RNS Number:2876O
MDY Healthcare PLC
20 December 2006
MDY Healthcare plc
Preliminary results
MDY Healthcare repositioned as strategic investor in healthcare companies
Substantial reduction in losses from #14.4m to #1.4m
20 December 2006: MDY Healthcare plc, ("MDY Healthcare", the "Group" or the "
Company") the strategic investor in healthcare companies, today announces its
preliminary results for the year ended 30 September 2006.
Highlights
* Sale of operating business and repositioning as a strategic investor in
healthcare companies
* Strengthened Board with appointment of Charles Spicer as CEO and Alan
MacKay as non-executive director
* Move to AIM and investment by 3i Group plc and management, raising #4.4
million (net of expenses), completed in September
* First two strategic investments completed
* Loss after tax reduced to #1.4 million from #14.2 million in 2005
* Loss per share reduced to 0.26p from 2.82p in 2005
* Equity at 30 September 2006 increased by 29.2% to #16.8 million (30
September 2005: #13.0 million).
* Cash and cash equivalents increased to #17.2 million (30 September 2005:
#0.8 million)
David Wong, Chairman, said "2006 has been a transformational year for MDY
Healthcare. By selling our operating businesses and repositioning the Company as
a strategic investor in healthcare companies, we have substantially reduced our
losses and transformed our balance sheet. With a clear strategy, a much
strengthened Board of Directors and over #17m on the balance sheet, we look
forward to creating future shareholder value."
Charles Spicer, CEO, said "In a short period of time, we have made good progress
with our strategy of building a healthcare sector-focused investor. We have
made two strategic investments to date and are considering a large number of
other interesting opportunities. With the investment from 3i and a growing team
of specialists, we are confident in our ability to extract value from the
healthcare sector."
Contact
MDY Healthcare plc
Charles Spicer: +44 (0) 207 647 1800
Financial Dynamics
Ben Atwell/John Gilbert: +44 (0) 207 831 3113
For further details on MDY Healthcare please see our re-launched website -
www.mdyhealthcare.com
Chairman and Chief Executive's Review
During 2006, MDY Healthcare sold its operating businesses, significantly
strengthened its Board and made good progress in implementing its new strategy.
In May, we completed the sale of all of our operating businesses to ARKRAY, Inc.
of Japan. At an EGM on 4 May, shareholders approved the sale and the Company
repositioned itself as a strategic investor in healthcare companies.
To enable the execution of our strategy, we made two senior appointments from
within the healthcare investment industry. In July we appointed Charles Spicer
as Chief Executive. Charles was previously Head of Healthcare Corporate Finance
at Numis Securities and prior to that he held the same position at Nomura
International. In both roles, he advised a wide range of companies in the
healthcare sector on corporate finance, mergers, acquisitions and corporate
broking.
In September, Alan MacKay, Global Lead Partner of Healthcare at 3i, was
appointed as a Non-Executive Director. Alan is a member of the 3i leadership
team and heads its healthcare group throughout Europe, USA and Asia, actively
investing in the pharmaceuticals, medical device and care services sub-sectors.
In August, we secured approval to change the Company's name from Medisys Plc to
MDY Healthcare plc and moved our stock market listing from the Official List to
the AIM market. At that time, we also secured an investment by 3i and the
management team, raising #4.7 million (#4.4 million net of expenses) through a
subscription for new shares in the Company.
MDY Healthcare is therefore now a sector specialised investing company quoted on
AIM with a strong management team and a healthy balance sheet. We are now
headquartered in Central London and have recruited a small executive team to
work with us. Our objective is to achieve superior returns for shareholders by
investing globally in companies, both public and private, across the healthcare
sector. The directors and executives have significant operational and
investment experience in the sector and therefore, we believe, the ability to
identify and review a wide range of potential investments. Given the
management's experience and contact base within the sector, MDY Healthcare is
also able to provide investee companies with strategic business support and
advice over and above finance.
The Company's investment strategy is to identify investment opportunities, both
individually and as a co-investor in companies in the following sub-sectors:
medical technology, diagnostics, biopharmaceuticals and providers of other
healthcare products and services. MDY Healthcare will consider investments in
both private and publicly traded companies located in the UK, Continental
Europe, Scandinavia, North America, Far East and Asia.
During the period, we made two investments:
Cozart plc
In July, we subscribed for 1.2 million ordinary shares at 28p per share in
Cozart plc as a part of the vendor placing to finance the acquisition of HL
Scandinavia AB. Cozart is an AIM-quoted medical diagnostics company which
develops, manufactures and sells immunodiagnostic tests, predominantly those
used for the detection of drugs of abuse. HL, based in Stockholm, supplies
drugs of abuse point of care urine testing products and services to customers in
the criminal justice, workplace and medical markets in Sweden.
