RNS Number:5736N
Medisys PLC
10 July 2000
MEDISYS PLC
("Medisys" or "the Group")
Unaudited Interim Results for the six months ended
31 March 2000
Highlights
* First half trading in line with expectations; sales
from continuing operations up by 12% to #4.0 million
(1999: #3.6 million)
* Operating loss, before amortisation of acquired
technologies, of #1.0 million compared to #1.5 million
(from continuing operations) in the previous year
* Previously announced #0.7 million exceptional charge
for aborted acquisition costs
* Placing and Open Offer raising approximately #45
million gross completed successfully in April 2000
* Move from AIM to the Official List of the UK Listing
Authority effective 16 June 2000
Futura
* FDA approval to market 3ml model of Futura safety
syringe received on 5 July 2000
* Continued focus on achieving manufacturing scale-up
for the Futura safety syringe in advance of US market
launch in late 2000
* Lark safety scalpel launched in the US
* Joe Costa, former Head of Marketing and Sales -
Safety Products at Becton Dickinson, recruited as Head of
Sales and Marketing for Futura safety products business
Hypoguard
* Continued progress on development of biosensor-based
diabetes monitoring products - 510(K) filing for DART by
the end of current calendar year
* Joint venture established with Drew Scientific for
the development of products based on Hypoguard's
Alzheimer's disease marker
* David Conn, former Vice President - Consumer and
Trade Sales for Lifescan, Johnson & Johnson's diabetes
monitoring business, appointed President and CEO of
Hypoguard
* US sales and marketing infrastructure being
established
David Wong, Chief Executive Officer, commented: "First
half progress has been in line with expectations. The
current financial year will be characterised by the
development work on the Futura syringe and the DART
glucose monitoring product prior to their market
launches. I am confident that the Group should benefit
from the introduction of these exciting new products in
2001 and beyond."
Enquiries:
Medisys PLC 020 7663 5602
Michael Barry, Chief Financial Officer
Square Mile Communications 0207 601 1000
Kevin Smith
MEDISYS PLC
("Medisys" or "the Group")
Unaudited Interim Results for the six months ended 31
March 2000
Overall, Medisys made good progress during the first half
of the current year. Trading results were in line with
expectations and the Group's new product development
programmes continue to progress to schedule.
Financial Review
Turnover from continuing operations in the six months
ended 31 March 2000 was #4.0 million compared to #3.6
million (when adjusted for discontinued operations) in
the previous year. Discontinued operations in the prior
year relate to the sutures business, which was sold in
July 1999. The operating loss from continuing businesses
for the period was #1.5 million compared to an operating
loss of #1.5 million in the prior year. The operating
loss for the period includes a charge of #0.5 million for
amortisation of technologies acquired from Elan
Corporation PLC as part of the diabetes monitoring joint
venture arrangements agreed in June 1999. There is no
corresponding charge in the profit and loss account for
the six months to 31 March 1999.
Research and development expensed in the half-year was
#0.4 million (1999: #0.2 million). In addition, #1.3
million of product development expenditure, relating
principally to the development of the Futura safety
syringe and the biosensor based blood glucose monitoring
products, was capitalised during the period.
Administration expenses were #2.7 million in the six
months ended 31 March 2000 compared to #2.8 million (#2.7
million when adjusted for discontinued operations) in the
previous year.
As previously announced, the Group incurred exceptional
expenses of #0.7 million related to an aborted
acquisition transaction in the six months ended 31 March
2000. These expenses consisted primarily of legal,
accounting and related advisory costs.
The loss before tax in the six months ended 31 March 2000
was #2.4 million compared to #2.1 million in the
corresponding six months in the previous year. Basic
loss per share was 0.90p (1999: 1.15p).
Net cash increased by #1.1 million during the period.
Subsequent to the period end the Group received #43.4
million net from the Placing and Open Offer of
approximately 37.6 million New Ordinary Shares which was
completed on 3 April 2000. During the six months ended 31
March 2000, approximately #4.6 million of convertible
bonds due 2002 were converted into Ordinary Shares. Cash
of approximately #4.3 million was received pursuant to
the exercise of warrants.
