RNS Number:1313E
Medisys PLC
24 May 2001
Medisys PLC
Interim Results
Medisys PLC
("Medisys" or "the Group")
Unaudited Interim Results for the six months ended 31
March 2001
Highlights
2001 2000
Turnover #10.4m #4.0m
Operating loss #(4.0)m #(2.3)m
Loss before tax #(3.1)m #(2.4)m
Loss per share (0.93)p (0.90)p
Futura
- Futura Safety Syringe on track to meet high volume
launch date in final quarter of 2001
- New safety lancet and needleless intra-venous access
port to be launched in second half - development of
additional new products continuing
Hypoguard
- MEDgenesis diagnostics business, acquired January
2001, being integrated and performing to expectation
- Manufacturing of Supreme diabetes monitoring product
being consolidated at acquired US facility - estimated
cost saving #1.5m per annum
- Development of Dart and Flight proceeding to plan
- US retail opportunities being actively pursued
Bill Bruce, Chairman, commented: "Current trading is in
line with expectations and the Board is confident that
continued progress will be made in the second half of the
year. The MEDgenesis acquisition is already beginning to
fulfil its potential and the restructuring of Hypoguard's
operations in the UK will deliver improved manufacturing
efficiencies and economies of scale. The Board also
expects that the safety products to be introduced by
Futura Medical Corporation will have a positive impact
upon profitability.
"The Group has now built a solid platform both in terms
of revenue and product portfolio and is well positioned
for quantum growth with its new products in both blood
glucose-monitoring and medical safety. The first step on
this growth path is the market introduction of the Futura
Safety Syringe upon which the Group is highly focused.
The Board remains confident that the product will be well
received in the market as momentum builds to convert to
safety products following the effective date of the
Needlestick Safety and Prevention Act in August 2001."
Enquiries:
Medisys PLC (24/05/01) 020 7601 1000
Michael Barry, Chief Financial Officer
(Thereafter) 020 7563 5200
Square Mile BSMG Worldwide 020 7601 1000
Kevin Smith/Becky Jewers
Medisys PLC
("Medisys" or "the Group")
Unaudited Interim Results for the six months ended 31
March 2001
Medisys made good overall progress during the first half
of the current year. Trading in the first half has been
satisfactory and the results were in line with
expectations. The launch programme for the Futura Safety
Syringe, which will comprise a low volume launch by 30
June 2001, followed by high volume production towards the
end of the calendar year, is on schedule.
Financial Review
Turnover increased to #10.4 million from #4.0 million,
with #5.7 million of the increase resulting from the
acquisition of the diagnostics business of MEDgenesis
Inc., a subsidiary of Chronimed Inc. ("the Acquisition")
in the United States, which was completed on 5 January
2001. Gross profit increased to #4.7 million from #2.2
million, again primarily reflecting the Acquisition.
Amortisation of technologies acquired as part of the
joint venture with Elan Corporation plc amounted to #0.5
million for the half year. Amortisation of goodwill on
the Acquisition amounted to #0.3 million in the period.
Research and development expenditure increased to #1.0
million (2000: #0.4 million) as the Group continued its
commitment to new product development both in the
diagnostics business and in the safety business.
Selling and distribution costs increased to #2.7 million
from #0.8 million. #1.2 million of the increase was a
result of the Acquisition, which has a US based sales and
marketing team consisting of 40 people. As outlined at
the time of the Placing and Open Offer in April 2000, the
Group also began the process of establishing a US
infrastructure to prepare for the forthcoming launch of
the Dart biosensor based blood glucose monitoring product
into the US retail market. This investment in
infrastructure included the recruitment of David Conn as
CEO of Hypoguard in June 2000 and certain other sales and
marketing appointments. Hypoguard also undertook a number
of one-off marketing initiatives in Europe, which have
since been discontinued. In addition, sales and
marketing costs in Futura Medical Corporation increased
as pre-launch costs were incurred in preparation for the
forthcoming launch of the Futura Safety Syringe.
Administration expenses increased to #4.0 million from
#2.7 million in the prior year. Of this increase #0.6
million was attributable to the Acquisition and
establishment of US infrastructure for the diagnostics
business, as referred to above. #0.3 million of the
increase related to the costs associated with
establishing and maintaining a corporate head office in
London and also the recruitment of certain corporate
employees, including legal, financial and information
technology personnel. A further #0.3 million of the
increase related to one-off costs associated with
providing bank financing for the Acquisition.
The operating loss for the six months ended 31 March 2001
was #4.0 million (#4.3 million from continuing operations
before accounting for the Acquisition) compared to #2.3
million in the corresponding period in the prior year.
Interest receivable was #1.1 million in the current
period compared to #0.1 million in the prior period.