AOI Medical Inc.
In September we subscribed for $1.5 million in ordinary shares in AOI Medical,
Inc. in a private placing arranged and underwritten by Numis Securities, with
MDY acting as lead investor. Based in Florida, USA, AOI Medical is developing
and intends to manufacture innovative orthopaedic medical devices for the spine
and trauma markets. The private placing raised a total of $3.0 million to fund
the continued product development as well as clinical and product marketing.
Following this placing, MDY Healthcare has an interest of approximately 7.5% of
the issued share capital of AOI Medical. MDY Healthcare will also provide paid
strategic consulting services to AOI Medical.
Both Cozart and AOI continue to make good progress with their businesses and we
remain excited about their prospects going forward. While just the start of the
process, these two investments illustrate the types of companies that MDY
Healthcare is targeting. We are continuing to review a wide range of potential
strategic investments as well as, on a selective basis, investing in listed
equities on a shorter-term basis.
We have made very good progress in repositioning MDY Healthcare this year, and
now we believe we have the management team and strategy in place to generate
strong future shareholder value.
Financial overview
Consolidated revenues for the period totalled #18.8 million (2005: #30.2
million), all but #41,000 of which related to the discontinued operations. The
operating loss for the period was #3.1 million (2005: #13.7 million). The gain
on sale of discontinued operations was #2.1 million (2005: nil) with loss after
tax of #1.4 million (2005: #14.2 million). Losses per share for the period were
0.26p (2005: 2.82p loss).
As at 30 September 2006, total assets were #19.0 million (2005: #29.0 million)
with #16.8 million (2005: #13.0 million) in equity. Cash and cash equivalents
were #17.2 million (2005: #0.8 million) while investments were #1.3 million
(2005: nil).
We announced on 17 April 2006 the sale of our Futura Safety business, together
with certain related assets, to Merit Medical Systems Inc ("Merit"). A
consideration of $750,000 (#428,000) was paid on closing and an additional
$500,000 (#267,000) was payable on Merit achieving sales of at least 600,000
units of safety scalpels in any six month period from the date of closing of the
agreement (10 April 2006) until 18 months from the date of closing. This level
of sales has now been achieved by Merit, therefore MDY Healthcare is now due
payment of the additional amount.
MDY Healthcare plc
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2006
September 2006 September 2006 September 2006
Continuing Disc'd Operations Total
Operations
Note #'000 #'000 #'000
Revenue 2 41 18,720 18,761
Cost of sales - (13,196) (13,196)
_____ _____ _____
Gross profit 41 5,524 5,565
Selling and distribution costs - (2,092) (2,092)
Administration expenses 5 (1,521) (4,225) (5,746)
Research and development expenditure in
the year - (870) (870)
_____ _____ _____
Loss from operations (1,480) (1,663) (3,143)
Loss on sale of financial assets -
Financing income 268 14 282
Financing costs (175) (395) (570)
_____ _____ _____
Loss before tax (1,387) (2,044) (3,431)
Income tax expense - (92) (92)
_____ _____ _____
Loss after tax but before gain on
discontinued operations (1, 387) (2,136) (3,523)
Gain on sale of discontinued operations,
net of tax 3 - 2,121 2,121
_____ _____ _____
Loss for the period (1, 387) (15) (1,402)
_____ _____
Attributable to:
Equity holders of the parent (1,402)
Minority interest -
_____
Loss for the period (1,402)
_____
Basic and diluted loss per share 4 (0.26)p
_____
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2006
(continued from table above)
September 2005 September 2005 September 2005
Continuing Disc'd Total
Operations Operations
Note #'000 #'000 #'000
Revenue 2 15 30,215 30,230
Cost of sales - (24,993) (24,993)
_____ _____ _____
Gross profit 15 5,222 5,237
Selling and distribution costs - (4,424) (4,424)
Administration expenses 5 (1,216) (10,714) (11,930)
Research and development expenditure in
the year (5) (2,536) (2,541)
_____ _____ _____
Loss from operations (1,206) (12,452) (13,658)
Loss on sale of financial assets (44) - (44)
Financing income 23 19 42
Financing costs (173) (429) (602)
_____ _____ _____
Loss before tax (1,400) (12,862) (14,262)
Income tax expense - 19 19
_____ _____ _____
Loss after tax but before gain on
discontinued operations
(1,400) (12,843) (14,243)
Gain on sale of discontinued operations,
net of tax 3 - - -
