RNS Number:0293J
Medisys PLC
25 February 2005


                                                              25 February 2005

                                  Medisys PLC
                          ("Medisys" or "the Company")

                         Trading Update & Board Change

Trading Update

In the announcement of its preliminary results on 8 December 2004, the Company
indicated that it was encountering increased competition in the Long Term Care
("LTC") segment of its glucose monitoring business. This competitive pressure
has intensified in the early months of 2005 with the result that the Company has
been required to pursue a more aggressive pricing and promotional strategy with
certain customers to protect its market share. As a result the LTC business has
performed below the Board's expectations. The Company anticipates that this more
competitive environment will continue to impact sales for at least the remainder
of the financial year.

In light of the above, Medisys now expects that the Company's sales in the half
year to 31 March 2005, on a constant exchange rate basis, will be approximately
5% lower than in the first half of 2004, which will be materially less than
market expectations. While the weakness in LTC sales is anticipated to continue
in the second half of the year, it is also expected that the revenue shortfall
will be compensated for by increased sales through other blood glucose
monitoring sales channels, including mail-order, such that total Company sales
are expected to show growth on the first half result. It is anticipated that the
weakness in sales in the LTC segment will significantly reduce the Company's
profitability in the year to 30 September 2005.

The Company is continuing to seek ways to improve efficiencies throughout its
business and all overhead categories are being reviewed to identify areas where
cost reductions can be implemented. As a result of this exercise, the Board has
decided to close the Company's London office, with the activities currently
carried out in London being transferred to its facilities in Minneapolis, USA
and Woodbridge, UK. This will result in an annualised saving of approximately
#0.4 million.

Sales of the Advance Micro-draw product to Liberty Medical have been in line
with the agreed forecast and the Board remains confident that this performance
will continue. As previously announced, the gross margins currently being
achieved on this product are being adversely impacted by a lack of manufacturing
economies of scale. Certain changes have been made to the manufacturing process
and the anticipated initial cost reductions are now being achieved. The
equipment necessary to increase automation and manufacturing capacity, which
will result in a further reduction in the cost of goods, is now beginning to be
delivered and should be fully commissioned by the end of May. The Board
therefore believes that the expected improvement in the gross margin on Advance
Micro-draw will start to be seen in the second half of the year.

Sales of NewTek through Wal*Mart stores are continuing to build, though at a
somewhat slower rate than originally anticipated. Wal*Mart remains committed to
the product and is working with the Company to promote sales throughout its
retail pharmacies. The Company's planned public relations campaign, aimed at
increasing the profile of the product amongst people with diabetes, has been
approved by Wal*Mart and is about to commence.

Medisys expects to expand its presence in the retail segment of the glucose
monitoring market through its recent agreement to provide the first private
branded blood glucose monitoring product to the Target Stores retail chain in
the US. Target has over 850 pharmacy outlets and is the second largest mass
merchandise retailer in the US. The product to be supplied will be a variation
of the Advance Micro-draw product and Target plan to launch it later this year.

The Company's initiative to seek major distribution partners in Europe is
progressing well and the Board is confident that negotiations, which are
currently underway, will result in a successful outcome.

Board

David Conn has today stepped down from his position as Chief Executive Officer
and from the Board of the Company with immediate effect. The search for a new
CEO will commence immediately. In the interim period the CEO's responsibilities
will be divided between the existing executive management team.

Mr Conn will remain in the position of President of Hypoguard with a specific
focus on sales and marketing.

Planned Disposal of Safety Products Business

As previously announced, the Board has decided to exit the Safety Products
business. A formal auction process targeted at potential interested purchasers
has now been concluded but none of the parties that participated in the auction
submitted a bid for the business. As a result, the Board has decided to write
off all assets related to the Futura Safety Syringe. These assets include
equipment with a carrying value of #5.3 million, intellectual property with a
carrying value of #1.2 million and inventory valued at #0.3 million.

The Company intends to continue operating the Futura Safety Scalpel business.
While this business is not aligned with the Company's strategic focus, the
product is generating increasing sales at attractive gross margins.

                                    - Ends -

Enquiries:

Medisys PLC                                                       020 7563 5200
Michael Barry, Chief Financial Officer

Weber Shandwick Square Mile                                       020 7067 0700
Kevin Smith




                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
TSTPUUGUPUPAPUC
MDY Healthcare (LSE:MDY)
Historical Stock Chart
Von Jul 2024 bis Aug 2024 Click Here for more MDY Healthcare Charts.
MDY Healthcare (LSE:MDY)
Historical Stock Chart
Von Aug 2023 bis Aug 2024 Click Here for more MDY Healthcare Charts.