RNS Number:3972V
Medisys PLC
09 December 2005
Embargoed until 0700 9 December 2005
Medisys PLC
("Medisys" or "the Group")
Preliminary Results for the Year Ended 30 September 2005
Medisys PLC, the medical products group, today announces its preliminary results
for the year ended 30 September 2005.
Financial Summary
* Turnover reduced to #30.2 million (2004: #35.8 million) largely as a result of
increased competition in the Group's core Long Term Care ("LTC") market
* Loss before interest, tax, depreciation, amortisation and exceptional items of
#3.7 million (2004: #2.9 million profit)
* Gross margin, before exceptional items, at 20% (2004: 36% before exceptional
items) reflecting pricing pressures in LTC and shift away from older, higher
margin products
* Loss before tax and exceptional items #7.3 million (2004: #0.7 million)
* Exceptional charges totalling #7.7 million (2004: #0.8 million)
Operational Summary
* Agreement signed with Menarini for supply of full-featured, private label
blood glucose monitoring systems - first product expected to be available in
early 2006
* Intensified competition in LTC segment reduces sales of blood glucose
monitoring products by 25% on a constant exchange rate basis
* Production of NewTek ceased
* Target Stores launches Advance system under its EasyPro brand in 880 in-store
pharmacies across the US
* Sales to Liberty Medical increase to #2.5 million (2004: #1.0 million at a
constant exchange rate)
* Successful expansion into new markets - non US and UK revenues increased by
#1.1 million over 2004 on a constant exchange basis
* Positive progress made on Roche patent infringement claim
* Agreement signed with Headstart Group of Funds for committed share finance
facility of up to #4 million
David Wong, Executive Chairman said: "2005 has been a very challenging year for
the Group. Many objectives have been achieved but we have also faced intense
competition in our core LTC market which has had a significant impact on overall
financial performance. In contrast, with the signing of the agreement with
Menarini, we were able to secure what we believe to be a significant step
forward in our drive to increase our European and international business.
"The automation of biosensor production will also position us for further
improvements in product margin during the first half of the current year. This,
together with the cost savings made during the latter part of 2005, should help
to improve financial performance during 2006."
Enquiries:
Medisys PLC
Jonathan Chapman 01394 446717
Weber Shandwick Square Mile
Kevin Smith/John Moriarty 020 7067 0700
Embargoed until 0700 9 December 2005
Medisys PLC
("Medisys" or "the Group")
Preliminary Results for the Year Ended 30 September 2005
2005 was a very challenging year for the Group. While we achieved many of our
objectives, including the expansion of our international business and the
implementation of a complex automation project, the increased competition in the
Long Term Care ("LTC") segment of the blood glucose monitoring market, and the
subsequent reduction in pricing and margin had a significantly adverse effect on
the financial performance of the Group.
As a result, the Company has taken steps to reduce its overhead costs in an
effort to mitigate some of the margin loss. However, the benefit of many of
these initiatives will not be seen until fiscal year 2006. As a consequence, and
as anticipated in both the Trading Update issued in February 2005 and the
Interim Results announced in June 2005, the final results of the Group were
disappointingly below original expectations.
OPERATIONAL REVIEW
Long Term Care Products
Products sold into the LTC segment include Supreme and the Assure family of
products. Sales of Supreme have continued to decline as expected and have been
replaced by the more advanced Assure 3 blood glucose monitoring system.
As previously noted, the Group has seen considerable competition in this
segment, both from established competitors and also from new entrants into the
market. This has resulted in some downward pressure on selling prices and
margins. The Group has responded to increased competition by focusing on
superior customer service, lowering its average selling price and through
promotional programmes. These initiatives have resulted in the Group regaining
much of the unit volume it had previously lost. The Group now has a 32% market
share on a unit basis.
Revenues in the LTC segment were #13.9 million, a reduction of 25% on a constant
exchange basis from #18.6 million in 2004. The Group is continuing to introduce
new promotions and initiatives to rebuild its revenues in LTC, and is also
successfully controlling costs, particularly by negotiating price reductions
with certain of its own suppliers, in order to prevent further margin erosion.
In addition, early in 2006, the Group will introduce its new Assure Pro blood
glucose monitoring system. Assure Pro is based on the Group's proprietary
biosensor technology and has been developed specifically for use in the clinical
environment. It is anticipated that the advanced feature set of the Assure Pro
will provide the Group with the opportunity to re-build its margins in the LTC
segment.