Futura
Futura Medical, the Group's medical safety product
business, made sound progress in the six months ended 31
March 2000.
Development of the 3ml model of its innovative Futura
safety syringe was completed and 510(K) marketing
approval was received from the Food and Drug
Administration on 5 July 2000. Development of the 5ml
and 10ml versions is also at an advanced stage.
Development of the 1ml model is at a slightly earlier
stage since there is a need to amend the basic syringe
design to achieve the smaller size required for such a
device. It is anticipated that the product design for
the 1ml version will be finalised by the end of 2000.
Futura intends to use its existing sales and distribution
capabilities to market the Futura syringe. In addition,
the Board is also engaged in continuing discussions with
potential marketing partners in the US and certain other
key markets for distribution of the Futura syringe.
Entering into such strategic partnerships would
facilitate wider distribution of the product.
Subsequent to the half-year end Joe Costa was appointed
to the position of Vice President - Strategic Operations.
He was previously Vice President - Safety Products, with
Becton Dickinson, the world's largest supplier of
disposable syringes. The Board believes that his
extensive experience of medical safety products will be
of great benefit to the Group as it prepares for the
market launch of the Futura syringe.
In the course of optimising the design of the syringe,
much attention has been focussed on developing a product
which can be manufactured in high volume at low cost.
The Directors believe that the final product design will
achieve this objective as the manufacturing process
consists primarily of plastic moulding, with minimal
mechanical assembly. Following receipt of the proceeds
of the Placing and Open Offer, the Board commenced the
manufacturing scale-up plan with external sub-contract
manufacturers. Equipment, including high cavitation
production moulds, is currently being ordered with a view
to achieving pilot production runs at the first two
manufacturing plants by the end of the current calendar
year.
The Board continues to seek out opportunities for the
acquisition of additional safety products which address
the needlestick injury problem and, which would
complement the Futura safety syringe. Several products
are being evaluated and negotiations are progressing.
Sales of Futura Medical's existing products in the half-
year ended 31 March 2000 (when adjusted for discontinued
business) were broadly level with the prior year period.
Following the disposal of the sutures business and the
out-licensing of the bone-wax business during 1999,
Futura Medical has been reorganised operationally to
focus on its core medical safety product portfolio which
includes sharps bins, lancets, infection control kits and
the NicSafe needle incinerator. The sales and marketing
team was strengthened significantly during the half-year
ended 31 March 2000 through the addition of several key
sales and marketing professionals with extensive industry
experience. The Directors believe that Futura Medical is
now well positioned to generate increased sales from its
existing product portfolio. In addition, management are
pursuing a number of opportunities to acquire rights to
other complementary medical products, which could be sold
through the existing infrastructure.
The Lark Safety Scalpel was launched in the US market
early in 2000. Early feedback on the product has been
very positive and there have been a significant number of
initial sales enquiries. Certain key hospitals have
indicated a willingness to convert to the Lark, following
clinical evaluation and the Board is confident that this
initial interest will convert into healthy sales. The
Lark product is now being manufactured at the Futura
facility in Cochin, India, which has recently received
ISO 9000 accreditation, following a programme to upgrade
its quality systems. The facility is not fully utilised
at present and the Directors are examining opportunities
to manufacture additional products at the site to
capitalise on its low cost, high quality capability.
Futura is also in the process of obtaining CE mark
classification for Lark and for its range of lancets to
enable the development of a European market for these
products.
Hypoguard
Sales at Hypoguard increased from #1.8 million in the
half-year ended 31 March 1999 to #2.7 million in the half-
year ended 31 March 2000.
Sales of Hypoguard's traditional product - the Supreme
Strip - declined during the half-year reflecting the
maturing market for products based on traditional
reflectance technology. The Directors anticipate that
sales growth at Hypoguard will come primarily from its
development pipeline of biosensor based products which
will offer new levels of functionality and convenience to
the diabetic. As they will not be subject to existing
licensing agreements the new products will also
facilitate Hypoguard's re-entry into the US market, the
world's largest. Near-term growth in sales of blood
glucose monitoring products will come from the DART
biosensor based product, launch of which is planned early
in 2001.
