RNS Number:9863Y
Medisys PLC
24 May 2004
Embargoed until 0700 24 May 2004
Medisys PLC
("Medisys" or "the Group")
Unaudited Interim Results for the Six Months Ended 31 March 2004
Medisys PLC, the diagnostics and medical safety group, today announces its
results for the six months ended 31 March 2004.
Financial Highlights
"Operating losses before amortisation decreased to #0.3 million despite
impact of weak dollar on turnover"
*Turnover decreased by 16% to #16.8 million (2003: #20.1 million)
reflecting:
- #2.0 million impact of the weakening in US Dollar/Sterling exchange
rate
- at a constant exchange rate, reduced sales of mail-order products, the
Futura Safety Scalpel and infusion sets, partly offset by increased
sales of long term care products
*Gross margin increased to 40% (2003: 37%)
*Selling, distribution and administration costs held at #4.7 million, in
line with previous period
*Research and development expense reduced significantly to #1.8 million
(2003: #3.0 million), with further reduction expected in second half
*Earnings before interest, tax, depreciation and amortisation of #0.7
million (2003: #0.3 million)
*Operating loss before amortisation #0.3 million (2003: #0.8 million)
*Loss before tax reduced to #1.0 million (2003: #1.6 million)
*Loss per share 0.41p (2003: 0.58p)
Product Highlights
*Shipments of NewTek integrated blood glucose monitoring system have
commenced - product now available in selected Wal*Mart stores and expected
to be nationally available later this financial year
*Shipments of the Futura Safety Syringe to a national medical products
distributor in the US are underway
*Sales of the Assure range of products increased to #8.4 million in the
period (2003: #6.2 million at a constant exchange rate)
*Sales of Advance Micro-draw #1.0 million (2003: #0.4 million at a
constant exchange rate)
David Conn, Chief Executive Officer commented: "Medisys made very solid progress
in the first half with the launch of two key products: NewTek, our unique
glucose monitoring system and the Futura Safety Syringe. In addition the Group's
core long term care diabetes business grew by 17% (at a constant exchange rate)
compared to the corresponding period last year. While revenues decreased,
largely as a result of the decline in the US dollar relative to sterling,
operating losses were also reduced significantly.
"Medisys is entering a new phase in its development when we anticipate seeing a
return on our investment in new products over the last number of years. The
Group is well positioned, in terms of both product offering and presence in key
segments of the healthcare market, for substantial growth."
- Ends -
Enquiries:
Medisys PLC (24/05/04) 020 7067 0700
David Conn, Chief Executive Officer (Thereafter) 020 7563 5200
Michael Barry, Chief Financial Officer
Weber Shandwick Square Mile 020 7067 0700
Kevin Smith/Susanne Walker
Embargoed until 0700 24 May 2004
Medisys PLC
("Medisys" or "the Group")
Unaudited Interim Results for the Six Months Ended 31 March 2004
Medisys made good progress in the six months ended 31 March 2004, with the
launch of two key products, NewTek, the first fully integrated disposable
glucose monitoring system, and the Futura Safety Syringe. The Group also
reported continued growth in its long term care business. Despite a reduction in
revenues compared to last year, operating losses were reduced by 42% as a result
of improved gross margin and a significant reduction in research and development
expenditure.
Financial Review
As announced in the trading update given at the AGM on 25 March 2004 revenues in
the first half decreased compared to the corresponding period in 2003. Turnover
decreased 16% to #16.8 million (2003: #20.1 million). Since most of the Group's
revenues are in US dollars, the well publicised weakening of the value of the
dollar against sterling has had a significant adverse impact, amounting to
approximately #2.0 million, on reported sales.
Total sales of glucose monitoring products, including Supreme and the Assure
range, into the long term care segment were #9.7 million (2003: #8.3 million at
a constant exchange rate), an increase of 17%. This increase reflects the
strength of the Group's position within long term care where it has a market
share exceeding 40%. Sales of safety lancets were #3.4 million, a 6% increase
(at a constant exchange rate) on the prior period's sales of #3.2 million.