The Haemolance safety lancet product also saw increased competitive pressure and
revenues were reduced to #6.1 million in 2005 from #7.0 million in 2004 on a
constant exchange basis, a decrease of 13%. Medisys currently maintains a market
share of 38% for lancets in the LTC segment.
Retail Products
NewTek is a disposable, integrated, cartridge-based glucose monitoring system.
It was launched in August 2004 by Wal*Mart as a product within its ReliOn brand
of diabetes products. Although acknowledged as an innovative product, it has
taken longer than expected to gain market awareness and generate sales.
In early 2005 the Group conducted a public relations campaign using an external
agency, which was aimed at creating awareness of the unique features and
benefits of NewTek for people with diabetes. Although this campaign met with
some success and sales of the product through Wal*Mart started to increase, the
number of units moving through the stores remained insufficient to enable the
Group to manufacture the product at an economically viable cost. The Group has
therefore reluctantly decided to cease production of NewTek and to stop
supplying Wal*Mart with the product. As a result, an obsolescence provision of
#915,000 has been taken against NewTek finished goods inventory and raw
materials. In addition, an impairment provision of #757,000 has been taken
against NewTek-specific fixed assets.
In June 2005, Target Stores, the second largest general merchandise retailer in
the US, successfully launched the Advance product under the EasyPro brand
throughout its network of 880 in-store pharmacies. The product is prominently
displayed in Target pharmacies, in such a way that feature-set and price
comparisons can easily be made by the customer against four other leading
branded products. The product has been well received by Target customers who
have responded to its solid feature set and value price.
Mail Order
As previously announced, the Group entered into a strategic alliance with
Liberty Medical in August 2004. Under this agreement, Liberty undertook to
distribute the Advance Micro-draw product through its mail-order business which
focuses on Medicare patients. The Advance product has performed well, although
growth in the first year has fallen short of expectations. Sales to Liberty
increased by 150% to #2.5 million in 2005 from #1.0 million in 2004 at a
constant exchange rate.
Advance Micro-draw is also being sold to other mail-order customers in the US.
Excluding Liberty, total US sales of the product in 2005 were #2.2 million
compared to #1.9 million in 2004 at a constant exchange rate, an increase of
16%.
As previously reported, sales of QuickTek tailed off in both 2004 and 2005.
These revenues have now stabilised and although it is anticipated that revenues
will continue a slow decline over the next few years, much of the expected
revenue reduction in the US will be offset by increased revenues in the rest of
the world. US revenues were #1.1 million in 2005 as compared to #2.3 million in
2004 on a constant exchange basis. Non-US revenues were #311,000 in 2005
compared to #162,000 in 2004, on the same basis.
European and International Markets
In July 2005 Medisys announced a major strategic alliance with A. Menarini
Industrie Farmaceutiche Riunite S.r.l. ("Menarini Group"), the fifth largest
worldwide distributor of blood glucose monitoring systems. Under the agreement,
Medisys will provide Menarini with a range of new blood glucose monitoring
systems that have been exclusively designed for them. The new systems will offer
market-leading features including micro blood sample size and quick read-time,
together with an attractive, ergonomically designed full-featured meter. They
are based on the Group's proprietary biosensor technology, and will leverage the
Group's recently expanded production facility in Minneapolis, USA.
Medisys has granted Menarini world-wide marketing rights to the new systems with
the exception of the USA, Canada and Mexico. Menarini is currently finalising
its launch plans but it is anticipated that the first of the new systems will be
released to the market early in 2006.
Also in July, the Group announced that it had entered into a supply agreement
with Stada Arzneimittel A.G. ("Stada") for the German market. Since that time,
Stada have indicated that they are keen to expand their rights into other
European and international territories and these opportunities are currently
being negotiated. The Group supplies Stada with a private label product based on
Advance Micro-draw, which is sufficiently different in design and feature set,
that it will not conflict with the systems being marketed by Menarini. Revenues
to Stada totalled #0.9 million in 2005.
Also during the year the Group announced that it had entered into a strategic
alliance with Nicholas Piramal India Limited ("NPIL") and has been supplying
Advance Micro-draw, QuickTek and the Diascreen urine chemistry line into India.
Sales to NPIL during the year were approximately #0.6 million. NPIL is now
looking to expand its marketing of these products into Pakistan and Sri Lanka.
Overall revenues outside of the UK and US have increased in 2005 by
approximately #1 million over 2004, to #2.7 million from #1.6 million on a
constant exchange basis.