In March 2000 Hypoguard entered into a joint venture with
Drew Scientific Group PLC. Under the terms of the
agreement Hypoguard provided a world-wide exclusive
license to certain technologies relating to an
Alzheimer's detection test to Drew Scientific
Developments Limited in return for a license fee of #1.3
million. The joint venture agreement should ensure
faster completion of development work on this innovative
technology and will allow Hypoguard to concentrate on its
diabetes monitoring interests.
Hypoguard continued development of its family of
biosensor based blood glucose monitoring products during
the period under review. Significant progress is being
made in the development of marketable products combining
low cost and leading edge functionality. The DART single
use biosensor-based strip and the accompanying meter are
at an advanced stage of development and the product is on
schedule for FDA 510(K) filing by the end of this
calendar year. Initial feedback from potential marketing
partners for the product has been extremely encouraging.
A prime objective of the Placing and Open Offer was to
provide the funds necessary to finance the development of
a US sales and marketing infrastructure to facilitate the
introduction of DART in that market. As part of this
process David Conn has recently been appointed President
and CEO of Hypoguard. He was previously Vice President
of Consumer and Trade Sales at Lifescan, Johnson &
Johnson's diabetes monitoring business. The Board
believes that his extensive sales and marketing
experience in the blood glucose monitoring industry will
facilitate a successful introduction of the DART product
into the key US market.
Product development within the Elan joint venture is
progressing well. Prototypes of the Flight multiple-use
disposable blood glucose monitoring system have been very
well received in focus group meetings with diabetics.
The next stage of the development process will
concentrate on product optimisation, with particular
reference to manufacturing cost, production scale-up and
component supply considerations. Interest from potential
strategic partners has already been considerable. The
Marathon minimally invasive blood glucose monitoring
system, while at an earlier stage of development,
continues to show significant potential. The Board is
optimistic that continuing investment in this exciting
technology will in due course give rise to an innovative
and successful product.
Admission to the Official List
Medisys was admitted to the Official List of the UK
Listing Authority on 16 June 2000.
Outlook
Trading in the first three months of the second half has
remained broadly in line with expectations.
Following receipt of FDA approval for the Futura 3ml
safety syringe, Futura plans a rapid implementation of
its manufacturing and marketing strategies with the aim
of achieving a US market launch for the Futura safety
syringe in late 2000.
At Hypoguard, the build-up of a US sales infrastructure
has begun under the leadership of David Conn and it is
anticipated that this process will be at an advanced
stage by the first quarter of 2001. The Board believes
Hypoguard now has in place a strong management team with
the capability to deliver a successful US launch for
DART.
The Group is on target to achieve its key strategic
objectives and the Board expects to be able to report
further progress for the year as a whole.
