(openPR) - year ended 31 December 2005

Antonov plc (the "Company" or "Antonov") announces its unaudited financial results for the year ended 31st December 2005.

Key Points:

Significant Progress

- Significant progress achieved during period as revenue streams begin

- Loss before tax of £4.3 million is in line with expectations as Antonov´s commercialisation strategy accelerates

- Option agreement completed with Great Wall Motor, one of China´s fastest growing vehicle manufacturers for Antonov´s 6 speed automatic transmission

- Negotiations continue with Shanghai Automotive, another one of China´s largest car manufacturers for Antonov´s Dual Clutch Automatic technology

- Successful launch of supercharger drive unit has generated a range of opportunities for high volume applications which are now under discussion

- Company focused on building revenues as initial order streams meet 2006 budgets

- Patent case judgment expected in August regarding alleged Toyota Prius infringement

- Board re-organised and strengthened with Christopher Ross being appointed as Chairman.

- Directors confident of steady progress in the year ahead

John Moore, Antonov´s CEO commented:

"Antonov has made steady progress during 2005 and has achieved a range of key objectives. The strength of Antonov´s technology has been recognised by Great Wall Motor who is currently working with the Company to develop the 6 speed automatic transmission. Antonov will deliver initial revenues from the launch of our supercharger drive unit to meet 2006 budgets and the Board remains very optimistic with regards to the opportunities that lie ahead".


For further information please contact:

John Moore, CEO
Antonov plc
+44 1223 421740

Rod Venables
Dawnay Day Corporate Finance Ltd.
+44 20 7509 2308

Shane Dolan,
Biddicks
+44 20 7448 1000


Chief Executive´s statement

Financials
Results were in line with expectations as the Company made significant progress towards achieving a number of key objectives.
Group losses for the period were £4.3 million (2004: £3.1 million) with a loss per share for the period of 14.6p (2004: 11.7p). Cash balances at 31st December 2005 were £0.3 million (2004: negligible). On the 21st January 2005 the Company was granted a convertible term loan facility of EUR3 million. The Company successfully completed a further fund raising on the 7th June 2005 through a convertible term loan facility of EUR6.75 million which included Quivest BV, the company´s largest shareholder. These monies will fund Antonov´s working capital requirements and via its flexible nature enable the Company to choose how and when it is used. At the period end, Antonov had drawn down a total of EUR2.5 million from these facilities.

As the Group makes further progress on the commercialisation of its intellectual property, there may, in due course, be further demands on working capital. With a view to providing the Company with greater flexibility to raise funding when required the Board intends to increase the Company´s authorised share capital and to put in place appropriate authorities for the Directors to issue further equity. Proposals in this respect will be put to shareholders at the appropriate time.

Commercial

6 Speed Automatic Transmission
The main activity on the 6 Speed Automatic is the work with Great Wall Motor to develop a range of passenger car transmissions based in Antonov´s patented transmission configuration. The Option Agreement signed at the end of 2005 runs for 6 months and during this period it is expected that a Production Licence Agreement will be granted with an agreed production plan.
Other enquiries for this transmission from Europe and Japan are at an early stage of discussions.

Dual Clutch Transmission
Production planning discussions continue with Shanghai Automotive and this remains a steady but slow process. Further progress is expected during 2006 but it is understood that initial production of the new large car platform will use a bought in gearbox to allow more time for development of the dual clutch unit. As with the 6 speed, other enquiries have been received and are being pursued.

Mechanical Module
Pre-production testing and assessment of the 2 speed supercharger drive have gone well. There have been minor development issues leading to adjustments to the design but the programme is on track. First production units have been delivered from NZWL and are on test.
In parallel with the product development at Antonov and NZWL, Wheel-to-Wheel is developing the 2 speed unit into kits for sale. The initial kits will target General Motors V6 and V8 mid and full-size pick-up trucks as the high low-end torque is seen as particularly a requirement in trucks. Wheel-to-Wheel is also preparing a Mustang to be used for demonstration purposes. Further distributors will be brought on stream during 2006.
The tuner market supply will be a self funding business but it should be noted that its main purpose is as part of the strategy to demonstrate the strength of the concept. This has already started to bear fruit with trial units sold to two vehicle makers and a major Tier 1 supplier and a number of higher volume enquiries.
In addition to the supercharger application, discussions continue on a number of other applications for the mechanical module concept. A trial unit will be prepared in 2006 for a two speed front end accessory drive to improve engine efficiency and a two speed unit for electric and fuel cell vehicle drives is also under investigation.

Hybrid Vehicle Transmission
The dispute with Toyota regarding their alleged infringement of Antonov´s patents in their hybrid driveline continues. As announced earlier in March, Toyota has chosen to initiate a legal challenge to Antonov´s Japanese patent. This is interpreted as a sign that Toyota´s confidence in the strength of their case is weakening and that they are now seeking to intimidate Antonov with the threat of costly litigation in Japan. This will not succeed as Antonov is confident in the strength of its case and has the funding in place to defend its patents, including the Euro 2 million put and call facility already announced.