Production Capacity
As announced previously, during the second half of the year the Group took
delivery of the final pieces of the production and packaging equipment acquired
to increase production capacity for the biosensor range of products. The new
production equipment was fully commissioned towards the end of the year and the
Group now has sufficient capacity to support its business with Menarini and
Liberty, and to cover additional expansion of the products in the US and
international markets.
The increased automation afforded by the introduction of this equipment has
resulted in reduced manufacturing costs and the expected reduction in cost of
goods for the Advance Micro-draw product. Much improved margins were seen during
the last few months of the year, and further improvements are anticipated as the
manufacturing process is further automated, and as volumes increase.
Research and Development
The Group is continuing to focus on improvements to its existing product range.
Some limited, additional resource is also being applied to the development of
next generation products based on the Group's proprietary biosensor platform.
The Group also continues to focus on maximising manufacturing efficiencies to
both improve yield and reduce cost.
Re-organisation
As announced previously, as a result of the increased competition in the LTC
business the Board has looked closely at the Company's operating cost base. The
London office has been closed, and all administrative functions have been
transferred to the Hypoguard facilities in Woodbridge, Suffolk and Minneapolis,
USA. The estimated annual saving associated with these changes is #0.7 million.
In addition, selective staff reductions have been implemented at the Minneapolis
facility in areas such as manufacturing, marketing and administration, and at
the Woodbridge facility in the research and development and administration
areas. The annual cost savings associated with these changes are estimated to be
#1.9 million. The severance and related costs incurred as a result of these
reductions amounted to #0.5 million and have been classified as the costs of
fundamental restructuring in the Group profit and loss account.
Medisys Board
Although a search for a new Chief Executive Officer was commenced following Mr.
David Conn's resignation, the process was subsequently put on hold whilst the
business reorganisation (detailed above) was undertaken. The reorganisation
project was led by Dr. David Wong, acting as interim CEO. The search for a new
CEO will recommence in the New Year and until an appointment is made, Dr Wong
shall continue to act as interim CEO.
Litigation
The patent infringement claim made by Roche Diagnostics against Hypoguard in
relation to the distributed Assure family of products is proceeding.
Medisys announced earlier in the year that the US District Court (Southern
District of Indiana Indianapolis Division) found one of the two patents in issue
in the infringement litigation to be unenforceable as a result of inequitable
conduct before the US Patent and Trademark Office during the prosecution of the
patent.
Subsequent to this announcement, Hypoguard was informed that the Court had
issued an Order on Claim Construction for Patent infringement on the remaining
patent in issue. This Order sets out how the Court has determined that the terms
used in the patent shall be construed in an infringement trial to determine
whether the product in issue (in this case, Assure 3) actually infringes the
patent. As a result of this Order, Hypoguard filed a motion asking the Court to
dismiss Roche's Complaint on the basis that, by applying the Court's Claim
Construction Order, no reasonable jury could find that the Assure 3 product
infringes the patent. It is anticipated that the Court will hear the motion in
early 2006.
The Directors remain of the opinion that Hypoguard shall be successful in
defending against the remaining claim. To date, all costs associated with
Hypoguard's defence of the claims have been paid by Apex Biotechnology Corp, the
manufacturer of the Assure products, under the terms of an indemnity provided by
Apex to Hypoguard.
Medical Safety Products
As announced in 2004, following a strategic review of the business, the Board
decided to dispose of the Medical Safety Products business, including the Futura
Safety Syringe, the Futura Scalpel and all associated assets, in order to focus
the Group's resources on the core blood glucose monitoring business.
On 25 February 2005 it was announced that the process of disposing of the safety
products business was not successful. The decision was taken, therefore, to
write off the remaining assets and inventory associated with the Futura Safety
Syringe. These write-offs have been disclosed as exceptional items in the
Group's profit and loss account. Of these, #0.5 million relating to inventory
and provisions against purchase commitments were charged to cost of goods and
#6.7 million relating to the write offs of assets, intellectual property and
inventory warehousing costs were charged to administration expense.
FINANCIAL REVIEW
Turnover decreased to #30.2 million from #35.8 million in the prior year. As
reported at the half year, much of the decline was a result of increased
competition in the Group's core LTC segment, and the subsequent price erosion
seen in this market.