Within the mail-order market segment sales were #2.2 million (2003: #2.8 million
at a constant exchange rate). As previously announced, the decrease was a result
of weaker than expected sales of the QuickTek product through GEMCO. QuickTek
was launched into mail-order as an interim product offering while development of
the more sophisticated Advance Micro-draw product was completed. While it is
anticipated that QuickTek will continue to sell through this channel, the Board
expects that it will be largely superseded by the Advance Micro-draw product as
new growth opportunities for that product are realised.
As expected, sales of the Futura Safety Scalpel were adversely impacted by the
temporary absence of the product from the market in 2004, while preparations
were being made for its re-launch under the Futura brand. Scalpel sales were
negligible in the first half compared to #0.9 million in 2003.
Gross margin for the period improved to 40% compared to 37% in the previous
period. The improvement resulted from a change in the product mix including a
#1.0 million reduction in sales of low margin infusion sets.
Selling, distribution and administration costs in total were #4.7 million (2003:
#4.8 million) reflecting continuing tight control on the overhead base of the
Group. However, as previously reported, due to the deterioration in the US
dollar exchange rate a foreign exchange loss was realised upon the conversion of
US dollars into sterling to fund non-US dollar expenses. This loss amounted to
#0.4 million.
Research and development expense was #1.8 million, a significant reduction on
the corresponding period level of #3.0 million. The total in the first half
reflected some additional expenditure resulting from the delays in getting both
NewTek and the Futura Safety Syringe to market and a further decline in the
level of R&D expense is therefore anticipated in the second half of the year now
that both products have been launched.
The loss before amortisation was #0.3 million (2003: #0.8 million).
Net interest expense was #0.2 million (2003: #0.2 million).
The loss on ordinary activities before tax reduced significantly to #1.0 million
(2003: #1.6 million). The loss per share was 0.41p (2003: 0.58p).
Earnings before interest, tax, depreciation and amortisation improved to #0.7
million (2003: #0.3 million). Net cash outflow from operating activities was
#0.3 million (2003: #1.6 million). During the first half, the Group sold its
remaining stake in the Medical House PLC at a loss of #0.1 million, generating
cash proceeds of #0.7 million.
Group Cash Position
The Group had net negative cash balances of #0.7 million (excluding long term
debt of #7.8 million) at the end of March 2004. While some further limited
investment in working capital will be required as new products are launched and
the existing business expands, the Board believes that the Group's future
working capital needs can be satisfied from a combination of positive operating
cash flows and the Company's existing #5 million working capital line of credit.
Operational Review
Retail Products
The NewTek integrated diabetes monitoring product was recently launched and is
now available for sale in selected Wal*Mart stores and through their mail-order
division in the US. Hypoguard is continuing to manufacture and ship further
product with a view to it being more widely available in the coming weeks. Plans
are now finalised to rapidly expand the current number of stores carrying the
product and it is anticipated that NewTek will be nationally available in
approximately 3,400 Wal*Mart pharmacy outlets by the end of the Group's
financial year. A staged introduction of the product is being undertaken so that
likely demand and required manufacturing output can be assessed more accurately
before making NewTek nationally available. During this introductory period,
Hypoguard is continuing to increase output of the product, but at this point in
time, it is too early for the Group to determine the likely market uptake.
Long Term Care Products
Aggregate sales of blood glucose monitoring products into the long term care
segment were again strong in the first half of the year, though the shift from
the older Supreme product to the newer Assure products has continued as
expected.
Mail Order
In the Mail order segment, the Group now has two products available. As
mentioned above, sales growth of QuickTek has tailed off but this has been
partly compensated for by increasing sales of the Advance Micro-draw product.
Advance Micro-draw is being sold to multiple durable medical equipment and
mail-order dealers, including GEMCO, where it is recording steady sales growth
and the initial customer response has been encouraging.
Medical Safety Products
As announced on 22 March 2004, the Group received its first major order for the
Futura Safety Syringe from a leading medical products distributor in the US.
Since then, the Group has continued to ship product to this customer and further
sizeable orders are anticipated. Further sales opportunities with other major
distributors are being actively pursued and it is expected that these activities
will yield further orders in due course. Group purchasing organisation contracts
are also being pursued to help generate pull through of the product from
distributors.