Operations
The commercial successes achieved during 2005 have in turn driven internal improvements. The work initiated in the first half of 2005 continues with new systems being implemented both for the financial management of the Group and the technical data management. Antonov has in place a planned programme of targeted capital expenditure to strengthen the Group´s engineering capability. Targeted recruitment is therefore under way to strengthen our Paris technical centre which is the centre of our engineering work.
It is important to underline that this investment in growth is being carefully managed to ensure that the company does not expand more than is strictly necessary to support to the success in applying Antonov´s intellectual property. However it is important that current client project commitments do not prevent Antonov pursuing new opportunities and steps are being taken to ensure we have sufficient engineering capacity to achieve this.

Outlook
Antonov is now benefiting from many years of Research and Development. Significant commercial milestones have now been achieved as the Company moves from strength to strength. Initial revenue streams are beginning to build and whilst the Company focuses on servicing the growing demand for its technology it continues to deliver high levels of support to existing clients. Significant opportunities exist in the market place for Antonov´s technology and the Board looks forward to updating shareholders in due course on further progress.

Unaudited group profit and loss account for the year ended 31 December 2005

2005 2004
£´000 £´000
Turnover 75 -
Cost of sales - -

Gross profit 75 -
Administration expenses (4,258) (3,048)

Operating loss (4,183) (3,048)
Interest payable (92) (13)

Loss on ordinary activities before taxation (4,275) (3,061)
Taxation on loss on ordinary activities 372 (51)

Loss on ordinary activities after taxation (3,903) (3,112)
Loss per ordinary share basic and diluted (in pence) 14.6p 11.7p


Unaudited group balance sheet as at 31 December 2005

2005 2004
£´000 £´000
Fixed assets
Intangible fixed assets 965 1,404
Tangible fixed assets 258 113
1,223 1,517

Current assets
Stocks and contracts in progress 114 155
Debtors 919 437
Cash in hand and at bank 270 -
1,303 592

Creditors: Amounts falling due within one year 1,738 1,761

Net current liabilities (435) (1,169)

Total assets less current liabilities 788 348

Equity shareholders´ funds 788 348


Notes:

1. The Board have accounted for Convertible Loan Notes as Equity as they consider it unlikely that these will not be converted into equity in due course. The Board have considered the requirements of FRS 25 and have determined that compliance with FRS 25 would result in the financial statements not providing a True and Fair view. The application of the requirements of FRS 25 to these financial statements would result in an increase in Creditors of £1.82 million, representing the Convertible Loan Stock, and a consequent reduction in Convertible Loan Stock within Share Capital and Reserves and Net Assets of £1.82 million to £nil and a deficit of £1.04 million respectively.

FRS 25 ´Disclosure and Presentation´ (´FRS 25´) is applicable to the group´s financial statements for the year ended 31 December 2005. FRS 25 requires that Convertible Loan Notes which are convertible into a fixed number of shares at a fixed price are accounted for as Equity. Where such shares are not calculated based upon a fixed price, the Convertible Loan Note is to be recognised as a liability upon the Balance Sheet. The group´s Convertible Loan Notes currently in issue are denominated in Euros, a currency other than the company´s functional currency, and as such are convertible into a fixed number of shares at a variable price. As such, FRS 25 requires these Convertible Loan Notes to be accounted for as a liability.

2.The calculation of loss per share for the twelve months ended 31 December 2005 is based on the loss on ordinary activities after taxation of £4.3 million (2004 : £3.1 million) and on 29,200,736 ordinary shares of 20p representing the weighted average number of shares in issue in 2005 (2004 : 27,007,282). During the year end the Company consolidated its share capital by increasing the nominal value of its shares from 5p to 20p thereby reducing the total number of issued shares to 25% of the pre-consolidation number.

3. The Preliminary results are unaudited. The financial information contained therein does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2005 will be produced under International Financial Reporting Standards (IFRS). The accounts for the year ended 31 December 2004 have been filed with the Registrar of Companies. The auditors´ report on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985.

4. In accordance with the New Market Amsterdam Listing Rules the Company has received notification from its locked-in shareholders showing that as at 31 December 2005 they collectively held 6,344,843 shares (of which 5,780,625 shares are locked in). In addition these shareholders also held options to subscribe for new ordinary shares totalling 195,000 shares and convertible loan notes with a face value of EUR100,000 as at 31 December 2005.

5. Copies of this statement will be available from the Company´s registered office at St James´s Court, Brown Street, Manchester, M2 2JF, United Kingdom or from its Dutch offices at Weena 89, 3013 CH Rotterdam, The Netherlands.

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