Revenues from LTC products, including Supreme and the Assure family, were #13.9
million in the year compared to #18.6 million in the prior year on a constant
exchange rate basis, a 25% decrease. As expected, customers are continuing to
switch from the older Supreme product to the more advanced Assure products and
it is anticipated that all Supreme customers will be converted to Assure by the
end of the current fiscal year.
Advance Micro-draw revenues doubled to #6.3 million (2004: #3.1 million on a
constant exchange rate basis). QuickTek recorded sales of #1.4 million in 2005
compared to #2.5 million in the prior year, on a constant exchange rate basis.
As noted above, although sales of the disposable NewTek product through Wal*Mart
were on an upward trend, the unit volumes were insufficient for the Company to
be able to manufacture the product in economically viable quantities. The
decision was therefore taken to cease production of the product. As a result
provisions against fixed asset impairments and inventory totalling #1.7 million
were charged to the profit and loss account during the year.
Sales of safety lancets were #6.1 million in the year (2004: #7.0 million on a
constant exchange rate basis).
Instrument revenues were #1.5 million in the year compared to #0.6 million in
2004 (on a constant exchange rate basis) reflecting the fact that an increasing
number of the Group's non-LTC customers now pay for meters.
Gross margin before exceptional items was 20% (2004: 36%, before exceptional
items). As expected, margin was reduced significantly over 2004 as the shift
from the older, reflectance based technologies, which historically generated
higher margins, to the newer biosensor based products was accelerated. Now that
the manufacturing processes for the biosensor products have been automated,
margins will be improved and it is expected that this will be evident during the
first half of 2006. In addition, the competitive pressures seen in the Group's
core LTC segment during the year caused significant price erosion and
consequently margin reductions. The Group has responded to this pressure with
the introduction of various incentive programmes which have resulted in many
nursing home conversions to the Assure products. It is also anticipated that the
introduction of the Assure Pro product early in 2006 will help to regain some
lost margin. This product has an improved feature set over the existing Assure
products and should attract a higher selling price. Again, it is envisaged that
the benefit of these initiatives will be seen in the first half of 2006. Gross
margin should also benefit from the recent pricing reductions negotiated with a
key supplier to the Group.
Selling and distribution costs, before exceptional items, were #4.5 million in
the year, compared to #4.3 million in the prior year.
Administration expenses, before exceptional items, were reduced by 11% to #4.6
million in the year compared to #5.2 million before exceptional items in the
prior year.
Research and development expenditure in the year, before exceptional items, was
held at #2.5 million.
Amortisation of acquired goodwill, resulting from the MEDgenesis acquisition,
was #0.9 million in the year (2004: #0.9 million).
The operating loss prior to exceptional items was #6.8 million (2004: loss of
#0.2 million). The increase in operating loss is solely a result of the margin
erosion discussed earlier in the report.
The net interest charge was #0.6 million (2004: #0.5 million). The loss on
ordinary activities attributable to shareholders, before exceptional items, was
#7.5 million (2004: #1.5 million).
Before exceptional items, the loss before interest, tax, depreciation and
amortisation was #3.7 million (2004: #2.9 million profit).
Exceptional items totalling #7.7 million were incurred in the year. These items
related to:
(a) The write-off of the remaining assets relating to the Futura Safety
Syringe; including intellectual property of #1.1 million, equipment with
a net book value of #5.2 million and inventory of #0.4 million;
(b) The provision against costs incurred, also associated with the disposal
of the safety products business, including costs associated with the
aborted sale of the business of #0.1 million and purchase commitments and
warehousing costs totalling #0.4 million;
(c) A loss of #44,000 incurred on the disposal of the Group's holding of
shares in Escalon Medical Corporation, and
(d) Severance and related costs of #0.5 million incurred as a result of the
headcount reduction at the Group's London office, and the facilities in
Woodbridge, Suffolk and Minneapolis, USA.
The loss on ordinary activities before interest (but after exceptional items) in
the year was #14.5 million (2004: loss of #1.0 million). The loss on ordinary
activities before tax was #15.1 million (2004: loss of #1.6 million).
The loss per ordinary share, before exceptional items, was 1.47p in the year
(2004: loss of 0.39 pence). The loss per ordinary share after exceptional items
was 2.97p in the year (2004: loss of 0.59 pence).
In line with stated Group policy, no final dividend is being proposed.
