MIC Micap

RNS Number:3818J
MICAP PLC
25 September 2006



For release                       07.00am                     25 September 2006
                                                                            




                 MICAP PLC ("MICAP" or "the Company") ("MIC.L")

            The AIM - quoted technology company specialising in the

                    microencapsulation of active ingredients


                    Re: Lease Assignment and Trading Update


     "Onerous lease on former Head Office assigned; Micap GmbH into profit;
      Continuing strong growth in turnover and business outlook positive"



Lease assignment


Following the reorganisation of the business in Autumn 2005, Micap has been
negotiating the assignment of the lease on its former Head Office in Newton le
Willows, Merseyside. The annual rent and rates bill for the property was in
excess of #200,000 and there were 13 years remaining on the lease. This was a
significant liability and a continuing drain on the Company's cash flow.


The Board of Micap is today delighted to announce that, subject only to
Landlord's consent, the Company has assigned the lease for a reverse premium of
c.#150,000 to a software company, (which is part of a major electronics Group).
Following this agreement, there will be no ongoing liabilities for Micap from
this property.



Trading update


Over the past few months, the Company has made further significant progress in
all parts of its trading divisions.


Micap GmbH, Germany

Micap GmbH, the wholly owned subsidiary which provides bespoke
microencapsulation solutions to industry, is now operating at a profit, and also
has a growing pipeline of new relationships in sectors ranging from food and
personal care to steel and industrial paints.


Micap Specialities Ltd

Progress with the large and internationally-focused Agrochemical partners who
have taken option agreements on the yeast technology as announced on the 5 July
2006 and 8 August 2006, has been positive. Over the period of these
relationships, Micap will receive access and milestone payments and the Company
will be entitled to royalties on all sales of products containing Micap's
Technology, if it is subsequently commercialised.



Micap Encapsulates Ltd

The investment made in Micap Encapsulates Ltd, which operates a spray drying
plant in Ireland, is now starting to pay dividends, as the first trial
production runs for new customers start to take place. Negotiations are underway
with a number of other new customers, and orders are anticipated in the near
future. This is in addition to continued business supplying encapsulated mustard
flavour utilising our patented yeast technology. Following the end of our
trading relationship with Firmenich, which restricted our ability to sell yeast
encapsulated ingredients, we are now free to promote sales of mustard, garlic
and other flavours directly to the food industry.



As a result of these and other developments, the Group's turnover for the six
months to 30th September 2006 will be in excess of #450,000, an increase of 200%
over the corresponding period last year and 25% over the immediately preceding
six months. With Micap Encapsulates Ltd, the spray drying business, making good
progress, turnover is expected to continue to grow.


With the assignment of the lease on the former Head Office, the company has
concluded its initial cost reduction, programme which has included a reduction
in the Group headcount from 31 to 18 over the last 2 years. This, coupled with
the revenue growth highlighted above, is expected to allow the company to reach
a monthly break even position by the end of this financial year. This is three
months later than anticipated by the board. The company is considering various
financing options, and is confident that with the progress made in recent months
it will be able to raise adequate funding for its short term working capital
commitments to take it through to break even.


Commenting, Michael Norris, Chief Executive of Micap, said:


"The assignment of the onerous lease on our former Head Office is the final
stage in an aggressive cost reduction programme which we have implemented over
the last 2 years. More importantly, we now have revenues being generated from
all our business units, with significant short term growth achievable from Micap
Encapsulates and major long term opportunities from our agrochemical
relationships. I am particularly delighted with the performance of Micap GmbH,
which has not only reached profitability but has developed an excellent pipeline
of customers to underpin this performance".



For further information please contact:

Contact:

Micap plc                               +44 (0)7966 341802
Michael Norris, CEO

Adventis Financial PR
Tarquin Edwards/Chris Steele            020 7034 4758 / 020 7034 4759
                                        07879 458 364 / 07979 604 687


Notes for editors:

About Micap

Micap is a provider of microencapsulation solutions to a range of customers in
fields such as flavour delivery, agrochemicals, healthcare and industrial
applications, using both its patented yeast cell technology and novel methods
developed by its scientific team. For further details visit http://
www.micap.co.uk.



About microencapsulation

Microencapsulation is a process whereby tiny droplets of liquid or particles of
solid material are coated with a continuous film of polymeric material.
Microcapsules have several benefits, including conversion of liquids to solids;
separating reactive compounds; protecting substances against environmental
factors; and improving the material handling properties.

Micap's unique patented technology involves using killed yeast cells as natural
capsules to protect the active ingredient. Yeast encapsulation can protect
active ingredients against high temperatures, the effects of the sun, pressure
and degradation through exposure to the air.






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