_____ _____ _____
Loss for the period (1,400) (12,843) (14,243)
_____ _____
Attributable to:
Equity holders of the parent (14,421)
Minority interest 178
_____
Loss for the period (14,243)
_____
Basic and diluted loss per share 4 (2.82)p
_____
MDY Healthcare plc
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 30 September 2006
2006 2005
Total Total
#'000 #'000
Gain / (loss) on foreign currency translation 126 (6)
Gain on redemption of preference shares - 12,947
Defined benefit plan actuarial gains/(losses) 156 (41)
Net change in fair value of available-for-sale financial assets 97 -
Deferred tax liability arising on net change in fair value of
vailable-for sale financial assets (29) -
_____ _____
Total amount recognised directly in equity in the year 350 12,900
Loss for the financial year (1,402) (14,421)
_____ _____
Total recognised income and expense for the year (1,052) (1,521)
Attributable to
- Equity holders of the Company (1,052) (1,699)
- Minority interests - 178
_____ _____
(1,052) (1,521)
Adjustment for impact of first time adoption of IAS 32 and IAS 39 (69) -
_____ _____
Total recognised income and expenses for the period including
transition adjustments (1,121) (1,521)
_____ _____
MDY Healthcare plc
CONSOLIDATED BALANCE SHEET
as at 30 September 2006
30 September 30 September
2006 2005
Notes #'000 #'000
Assets
Non-current assets
Financial asset investments 1,274 -
Intangible assets - 15,793
Property, plant and equipment 68 3,376
_____ _____
Total non-current assets 1,342 19,169
_____ _____
Current assets
Inventories - 4,159
Trade and other receivables 545 4,724
Cash and cash equivalents 6 17,159 771
_____ _____
17,704 9,793
_____ _____
Total assets 19,046 28,962
_____ _____
Equity
Issued capital 7,013 5,368
Share premium account 100,851 97,581
Capital redemption reserve fund 20 20
Other reserves 22,854 22,854
Share option reserve - 173
Shares issuable 63 -
Currency translation reserve 119 (7)
Retained earnings (114,077) (112,994)
_____ _____
Total equity 16,843 12,995
_____ _____
Liabilities
Non-current liabilities
Deferred tax liabilities 29 -
Employee related liabilities - pensions - 441
_____ _____
Total non-current liabilities 29 441
Current liabilities
Borrowings and other debt - 8,409
Trade and other payables 2,174 7,117
_____ _____
Total current liabilities 2,174 15,526
Total liabilities 2,203 15,967
_____ _____
Total equity and liabilities 19,046 28,962
_____ _____
MDY Healthcare plc
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2006
2006 2005
#'000 #'000
Cash flows from operating activities
Loss for the year (3,523) (14,243)
Adjustments for:
Depreciation and amortisation 509 2,111
Income tax expense 92 (19)
Loss on sale of property, plant and equipment - 122
Loss on sale of financial assets - 44
Impairment of property, plant and equipment 1,001 5,497
Impairment of intangibles 219 1,113
Share based payments (9) 76
Interest receivable (282) (42)
Financing costs 570 602
_____ _____
Operating loss before changes in (1,423) (4,739)
working capital and provisions
(Increase)/decrease in inventory (28) 780
(Increase)/decrease in trade and other receivables (70) 2,934
Increase in trade and other payables 1,472 1,149
Increase in pension 5 41
_____ _____
Cash generated from operations (44) 165
Current tax paid - (42)
Interest paid (567) (592)
_____ _____
Net cash outflow from operating activities (611) (469)
_____ _____
Cash flows from investing activities
Interest received 282 42
Purchase of financial asset investments (1,177) -
Purchase of intangibles (6) (77)
Purchase of property, plant and equipment (324) (2,463)
Proceeds from the sale of property, plant and equipment - 23
Proceeds from the sale of discontinued activities (net of costs of sale 21,808 -
and cash held by discontinued activities)
Proceeds from the sale of financial assets - 73
_____ _____
Net cash outflow from investing activities 20,583 (2,402)
_____ _____
Cash flows from financing activities
Proceeds from issue of share capital 4,825 235
Bank loan repayment (6,237) (1,384)
_____ _____
Net cash outflow from financing activities (1,412) (1,149)
_____ _____
Increase/(Decrease) in cash and cash equivalents 18,560 (4,020)
Cash and cash equivalents at 1 October (1,401) 2,600
Effect of exchange rate fluctuations on cash held - 19
_____ _____
Cash and cash equivalents at end of year 17,159 (1,401)
_____ _____
MDY Healthcare plc
Notes to the Financial Statements
1. Basis of Preparation
The consolidated financial information for 2006 has been presented in accordance
with International Financial Reporting Standards ("IFRS").