FOREIGN CURRENCY EXPOSURE
The vast majority of the Group's revenues are in US dollars and a large
proportion of the cost base is also in US dollars. However, significant costs
are incurred in sterling in relation to the Group's UK operations (including
out-sourced manufacturing of glucose monitoring strips). The hedge contracts
that covered the 2005 fiscal year expired at the end of September and in order
to minimise any future impact of currency fluctuations the Group has recently
entered into a new series of contracts covering the period up to the end of
March 2006. These contracts will be reviewed again as the current contracts
approach expiry.
ELAN JOINT VENTURE
As announced on 2 December 2004, the research and development relationship with
Elan Corporation, plc has been terminated. Medisys agreed to purchase the B
Preference Shares held by Elan in Hypoguard Holding Co Limited in consideration
for the allotment of 17 million new ordinary shares in Medisys and #560,000 in
cash payable in eight equal quarterly instalments of #70,000. The first and
second instalments were paid on 31 December 2004 and 31 March 2005 respectively.
With agreement from Elan, the remaining balance of #420,000 will now be paid on
31 October 2006, or earlier under certain specified conditions. The balance will
attract interest at a rate of 6% per annum until paid. In addition, a premium of
#105,000 is also payable on or before 31 October 2006. Medisys has the option to
settle this premium in cash or by issuing Medisys ordinary shares.
On 14 January 2005 it was agreed with Elan that the Company would re-purchase
the 13 million 'A' preference shares held by Elan and 4 million 'C' preference
shares held by Elan in exchange for 30,804,706 shares in the Company.
GROUP CASH POSITION
At the year end the Group had cash balances totalling #0.8 million and an
undrawn overdraft facility of #0.4 million. EBITDA for the year before
exceptional items was negative #3.7 million.
During the year the Company entered into an agreement with the Headstart Group
of Funds ("Headstart") under which Headstart made available to the Company a
committed share finance facility of up to #4,000,000. In consideration for
making the facility available, the Company agreed to pay Headstart a one-off fee
of #120,000 which was satisfied by the issue of 2,857,142 Ordinary Shares of the
Company. The Company has subsequently drawn down on this facility and has issued
to Headstart 3,248,863 Ordinary Shares at 3.85p, 3,508,772 Ordinary Shares at
3.56p, 4,385,965 at 2.85p and 5,263,158 Ordinary Shares at 2.375p for cash
considerations totalling #471,000 net of expenses.
The Board believes that anticipated cash flows from operations, together with
available banking facilities and the facility provided by Headstart, will be
sufficient to finance the Group's operations for the foreseeable future.
The Group has an outstanding bank loan of US$11.0 million (2004: US$13.9
million). While the loan is classed as current, the loan provider has indicated
that it will not be looking for repayment within the next twelve months.
CURRENT TRADING AND PROSPECTS
The current financial year is at an early stage, but to date trading has been in
line with expectations. Growth is expected to come primarily from the biosensor
based products, specifically through the alliance with Menarini and from the
introduction of the Assure Pro system into the LTC market. In addition the cost
savings realised in the latter part of 2005 will help to improve the financial
performance of the Group in the current year.
As noted earlier, the automation equipment commissioned in the latter part of
the year for the Advance Micro-draw products will ensure that improved cost of
goods, and subsequently margins, are achieved during the first half of 2006.