This large increase resulted from the significant cash
balances being held throughout the period as a result of
the Placing and Open Offer completed in April 2000.
The loss before tax was #3.1 million (2000: #2.4
million). The basic and diluted loss per ordinary share
was 0.93p (2000: 0.90p).
Convertible bonds
In February 2001, Medisys announced its intention to
redeem early all of the outstanding convertible bonds,
due 2002, in accordance with the terms upon which they
were issued, in order that the Company could avoid paying
interest in cash. Prior to the actual date of redemption
all outstanding bonds had been converted into ordinary
shares.
Futura
Futura Medical Corporation, the Group's medical safety
products business, made solid progress towards its
strategic objective of building a portfolio of safety
products that address the problem of needlestick injury.
The launch programme for the Futura Safety Syringe is on
schedule for a low volume launch by 30 June 2001 with
high volume output coming on stream towards the end of
the calendar year.
The Board believes that the market opportunity for the
Futura Safety Syringe, Futura's lead product, remains
excellent and is confident that the product will be
manufactured, in commercial quantities, at a sub 10 cents
(US) cost price. Based on publicly available information
on competing retractable safety syringes, the Board
believes that the Futura Safety Syringe will have a
significant cost advantage over existing products,
enabling the Group to pursue an aggressive pricing policy
to capture market share. Since the initial shipments of
product will primarily consist of free of charge samples
to key reference sites, it is not anticipated that any
significant sales revenues will be generated in the
current financial year. As previously announced, the
design issue identified in January 2001 in the course of
accelerated shelf life testing has been addressed fully,
although the additional work as previously reported
resulted in a six month delay to the high volume launch.
The requisite changes have been successfully incorporated
into the syringe design and production scale-up is
progressing on target to the revised schedule.
Development work continued on the range of new products
that will complement the Futura Safety Syringe and ensure
the Group is well positioned to address the substantial
market opportunity presented by the US Needlestick Safety
& Prevention Act, which comes into effect in August 2001.
This legislation will require most healthcare facilities
in the US to assess and convert, where possible, to
safety sharps devices, including safety syringes.
Momentum towards conversion is already building amongst
healthcare professionals and in the US healthcare press.
In December 2000 McKessonHBOC ("McKesson") was appointed
as lead US distributor for the Futura Safety Syringe.
McKesson is one of the largest medical products
distribution companies in the US. The Group also entered
into a high volume manufacturing agreement for the
product with Nypro Inc., a major contract manufacturing
company with particular expertise in volume manufacturing
of precision moulded plastic products for medical
applications.
In March 2001, the Group signed a manufacturing and
marketing agreement with Beyonics International Limited
("Beyonics"), a subsidiary of Beyonics Technology
Limited, a public company listed on the Singapore Stock
Exchange. Under the terms of this agreement, Beyonics
has been granted manufacturing rights and, in Hong Kong
and Australia, marketing and sales rights, for the Futura
Safety Syringe for an initial fee of US$2.0 million and
future royalties.
Sales of Futura Medical's existing products were #2.0
million, including sales of #0.4 million from Medical
Profiles Inc. ("MPI") which was acquired in September
2000. Sales of Futura Medical's products in the
corresponding period in the previous year were #1.3
million.
Initial sales of the Lark safety scalpel since January
2001 have been very encouraging. While the dollar value
of these sales is still quite small, they are showing
significant growth each month as the product gains market
acceptance. Most importantly, the Lark product has
undergone evaluation in several substantial hospital and
other clinical facilities and, in several instances, it
has been recommended for adoption as a cost effective
product that fulfils the requirements of the safety
legislation. The Board is optimistic that significant
sales of product will ultimately result from this
evaluation process.
Futura Medical will be introducing two new safety
products over the next few months. Safe T Lance is a lock-
out, single use safety lancet, the exclusive US rights to
which were acquired as part of the Acquisition. Futura
Medical will sell the product into the hospital market as
a lancet complying with the requirements of the
Needlestick Safety and Prevention Act. With existing
safety lancet sales of approximately $6.0 million per
annum, in addition to anticipated sales on the Safe T
Lance product, the Group's position as a significant
participant in the US Medical Safety products market will
be confirmed.
The VLV needleless intra-venous access port is also close
to market introduction. The rights to this product, in
prototype form, were acquired in 2000 and the design was
then optimised by the engineering team at MPI in Livonia,
Michigan. It will be manufactured initially at MPI,
though high volume manufacturing may be transferred to
the Far East in due course.
The introduction of each of these products is a key part
of the Board's strategy of assembling a broad portfolio
of medical safety products with the Futura Safety Syringe
as the core offering. The Group continues to seek other
medical safety products that would complement the
existing range.