As outlined in the interim financial statements issued in June 2006 the Group
has, with effect from 1 October 2005, presented its consolidated financial
statements in accordance with IFRS in line with the requirements of UK Company
Law and European Commission regulations.
The comparative consolidated financial information for 30 September 2005 has
been restated in accordance with IFRS.
2. Revenue and Segment Information
On 11 May 2006 the Group sold its trading subsidiaries (namely Hypoguard Limited
and Hypoguard USA Inc) and ceased to trade in the Diagnostics and Healthcare
worker safety product business. The Group now has surplus cash which it plans
to invest in healthcare related businesses. As a result all of the Group's
healthcare services are classed as discontinuing and investment actives classed
as continuing.
Prior to the 2006 disposal the Group's income was primarily sourced from the
United States, and operating in two business segments:
* Diagnostics
* Healthcare worker safety products
The Group's operations and income are now predominately UK based.
Primary reporting format - geographical segments
Geographically
2006 2005
#'000 #'000
_____ _____
Revenue
United Kingdom 117 383
Rest of Europe 1,157 1,758
United States 16,754 27,175
Rest of World 733 914
_____ _____
18,761 30,230
_____ _____
Loss on ordinary activities before taxation
United Kingdom (2,061) (2,991)
United States 1,714 (4,808)
Rest of World (19) (5,332)
Central costs (2,777) (571)
_____ _____
(3,143) (13,702)
Financing costs (net) (288) (560)
_____ _____
(3,431) (14,262)
_____ _____
Assets by location of undertaking
United Kingdom 18,152 933
United States 894 27,714
Rest of World - 315
_____ _____
19,046 28,962
_____ _____
Liabilities by location of undertaking
United Kingdom (2,100) (515)
United States (103) (15,280)
Rest of World - (172)
_____ _____
(2,203) (12,995)
_____ _____
Geographical revenue is shown by location of customers. Geographic revenue by
location from which products and services are supplied is not materially
different other than for the Rest of Europe and Rest of World customers which
are primarily supplied from the United States.
Secondary reporting format - business segments
Class of business
2006 2005
#'000 #'000
_____ _____
Revenue
Diagnostics 17,781 29,163
Healthcare worker safety products 928 1,067
Other 52 -
_____ _____
18,761 30,230
_____ _____
Loss on ordinary activities before taxation
Diagnostics (339) (8,256)
Healthcare worker safety products (27) (4,875)
Central costs (2,777) (571)
_____ _____
(3,143) (13,702)
Financing costs (net) (288) (560)
_____ _____
(3,431) (14,262)
_____ _____
Assets by class of business
Diagnostics - 28,647
Healthcare worker safety products - 315
Investing activities 19,046 -
_____ _____
19,046 28,962
_____ _____
Liabilities by class of business
Diagnostics - (15,794)
Healthcare worker safety products - (173)
Investing activities (2,203) -
_____ _____
(2,203) (15,967)
_____ _____
3. Gain on Sale of Discontinued Operations
a) Sale of diagnostic operations
On 7 March 2006 the Boards of the Company and Medisys USA, Inc signed a Term
Sheet with ARKRAY, Inc of Kyoto, Japan under the terms of which ARKRAY was to
purchase the entire issued share capital of Hypoguard Limited and Hypoguard USA
Inc (together with its wholly owned subsidiary Hypoguard Medical Products, Inc)
for a cash consideration of $21.7 million (#11.9 million) and the repayment of
intra Group loans of $21.1 million (#11.5 million). The total consideration
received was $42.8 million (#23.4 million). The transaction closed on 11 May
2006. No tax liability arose on this transaction given the availability of
group relief.
On this date the Group ceased to trade in the Diagnostics business. The Group
now has surplus cash which it plans to invest in healthcare related businesses.
Thus all of the Group's previous trade associated with healthcare services is
classed as discontinuing, and trade associated with investment activities
classed as continuing.
b) Sale of healthcare worker safety products business
On 10 April 2006 the Group sold its Futura Safety businesses, together with
certain assets used by Hypoguard USA, Inc in carrying out that business, to
Merit Medical Systems Inc ('Merit'). The consideration payable was $750,000
(#429,000) on closing and an additional $500,000 (#267,000) payable upon Merit
achieving sales of at least 600,000 units of safety scalpels in any six month
period from the date of the closing of the agreement until 18 months from the
date of closing. At 30 September 2006 Merit informed the Group that this
threshold had been achieved and that the additional $500,000 consideration was
payable. As a result the additional consideration payable is included in total
consideration receivable of #696,000. The additional consideration is included
in receivables at 30 September 2006.