Following the re-launch of the Futura Safety Scalpel under the Group's own
brand, the product is rapidly recovering its position in the market and
significant sales growth is anticipated over the coming months.
Litigation
Hypoguard USA, Inc. (the Group's US blood glucose monitoring subsidiary) has
filed a response to the Complaint made by Roche Diagnostic Corp. alleging that
the Assure family of products infringe certain patents. Hypoguard is one of four
defendants named in the Complaint including the manufacturer of Assure products,
Apex Biotechnology Corp. Apex provided an indemnity for liability arising from
the Assure products infringing the intellectual property of a third party, under
the terms of the supply agreement with Hypoguard.
Current Trading and Prospects
The Board is confident that both NewTek and the Futura Safety Syringe have
excellent prospects, though, since both have been recently launched, it is still
too early to gauge their true performance in the market. In addition, output of
the Advance Micro-draw product is being scaled up rapidly to fulfil anticipated
mail-order demand. As a result, the Group is in a transitional phase where a
significant positive impact on profitability from the new products has yet to be
seen and will not be evident for some months, until anticipated economies of
scale are achieved. As volume output increases, it is anticipated that unit
manufacturing costs will fall enabling these products to generate increasing
profitability. The remaining core business of the Group is continuing to perform
well.
Medisys is entering a new phase in its development when the Group should begin
to see a return on the investment in new products over the last number of years.
The Directors believe that the Group is well positioned, in terms of both
product offering and presence in key segments of the healthcare market, for
substantial growth.
- Ends -
Enquiries:
Medisys PLC (24/05/04) 020 7067 0700
David Conn, Chief Executive Officer (Thereafter) 020 7563 5200
Michael Barry, Chief Financial Officer
Weber Shandwick Square Mile 020 7067 0700
Kevin Smith/Susanne Walker
Medisys PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 31 March 2004
--------------------------------------------------------------------------------
2004 2003
Notes Total Total
#'000 #'000
--------------------------------------------------------------------------------
Turnover - continuing operations 16,845 20,074
Cost of sales (10,081) (12,675)
---------- ----------
Gross profit 6,764 7,399
Selling and distribution costs (2,138) (2,504)
Administration expenses (2,563) (2,294)
Loss on sale of financial assets (109) -
(Loss)/gain on foreign exchange (399) 7
---------- ----------
Profit before amortisation and research and
development expenditure 1,555 2,608
Research and development expenditure in the year (1,842) (2,990)
Write down of fixed asset investments - (400)
---------- ----------
Loss before amortisation (287) (782)
Amortisation of acquired goodwill (480) (534)
---------- ----------
Operating loss - continuing operations (767) (1,316)
Interest receivable 29 17
Interest payable and similar charges (258) (253)
---------- ----------
Loss on ordinary activities before taxation (996) (1,552)
Tax on loss on ordinary activities (148) (210)
---------- ----------
Loss on ordinary activities after tax (1,144) (1,762)
Minority interest - non equity (442) (489)
---------- ----------
Loss attributable to shareholders (1,586) (2,251)
========== ==========
Loss per ordinary share
- basic and diluted 2 (0.41)p (0.58)p
========== ==========
Medisys PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
at 31 March 2004
--------------------------------------------------------------------------------
31 March 31 March 30 September
2004 2003 2003
#'000 #'000 #'000
--------------------------------------------------------------------------------
Fixed assets
Intangible assets 17,043 20,951 19,424
Tangible assets 9,147 12,484 10,594
Financial assets 119 1,668 952
-------- -------- --------
26,309 35,103 30,970
-------- -------- --------
Current assets
Stocks 5,330 5,271 4,483
Debtors 4,686 7,660 5,563
Cash at bank and in hand 1,167 1,350 887
-------- -------- --------
11,183 14,281 10,933
Creditors: amounts falling due within
one year (7,685) (17,751) (7,097)
-------- -------- --------
Net current assets/(liabilities) 3,498 (3,470) 3,836
-------- -------- --------
Total assets less current liabilities 29,807 31,633 34,806
