omega 3 whose sales volumes quickly superseded the original orange juice with Omega 3 that it replaced.

During the second half we commenced the development of our second new brand Blenheim Palace Provisions which I refer to in more detail later in this statement.

New Product Development and Launches in 2007

After detailed consumer research the packaging design and branding was successfully re-launched in October 2006 as SPARKY SUPER FOODS to capitalise on the growing demand for super fruits.  October also saw the launch of the SPARKY SUPER JUICE wild acai berry & mango juice drink with Omega 3 in 180 Tesco stores. The acai berry is the most antioxidant rich fruit yet known and is currently being hailed as a “superfood”. The SPARKY juice drink is the first product of its kind in the UK and we were encouraged by the positive reception from consumers and the press.

We also extended the brand concept with the launch of two super fruit and oat bars enriched with Omega 3 – pomegranate & strawberry and blueberry & raspberry. These gained a test listing in Boots from October and are now gaining further distribution across the grocers and independent trade. 

In addition, I am also pleased that  we have developed the first 100ml not from concentrate wild acai berry daily shot with Omega 3 which will be sold singularly and in a four-pack. I am delighted to report that this addition to the range has already secured listings in 180 Tesco stores from the 29 January 2007 and we are currently securing further listings with other supermarkets and independent retailers.

Concurrently, we have developed the Blenheim Palace Provisions brand centred on the innovative idea of fruit based products which are “Fresh from the Orchards”. The brand is inspired by the 12 acre, 400 year old walled garden and orchards at Blenheim Palace which produces oranges, grapes, melons and their unique variety the Blenheim orange apple.  A range of chilled fruit desserts, fruit toppings, chocolate coated fruits and juice drinks have been developed and production secured.  We are in the final stages of securing listings with the retailers and food service companies and I am looking forward to making further announcements in the first half of 2007.

In addition, we have developed the Marco Pierre White brand centred around innovation in chocolate across products both in the chilled and ambient areas. A range of innovative products have been developed, production secured and we are in discussions with the retailers who are responding positively.  I am looking forward to making further announcements in the first half of 2007. 

Financials

Turnover achieved in the year ended 30 June 2006 was £198,000 (period ended 30 June 2005 £nil) and a loss before taxation of £10,744,000  (period ended 30 June 2005:£818,000) was incurred after a goodwill impairment charge of £8,571,000 (period ended 30 June 2005: £nil) The loss per share was 6.77p (period ended 30 June 2005:1.30p) Following the acquisition of Portfolio Products Limited, which held a range of licences, in 2005 the goodwill on consolidation arising as a consequence of that acquisition was capitalised in the accounts. In relation to two of these licences,  Marco Pierre White and Blenheim Palace,we have discounted the future expected minimum cashflows and have attributed a value of £1.25 million to them.  We have a number of additional licences where it is unlikely that the rights will be exploited in the short to medium term and we have therefore decided to apply a non-cash impairment charge of £8,571,000 to the goodwill. 

I am pleased to say that the Board is confident that the SPARKY SUPER FOODS brand has been developed to the extent where we believe it has growing future value, particularly as it increases its market awareness and range of products, however in line with accounting rules this value is not of course capitalised on the balance sheet.

As a consequence of the losses incurred to date the Company’s net assets  at 30 June 2006 reached a level at which the Company is required to discuss the matter at a meeting of the shareholders.  In order to redress this imbalance the Company successfully completed a placing of new ordinary shares which, before transaction costs and capitalising a loan from Corvus Capital Inc, raised a further £760,000.  This action by the Board took place after the balance sheet date so there remains a technical requirement to discuss the Company’s position in this regard at the annual general meeting. 

Outlook 2007

I am very pleased with the level of brand development and product innovation that has taken place to date. The nature of the UK environment means that the process of securing manufacturing and listings with the supermarkets and independent retailers takes time. The speed with which we can bring our brands to market is dependant upon these negotiations which are now progressing well.  As our portfolio of existing and new brands and products come on stream we are confident that the retail, media and consumer recognition of both the brands and products will translate into increasing sales.

Finally, I would like to thank all our staff and our commercial partners for their hard work and dedication during the year and to our shareholders and our customers for their continued support.

Dr Paul Clayton
Deputy Chairman

CONSOLIDATED PROFIT AND LOSS ACCOUNT

There were no recognised gains or losses other than the loss for the financial period.

CONSOLIDATED BALANCE SHEET

CONSOLIDATED CASH FLOW STATEMENT