No tax liability arose on this transaction given the availability of group
relief.
The gain on sale of the above discontinued activities has been calculated as
follows:
Sale of Sale of Sale of Total
Hypoguard USA Hypoguard healthcare
Inc Limited safety products
business
Assets #'000 #'000 #'000 #'000
Property, plant and equipment 1,835 147 107 2,089
Current assets 7,876 1,528 - 9,404
Non-current liabilities (293) - (293)
Current liabilities (4,334) (2,034) - (6,368)
Related goodwill 15,739 - - 15,739
Net assets disposed of 21,116 (652) 107 20,571
Consideration 21,355 2,033 696 24,084
Costs of disposal (1,365) (6) (21) (1,392)
(Loss)/Profit on disposal (1,126) 2,679 568 2,121
4. Loss per Share
2006 2005
_____ _____
Basic
Net loss for the financial period (#'000) (1,402) (14,421)
Weighted average number of shares outstanding ('000) 547,563 511,982
Basic loss per share (0.26)p (2.82)p
_____ _____
The basic net loss per ordinary share is calculated using a numerator of the net
loss for the financial year and a denominator of the weighted average number of
ordinary shares in issue for the financial year. The diluted net loss per
ordinary share is calculated using a numerator of the net loss for the financial
year and a denominator of the weighted average number of ordinary shares and
adjusting for the effect of all potentially dilutive shares, including share
options and warrants, assuming they are converted. There is no difference for
2006 and 2005 between the basic net loss per share and the diluted net loss per
share as ordinary share equivalents from share options have been excluded from
the computation as their effects are anti-dilutive.
5. Administration expenses
2006
Included in administration expenses in respect of discontinued operations for
the year ended 30 September 2006 is an impairment loss of #1,331,000 with
respect to assets and liabilities sold in relation to Hypoguard Limited
(discontinued operation). This consisted of write downs to property, plant and
equipment (#977,000), intangible assets (#202,000) and inventory (#152,000) to
their recoverable amount.
2005
Included in administration expenses for the year ended 30 September 2005 were
write offs of manufacturing equipment and intellectual property amounting to
#6,382,000 following the then unsuccessful process of disposing of the Group's
safety products business.
6. Analysis of changes in net funds
At 30 Cash flow Exchange rate At 30 September
September movements 2006
2005
#'000 #'000 #'000 #'000
Cash and cash equivalents 771 16,388 - 17,159
Bank overdraft (2,172) 2,172 - -
_____ _____ _____ _____
(1,401) 18,560 - 17,159
Bank loans (6,237) 6,237 - -
_____ _____ _____ _____
Total (7,638) 24,797 - 17,159
_____ _____ _____ _____
7. Litigation
As previously disclosed, MDY Healthcare is engaged in various litigation in the
USA relating to the discontinued businesses. On 31 January 2005, Miller and Cole
on behalf of themselves and all other similarly situated filed a complaint in
the Circuit Court of Madison County, Illinois, against, inter alia, Hypoguard
USA Inc and Medisys USA Inc., a subsidiary of MDY Healthcare. The original
complaint cited several claims against Hypoguard and Medisys, the majority of
these claims have been dismissed and the only claims that were still active were
a claim for common law fraud and a claim for the purported violation of an
Illinois consumer fraud and deceptive business practices act. Under the
remaining claims, Miller and Cole claimed for the return of the purchase price
of the product in question. In November of this year, Hypoguard and Medisys
(MDY Healthcare) received summary judgment in our favour. The plaintiffs have
the option to file to move to reconsider in trial court or absent such a motion,
to attempt an appeal. The final impact of this litigation is currently not
known by the Company, although to date the action has proceeded favourably for
us as we now have summary judgment from the trial court. Under the terms of the
sale and purchase agreement with ARKRAY, MDY Healthcare has agreed to indemnify
ARKRAY and Hypoguard in respect of the complaint in accordance with the terms of
that agreement.
Separately, Hypoguard USA Inc and Medisys USA Inc have filed a complaint against
their insurer St Paul Fire and Marine Insurance Company for their failure to
defend or meet the costs of defending the Miller/Cole action. We have now
received summary judgment in our favour that St Paul is obligated to defend the
Miller/Cole action. St Paul has filed notice of appeal. No specific provision
has been included in the financial statements in respect of these matters.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MGMMZLLDGVZM
MDY Healthcare (LSE:MDY)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
MDY Healthcare (LSE:MDY)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