- Ends -
MEDISYS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2005
2005 2005 2005 2004 2004 2004
Before Exceptional Before Exceptional
exceptional items exceptional items
items (Note 2) Total items (Note 2) Total
Notes #'000 #'000 #'000 #'000 #'000 #'000
-----------------------------------------------------------------------------------------
Turnover
- continuing
operations 1 30,230 - 30,230 35,775 - 35,775
Cost of sales (24,316) (545) (24,861) (22,860) - (22,860)
-----------------------------------------------------------------------------------------
Gross profit 5,914 (545) 5,369 12,915 - 12,915
Selling and
distribution costs (4,468) - (4,468) (4,344) - (4,344)
Administration expenses (4,619) (6,659) (11,278) (5,164) (420) (5,584)
Research and development
expenditure in the year (2,541) - (2,541) (2,499) (283) (2,782)
-----------------------------------------------------------------------------------------
(Loss)/profit before
amortisation (5,714) (7,204) (12,918) 908 (703) 205
Amortisation of acquired
technologies (132) - (132) (194) - (194)
Amortisation of acquired
goodwill (918) - (918) (949) - (949)
-----------------------------------------------------------------------------------------
Operating loss
- continuing
operations (6,764) (7,204) (13,968) (235) (703) (938)
Loss on sale of
financial assets - (44) (44) - (109) (109)
Costs of fundamental
restructuring
- continuing
operations - (491) (491) - - -
-----------------------------------------------------------------------------------------
Loss on ordinary
activities before
interest (6,764) (7,739) (14,503) (235) (812) (1,047)
Interest receivable 42 - 42 26 - 26
Interest payable and
similar charges (592) - (592) (530) - (530)
-----------------------------------------------------------------------------------------
Loss on ordinary
activities before
taxation 1 (7,314) (7,739) (15,053) (739) (812) (1,551)
Tax on loss on
ordinary activities 19 - 19 77 - 77
-----------------------------------------------------------------------------------------
Loss on ordinary
activities after tax (7,295) (7,739) (15,034) (662) (812) (1,474)
Minority interest
- non equity (178) - (178) (869) - (869)
-----------------------------------------------------------------------------------------
Loss attributable
to shareholders (7,473) (7,739) (15,212) (1,531) (812) (2,343)
=========================================================================================
Loss per ordinary
share - basic and
diluted 3 (1.47)p (1.50)p (2.97)p (0.39)p (0.20)p (0.59)p
MEDISYS PLC
CONSOLIDATED BALANCE SHEET
at 30 September 2005
2005 2004
Notes #'000 #'000
Fixed assets
Intangible assets 14,875 16,685
Tangible assets 3,376 8,463
Financial assets - 119
------------------------------
18,251 25,267
------------------------------
Current assets
Stocks 4,159 4,878
Debtors 4,863 7,985
Cash at bank and in hand 771 2,600
------------------------------
9,793 15,463
Creditors: amounts falling due within one year (15,526) (6,902)
------------------------------
Net current(liabilities)/assets (5,733) 8,561
------------------------------
Total assets less current liabilities 12,518 33,828
Creditors: amounts falling due after more
than one year - (6,442)
------------------------------
Net assets 1 12,518 27,386
==============================
Capital and reserves
Called up share capital 5,368 4,749
Share premium account 97,581 94,923
Capital redemption reserve fund 20 20
Other reserves 22,854 22,854
Profit and loss account (113,305) (111,036)
------------------------------
Equity shareholders' funds 12,518 11,510
Minority interest - 15,876
------------------------------
12,518 27,386
==============================
MEDISYS PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2005
2005 2004
Notes #'000 #'000
Net cash inflow/(outflow) from
operating activities 4 165 (700)
------------------------------
Returns on investments and servicing of finance
Interest received 42 26
Interest paid (592) (530)
------------------------------
Net cash outflow from returns on investments
and servicing of finance (550) (504)
Corporation tax paid (42) (136)
Capital expenditure and financial investment
Purchase of intangible fixed assets (77) (4)
Purchase of tangible fixed assets (2,463) (819)
Proceeds from the sale of tangible fixed assets 23 143
Proceeds from sale of financial fixed assets 73 725
------------------------------
Net cash (outflow)/inflow from capital
expenditure and financial investment (2,444) 45
------------------------------
Net cash outflow before use of liquid resources
and financing (2,871) (1,295)
Financing
Proceeds from issue of share capital 235 4,985
Bank loan repayments (1,384) (805)
------------------------------
Net cash (outflow)/inflow from financing (1,149) 4,180
------------------------------
(Decrease)/increase in cash 5 (4,020) 2,885
==============================
MEDISYS PLC
NOTES
1 - Turnover and segment information
Geographically
2005 2004
#'000 #'000
--------------------------------------------------------------------------------
Turnover
United Kingdom 383 331
Rest of Europe 1,758 860
United States 27,175 33,832
Rest of World 914 752
------------------------------
30,230 35,775
==============================
(Loss)/profit on ordinary activities before taxation
United Kingdom (2,991) (2,241)
United States (4,808) 4,338
Rest of World (5,332) (749)
Central costs (1,372) (2,395)
------------------------------
(14,503) (1,047)
Interest receivable 42 26
Interest payable (592) (530)
------------------------------
(15,053) (1,551)
==============================
Net assets/(liabilities) by location of undertaking
United Kingdom 650 (10,467)
United States 19,287 36,990
Rest of World 219 5,777
------------------------------
20,156 32,300
Net debt (7,638) (4,914)
------------------------------
12,518 27,386
==============================
Geographical turnover is shown by location of customers. Geographic turnover by
location from which products and services are supplied is not materially
different other than the Rest of Europe and Rest of World customers which are
primarily supplied from the United States.