Hypoguard
Sales of diagnostic and related products increased to
#6.9 million in the six months ended 31 March 2001 from
#1.4 million in the previous year. This increase resulted
from the Acquisition. The acquired business, which has
now been re-branded Hypoguard USA, has achieved target
sales and orders are showing an upward trend.
Integration into the Group, including the restructuring
of Hypoguard's UK operations as discussed below, will be
completed by the end of June 2001. In March the acquired
business reported excellent sales and profitability
growth and the Board is optimistic about future
prospects.
Following the Acquisition, an extensive restructuring of
Hypoguard's UK operation is being implemented. The
Supreme product, which has been manufactured at
Hypoguard's facility in Suffolk, is virtually the same
product that has been manufactured in much higher volumes
at the former Chronimed facility in Minnesota. The Board
has therefore decided to centralise all manufacturing for
the product in Minnesota to achieve economies of scale
and to eliminate duplicated costs. Whilst the Board
regrets the need for significant redundancies at the
Suffolk facility, this action is required in order to
achieve necessary efficiencies. It is estimated that
this restructuring will give rise to annual cost savings
of approximately #1.5 million, following an initial
transitional period. Research and Development and
European Sales and Marketing functions will remain in
Suffolk.
A complete review of Hypoguard's European sales and
marketing strategy has also been undertaken. The
previous approach of attempting to compete directly with
the major blood glucose monitoring companies was failing
to generate the necessary sales growth at acceptable
margins. Hypoguard's sales and marketing efforts will
now focus on developing certain niche markets, such as
long-term care and private label opportunities. This is
a model that has been successfully pursued by the
Chronimed diagnostics business in the US. The Board
believes that a similar approach will be successful in
Europe. Some of Hypoguard USA's products, including urine
strips, will also be marketed in Europe.
The Dart biosensor based blood glucose-monitoring product
is now at the final stage of development and product
optimisation. This process is being completed hand in
hand with a major potential partner, which is interested
in acquiring marketing rights to the product for markets
outside of the US. Work on fine tuning the product to
the partner's exact specification is continuing and it
is envisaged that a 510(k) filing will be made in the US
by the end of 2001. In the US, the Group is actively
engaged in its strategy of pursuing major private label
retail opportunities for Dart and certain other products
in the Hypoguard USA portfolio, and discussions are
ongoing with several large pharmacy chains and
distribution partners. The infrastructure acquired as
part of the Acquisition will enable the Group to pursue
such opportunities on a fast track basis.
Development of the Flight disposable blood glucose-
monitoring product is progressing on schedule. Flight
has advantages both for the user and the supplier of the
product. For the user, this innovative device combines
100 biosensor based test strips and a meter in a single
disposable unit. Traditional systems require the
diabetic to separately load each test strip in the meter.
Many patients with limited dexterity, a common result of
diabetes, have difficulty with this process. Studies
with focus groups confirm the convenience of Flight for
the diabetic, providing simplicity and a quick test
result while avoiding the need to carry both a meter and
a separate supply of test strips.
Currently, blood glucose-monitoring meters are either
given away or sold at a nominal cost. The supplier then
relies on subsequent sales of strips to recover the not
inconsiderable cost of the meter and to ultimately make a
profit. This is a particularly inefficient business
model with respect to Type II (adult onset) diabetics who
test less frequently and it can often take many months to
simply recover the meter cost. Flight has been designed
and engineered to sell at a retail price that will be the
same as 100 test strips, with the supplier earning an
immediate gross margin. The Board believes that this
will make the product attractive to major potential
partners in the glucose-monitoring market.
Outlook
Current trading is in line with expectations and the
Board is confident that continued progress will be made
in the second half of the year. The Acquisition is
already beginning to fulfil its potential and the
restructuring of Hypoguard's operations in the UK will
deliver improved manufacturing efficiencies and economies
of scale. The Board also expects that the safety
products to be introduced by Futura Medical Corporation
will have a positive impact upon profitability.
The Group has now built a solid platform both in terms of
revenue and product portfolio and is well positioned for
quantum growth with its new products in both blood
glucose-monitoring and medical safety. The first step on
this growth path is the market introduction of the Futura
Safety Syringe upon which the Group is highly focused.
The Board remains confident that the product will be well
received in the market as momentum builds to convert to
safety products following the effective date of the
Needlestick Safety and Prevention Act in August 2001.