Enquiries:
Medisys PLC 020 7663 5602
Michael Barry, Chief Financial Officer
Square Mile Communications 020 7601 1000
Kevin Smith
MEDISYS PLC
Unaudited consolidated profit and loss account
for the six months to 31 March 2000
Six months Six months
ended ended
31 March 31 March
2000 1999
#'000 #'000
Turnover
- continuing operations 4,016 3,600
- discontinued operations - 647
_____________________
4,016 4,247
Cost of sales
- continuing operations (1,842) (2,067)
- discontinued operations - (928)
_____________________
(1,842) (2,995)
_____________________
Gross profit 2,174 1,252
Research and development
expenditure in the period (353) (161)
Amortisation of acquired
technologies (543) -
Amortisation of capitalised
research and development costs (15) (72)
Distribution costs (88) (47)
Administrative expenses (2,693) (2,828)
_____________________
Operating loss (1,518) (1,856)
- continuing operations (1,518) (1,462)
- discontinued operations - (394)
_____________________
(1,518) (1,856)
Exceptional item
Aborted transaction costs (740) -
Loss on ordinary activities
before interest (2,258) (1,856)
Interest receivable 60 26
Interest payable and similar
charges (176) (234)
_____________________
Loss on ordinary activities
before taxation (2,374) (2,064)
Taxation on ordinary activities - -
_____________________
Loss on ordinary activities
after taxation for the period
attributable to shareholders (2,374) (2,064)
_____________________
Loss per ordinary share - basic (0.90)p (1.15)p
_____________________
Loss per ordinary share - diluted (0.90)p (1.15)p
_____________________
MEDISYS PLC
Consolidated statement of total recognised gains and losses
for the six months to 31 March 2000
Six months Six months
ended ended
31 March 31 March
2000 1999
#'000 #'000
Loss for the financial period (2,374) (2,064)
Unamortised issue costs on bonds
converted during the period (270) (131)
Loss on foreign currency translation (60) (11)
______________________
(2,704) (2,206)
______________________
MEDISYS PLC
Unaudited consolidated balance sheet
at 31 March 2000
At At
31 March 30 September
2000 1999
#'000 #'000
Fixed assets
Intangible assets 12,251 11,478
Tangible assets 2,149 2,205
Investments 1,250 -
_____________________
15,650 13,683
______________________
Current assets
Stocks 1,319 1,576
Debtors 3,501 3,573
Cash at bank and in hand 2,947 3,357
______________________
7,767 8,506
Creditors: amounts falling due
within one year (3,125) (4,100)
______________________
Net current assets 4,642 4,406
______________________
Total assets less current liabilities 20,292 18,089
Creditors: amounts falling due
after more than one year (196) (245)
Convertible bonds due 2002 (2,824) (7,201)
_____________________
17,272 10,643
_____________________
Capital and reserves
Called up share capital 2,810 2,254
Share premium account 22,469 13,677
Capital redemption reserve fund 20 20
Other reserves 22,361 22,854
Profit and loss account (44,369) (42,150)
_____________________
Surplus/(deficit) on shareholders'
funds - equity 3,291 (3,345)
Minority interest 13,981 13,988
_____________________
17,272 10,643
_____________________
MEDISYS PLC
Unaudited consolidated cash flow statement
for the six months to 31 March 2000
Six months Six months
ended ended
31 March 31 March
2000 1999
#'000 #'000
Net cash inflow/(outflow) from
operating activities 1,518 (6,069)
_____________________
Returns on investments and servicing
of finance
Interest received 60 26
Interest paid (176) (119)
_____________________
Net cash outflow from returns on
investments and servicing of
finance (116) (93)
Capital expenditure
Purchase of intangible fixed assets (1,316) (111)
Purchase of tangible fixed assets (143) (145)
_____________________
Net cash outflow for capital
expenditure (1,459) (256)
_____________________
Acquisitions and disposals
Payment to acquire investment
undertaking (1,250) -
_____________________
Net cash outflow before use of
liquid resources and financing (1,307) (6,418)
Financing
Issue of ordinary share capital
including premium 2,442 841
Repayment of secured loans (49) (24)
_____________________
Net cash inflow from financing 2,393 817
_____________________
Increase/(decrease) in cash 1,086 (5,601)
_____________________
Notes:
1. The interim financial information has been prepared
on the basis of the accounting policies set out in the
1999 annual report and accounts, but has not been
audited.
2. The interim financial information does not constitute full
accounts within the meaning of Section 240 of the
Companies Act 1985. The accounts for the year ended 30
September 1999 have been filed with the Registrar of
Companies and received an unqualified auditors' report.
3. The basic loss per ordinary share has been calculated on
losses of #2,374,000 divided by 264,662,253, the weighted
average number of ordinary shares in issue.
4. The movement in minority interest is a result of the
revaluation of the investment in the subsidiary
undertaking located in Cochin, India.
5. The interim report for the six months ended 31 March 2000
has been prepared by the Company and was approved by the
Directors on 7th July 2000.
6. A copy of this announcement will be sent to all
shareholders. Further copies are available to members of
the public from the Company's registered office, Bruce &
Partners, 23 Bridge Street, Ellon, Aberdeenshire AB41 9AA.
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