Class of business
2005 2004
#'000 #'000
--------------------------------------------------------------------------------
Turnover
Diagnostics 29,163 34,811
Healthcare worker safety products 1,067 964
------------------------------
30,230 35,775
==============================
Profit/(loss) on ordinary activities before taxation
Diagnostics (8,256) 1,958
Healthcare worker safety products (4,875) (610)
Central costs (1,372) (2,395)
------------------------------
(14,503) (1,047)
Interest receivable 42 26
Interest payable (592) (530)
------------------------------
(15,053) (1,551)
==============================
Net assets
Diagnostics 19,937 26,523
Healthcare worker safety products 219 5,777
------------------------------
20,156 32,300
Net debt (7,638) (4,914)
------------------------------
12,518 27,386
==============================
2 - Exceptional items
The exceptional costs incurred during the years to 30 September 2005 and 30
September 2004 are included in the profit and loss account under the following
statutory headings:
2005 2004
#'000 #'000
--------------------------------------------------------------------------------
Cost of sales 545 -
Administration expenses 6,659 420
Research and development - 283
Loss on sale of financial assets 44 109
Costs of fundamental restructuring 491 -
------------------------------
7,739 812
==============================
2005
As announced on 25 February 2005, the process of disposing of the safety
products business was not successful. The decision was taken, therefore, to
write off the remaining assets and inventory associated with this business. Of
these write offs, #0.5 million relating to inventory and provisions against
purchase commitments were charged to cost of goods and #6.7 million relating to
the write offs of assets, intellectual property and inventory warehousing costs
were charged to administration expense.
In September 2005 the Company disposed of its holding in Escalon Medical
Corporation. This sale resulted in a loss of #44,000. This has been classified
as a loss on the sale of financial assets.
During the year the Group made selective staff reductions both in the UK and USA
facilities. The severance and related costs associated with these reductions
amounted to #0.5 million and have been classified as the costs of fundamental
restructuring.
2004
During the first half of the year the deterioration in the value of the US
dollar against sterling resulted in a realised loss of #0.4 million being
suffered on the conversion of one currency to the other. This cost is shown
under administration expenses.
In February 2004 the Company disposed of its remaining holding in The Medical
House PLC. This sale resulted in a loss of #0.1 million. This has been
classified as a loss on the sale of financial assets.
Certain assets used in the process of preparing the safety syringe for
production have been written off at a cost of #0.3 million which has been
classified as research and development expenditure.
3 - Loss per ordinary share
2005 2004
--------------------------------------------------------------------------------
Basic
Loss attributable to ordinary shareholders (#'000) (15,212) (2,343)
Weighted average number of shares outstanding 511,981,913 399,535,735
Basic loss per share (2.97)p (0.59)p
------------------------------
Basic loss per share is calculated by dividing the weighted average number of
ordinary shares in issue into the loss after taxation for the year attributable
to ordinary shareholders. There is no difference for 2004 and 2005 between the
basic loss per share and the diluted loss per share as ordinary share
equivalents from share options have been excluded from the computation as their
effects are anti-dilutive.
4 - Reconciliation of operating loss to net cash inflow/(outflow) from operating
activities
2005 2004
#'000 #'000
-------------------------------------------------------------------------------
Operating loss (14,503) (1,047)
Depreciation and amortisation 3,029 3,106
Loss/(profit) on disposal of fixed assets 122 (14)
Loss on sale of financial assets 44 109
Write down tangible fixed assets 5,497 296
Write down intangible fixed assets 1,113 -
Decrease/(increase) in stocks 780 (738)
Decrease/(increase) in debtors 2,934 (2,668)
Increase in creditors 1,149 256
-----------------------------
Net cash inflow/(outflow) from operating activities 165 (700)
=============================
5 - Analysis of changes in net debt
At 30 September Exchange rate At 30 September
2004 Cash flow movements 2005
#'000 #'000 #'000 #'000
------------------------------------------------------------------------------
Cash at bank 2,600 (1,848) 19 771
Overdraft - (2,172) - (2,172)
----------------------------------------------------------
2,600 (4,020) 19 (1,401)
Bank loans (7,514) 1,384 (107) (6,237)
----------------------------------------------------------
Total (4,914) (2,636) (88) (7,638)
===========================================================
This information is provided by RNS
The company news service from the London Stock Exchange
END
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