Enquiries:
Medisys PLC (24/05/01) 020 7601 1000
Michael Barry, Chief Financial Officer
(Thereafter) 020 7563 5200
Square Mile BSMG Worldwide 020 7601 1000
Kevin Smith/Becky Jewers
MEDISYS PLC
Unaudited consolidated profit and loss account
for the six months to 31 March 2001
Six months Six months
ended 31 ended 31
March 2001 March 2000
#'000 #'000
Turnover
- continuing operations 4,723 4,016
- acquisition 5,661 -
______ ______
10,384 4,016
Cost of sales
- continuing operations (2,416) (1,842)
- acquisition (3,269) -
_______ _______
(5,685) (1,842)
_______ _______
Gross profit 4,699 2,174
Research and development expenditure in
the period (978) (353)
Amortisation of acquired technologies (543) (543)
Amortisation of acquired goodwill (255) -
Amortisation of capitalised development costs (147) (15)
Selling and distribution costs (2,720) (797)
Administration expenses (4,049) (2,724)
_______ _______
Operating loss (3,993) (2,258)
- continuing operations (4,310) (2,258)
- acquisition 317 -
_______ _______
(3,993) (2,258)
_______ _______
Interest receivable 1,093 60
Interest payable (223) (176)
Loss on ordinary activities before taxation (3,123) (2,374)
Taxation on loss on ordinary activities - -
Loss on ordinary activities after _______ _______
taxation for the period attributable to
shareholders (3,123) (2,374)
======= =======
Loss per ordinary share - basic and diluted (0.93p) (0.90p)
======= =======
MEDISYS PLC
Unaudited consolidated statement of total recognised
gains and losses
for the six months to 31 March 2001
Six months Six months
ended 31 ended 31
March 2001 March 2000
#'000 #'000
Loss for the financial period (3,123) (2,374)
Unamortised issue costs on bonds
converted during the period (79) (270)
Loss on foreign currency translation (71) (60)
_______ _______
(3,273) (2,704)
======= =======
MEDISYS PLC
Unaudited consolidated balance sheet
at 31 March 2001
At At At
31 March 31 March 30 September
2001 2000 2000
#'000 #'000 #'000
Fixed assets
Intangible assets 42,008 12,251 17,400
Tangible assets 8,753 2,149 4,391
Investments 3,945 1,250 2,195
______ ______ ______
54,706 15,650 23,986
====== ====== ======
Current assets
Stocks 6,510 1,319 1,451
Debtors 7,644 3,501 5,140
Cash at bank and in hand 17,066 2,947 38,944
______ _____ ______
31,220 7,767 45,535
Creditors: amounts falling due
within one year (4,297) (3,125) (3,471)
_______ ______ ______
Net current assets 26,923 4,642 42,064
______ ______ ______
Total assets less current liabilities 81,629 20,292 66,050
Creditors: amounts falling due
after one year (10,370) (196) -
Convertible bonds due 2002 - (2,824) (2,615)
_______ _______ _______
71,259 17,272 63,435
======= ======= =======
Capital and reserves
Called up share capital 3,499 2,810 3,276
Share premium account 76,670 22,469 67,433
Capital redemption reserve fund 20 20 20
Other reserves 22,854 22,854 22,854
Profit and loss account (48,334) (44,862) (45,061)
_______ _______ _______
Shareholders' funds - equity 54,709 3,291 48,522
Minority interest 16,550 13,981 14,913
_______ _______ _______
71,259 17,272 63,435
======= ======= =======
MEDISYS PLC
Unaudited consolidated cash flow statement
For the six months to 31 March 2001
Six months Six months
ended ended
31 March 31 March
2001 2000
#'000 #'000
Net cash (outflow)/inflow from (4,546) 1,518
operating activities
Returns on investments and servicing
of finance
Interest received 1,093 60
Interest paid (224) (176)
Net cash inflow/(outflow) from returns ______ _____
on investments and servicing of finance 869 (116)
Capital expenditure and financial investment
Purchase of intangible fixed assets (3,211) (1,316)
Purchase of tangible fixed assets (2,295) (143)
Purchase of financial fixed asset (1,750) (1,250)
______ _______
Net cash outflow for capital expenditure (7,256) (2,709)
Acquisition
Acquisition of business undertaking (21,560) -
_______ _______
Net cash outflow before use of liquid
resources and financing (32,493) (1,307)
Financing
Issue of ordinary share capital
including premium 245 2,442
Drawdown of loans 10,370 -
Repayment of secured loans - (49)
_______ ________
Net cash inflow from financing 10,615 2,393
_______ ________
(Decrease)/increase in cash (21,878) 1,086
======== ========
Notes:
1. The interim financial information has been prepared
on the basis of the accounting policies set out in the
2000 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 2000 have been filed with the
Registrar of Companies and received an unqualified
auditors' report.
3. The basic loss per share has been calculated on
losses of #3,123,000 divided by 335,451,986, the weighted
average number of ordinary shares in issue. There is no
difference for 2000 and 2001 between the basic net loss
per share and the diluted net loss per share as ordinary
share equivalents from bonds, warrants and share options
have been excluded from the computation as their effects
are anti-dilutive.
4. The interim report for the six months ended 31 March
2001 has been prepared by the Company and was approved by
the Directors on 23 May 2001.
5. 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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