Creditors: amounts falling due after more
than one year (6,797) - (8,358)
-------- -------- --------
Net assets 23,010 31,633 26,448
======== ======== ========
Capital and reserves
Called up share capital 3,913 3,901 3,912
Share premium account 90,780 90,712 90,775
Capital redemption reserve fund 20 20 20
Other reserves 22,854 22,854 22,854
Profit and loss account (110,304) (103,212) (108,101)
-------- -------- --------
Equity shareholders' funds 7,263 14,275 9,460
Minority interest 15,747 17,358 16,988
-------- -------- --------
23,010 31,633 26,448
======== ======== ========
Medisys PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 March 2004
--------------------------------------------------------------------------------
2004 2003
Notes #'000 #'000
--------------------------------------------------------------------------------
Net cash outflow from operating activities 3 (303) (1,595)
-------- ---------
Returns on investments and servicing of finance
Interest received 29 17
Interest paid (258) (253)
-------- ---------
Net cash outflow from returns on investments and
servicing of finance (229) (236)
Corporation tax paid (225) (160)
Capital expenditure and financial investment
Purchase of intangible fixed assets (5) (52)
Purchase of tangible fixed assets (230) (1,515)
Proceeds from the sale of tangible fixed assets 198 323
Proceeds from the sale of financial fixed assets 724 -
-------- ---------
Net cash inflow/(outflow) from capital expenditure
and financial investment 687 (1,244)
-------- ---------
Net cash outflow before use of liquid resources and
financing (70) (3,235)
-------- ---------
Financing
Proceeds from issue of share capital 5 15
Fees paid in relation to renewal of bank facilities (155) -
Bank loan repayment (204) -
-------- ---------
Net cash (outflow)/inflow from financing (354) 15
-------- ---------
Decrease in cash 4 (424) (3,220)
======== =========
Medisys PLC
Notes
1 Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the 2003 annual report and accounts, but has not
been audited. 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 2003 have been filed with the Registrar
of Companies and received an unqualified auditors' report.
2 Loss per ordinary share
2004 2003
--------------------------------------------------------------------------------
Basic
Loss attributable to ordinary shareholders (#'000) (1,586) (2,251)
Weighted average number of shares outstanding (000) 391,242 389,927
Basic loss per share (0.41)p (0.58)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 2003 and 2004 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.
3 Reconciliation of operating loss to net cash outflow from operating activities
2004 2003
#'000 #'000
--------------------------------------------------------------------------------
Operating loss (767) (1,316)
Depreciation and amortisation 1,452 1,589
Profit on sale of tangible fixed assets (18) -
Loss on sale of financial assets 109 -
Write down of tangible fixed assets - 104
Write down financial assets - 400
Increase in stocks (1,282) (1,184)
Decrease/(increase) in debtors 449 (1,041)
Decrease in creditors (246) (147)
--------- ----------
Net cash outflow from operating activities (303) (1,595)
========= ==========
4 Analysis of changes in net funds
At 30 September Cash flow Exchange rate At 31 March
2003 movements 2004
#'000 #'000 #'000 #'000
--------------------------------------------------------------------------------
Cash at bank 887 364 (84) 1,167
Overdraft (1,108) (788) - (1,896)
----------- ---------- --------- ----------
(221) (424) (84) (729)
Bank loans (9,036) 359 884 (7,793)
----------- ---------- --------- ----------
Total (9,257) (65) 800 (8,522)
=========== ========== ========= ==========
5 Reconciliation of movement in equity shareholders' funds
#'000
--------------------------------------------------------------------------------
Balance at 30 September 2003 9,460
Issue of ordinary share capital 5
Loss attributable to shareholders (1,586)
Loss on foreign currency translation (616)
----------
Balance at 31 March 2004 7,263
==========
6 The interim report for the six months ended 31 March 2004 has been prepared
by the Company and was approved by the Directors on 21 May 2004.
7 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, 23
Bridge Street, Ellon, Aberdeenshire AB41 9AA. A copy will also be posted on the
Group's website: www.medisys-group.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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