MDY Mdy Healthcare

RNS Number:9159W
Medisys PLC
25 March 2004



Embargoed until 0700                                               25 March 2004


                                  Medisys PLC
                           ("Medisys" or "the Group")

           AGM Statement

At the Annual General Meeting, which is scheduled to take place later today, Dr.
David Wong, Chairman, will make the following comments:


Product Update


NewTek

The NewTek product is now ready for market with all necessary optimisation of
the manufacturing process and final testing having been completed.  Production
of commercial product commenced approximately eight weeks ago and inventory is
now on hand in our Minneapolis facility ready to be shipped upon receipt of
anticipated purchase orders from Wal-Mart.  The Group is now working with
Wal-Mart to finalise the logistics of the market launch of the product over the
coming weeks.


Futura Safety Syringe

As announced on 22 March 2004, the Group has commenced the launch of the Futura
Safety Syringe in the US using its own sales and marketing team.  The initial
purchase order received from a national medical products distributor has been
fulfilled and inventory is on hand in Minneapolis to fulfil further anticipated
purchase orders.


Trading Update

Revenues for the six months ended 31 March 2004, are expected to be
approximately #17.0 million compared to #20.0 million in the corresponding
period in 2003.


Most of theGroup's revenues are in US dollars and approximately #2.0 million of
the reduction in the level of reported sales is due to the well-publicised
weakening of the value of the US dollar against sterling.  The following revenue
analysis by product is on a constant dollar exchange rate basis.


In the Group's core long term care diabetes business, revenues from the Assure
family of products are expected to show continuing strong growth increasing to
approximately #8.4 million in the half year compared to #6.3 million in the
corresponding period last year, an increase of 33%.  As expected this increase
will be partly offset by the continuing reduction in sales of the older Supreme
product which it replaces.  The Group continues to maintain its market
leadership position in long term care, with a market share exceeding 40%.


The bio-sensor based Advance MicroDraw product is expected to record sales of
approximately #1.1 million in the half year compared to #0.4 million in the
prior period.  This value priced product has a feature set comparable to the
market leading bio-sensor based products, including a tiny sample size and quick
read time. The Board remains firmly of the view that the mail-order segment
offers significant additional opportunity for the Advance MicroDraw product and
new business is being actively pursued.


Sales of the QuickTek product into the mail-order segment through our partner,
GEMCO, have been weaker than expected.  Sales for the half year are anticipated
to be approximately #1.2 million, compared to #2.4 million in the prior period
(which included substantial initial stocking orders from GEMCO).  QuickTek was
originally launched through GEMCO as a first step into the mail-order segment
withthe objective of capturing some near-term sales opportunities, while final
development of the more sophisticated Advance MicroDraw product was completed.
The Board believes that future sales growth for QuickTek is likely to be limited
since it is a reflectance based product, which requires a relatively large blood
sample and typically a longer read time than the newer bio-sensor products, such
as Advance MicroDraw.


As expected, revenues for the half year were adversely affected by the temporary
absence of sales of the Futura Safety Scalpel, which contributed approximately
#0.9 million of sales in the first half of 2003.  Scalpel sales were suspended
following the termination of the safety products co-marketing agreement in
September 2003.  Following receipt of new packaging materials, the Group has now
re-commenced sales and the first substantial orders have been received.


Sales of infusion sets are also expected to show a decline of approximately #1.0
million as the Group's largest customer amended its supply arrangements to
source direct from the manufacturer.  This change, although significant in
revenue terms, has a very limited effect on profitability since the product was
being sold at a gross margin of less than 10%.


Gross margins for the half year are expected to be somewhat better than the
margins achieved in the first half of last year due to the reduction in low
margin infusion set sales and the lower level of meter placements.  Selling,
marketing and administration costs remain under control and in line with
expectations.  However, a foreign exchange loss of #0.6 million was realised
upon conversion of US dollars into sterling to fund non-US dollar expenses.


As expected, research and development spend has continued to decline as the
pipeline of development projects approaches market introduction. While
additional expenditure has been incurred as a result of the delays in launching
both NewTek and the Futura Safety Syringe, it is anticipated that research and
development expense for the half year will be in the region of #1.9 million,
which is 36% less than in the corresponding period in 2003.


Litigation

On 3 March 2004, the Group announced that Hypoguard had been named as one of
four defendants in a complaint for patent infringement made by Roche Diagnostics
Corporation in the US.  The Group has been working with its professional
advisers to complete a preliminary analysis of the basis of Roche's claim.  The
Group anticipates that it will shortly be in a position to respond with a robust
defence to the complaint.


Outlook

The outlook for the second half of the year remains positive with growth in the
business expected to result from the recent market introduction of the Futura
Safety Syringe and the forthcoming launch of NewTek through Wal-Mart.  Further
new business is expected to result from current efforts to promote the Advance
MicroDraw product into the mail-order segment.  A rapid recovery in sales of the
Futura Safety Scalpel at an improved gross margin is also anticipated following
its re-launch as Futura branded product.




                                    - Ends -


Enquiries:

Medisys PLC                                    020 7563 5200
David Conn, Chief Executive Officer
Michael Barry, Chief Financial Officer

Weber Shandwick Square Mile                                        020 7067 0700
Kevin Smith/Susanne Walker







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