RNS Number:3037I
Gyrus Group PLC
5 March 2003
5 March 2003
Gyrus Group PLC
Gyrus Announces Maiden Pre-Tax Profits
Gyrus Group PLC ("Gyrus" or "the Group"), a leading supplier of medical devices
to reduce trauma and complications in surgery, today announces its preliminary
results for the year ended 31 December 2002, showing strong revenue growth,
increasing margins and maiden profits.
Financial Highlights
* Group revenues, up 49% (55% on a constant exchange rate basis), reach #75m
(2001: #50.3m)
* Gross margins continued upward trend to 61% (2001: 57.4%)
* Operating profits (EBITA)* sharply increased to #8.3m (2001: #1.5m)
* EPS * rises to 8.1p (2001: 3.1p)
* Positive outlook, with Group expected to be cash generative in 2003
* Before goodwill amortisation and exceptional items
Operating Highlights
* Successful integration of Smith & Nephew ENT and Somnus acquisitions,
establishing leadership position in $1.6 billion ENT market
* Generator placements more than doubled to 2,600 in 2002 (2001: 1,250)
* Sinus sales up 68% in H2, driven by successful launch of Diego Powered
Dissector System
* Lower abdominal surgical business delivers exceptional growth of 47%
Commenting on the results, Brian Steer, Executive Chairman, said today:
"Gyrus has made very significant progress in 2002, delivering sharply increased
turnover and growing profitability. Operationally, we have seen the successful
integration of our most recent acquisitions, evidenced by the second half
results in ENT, and we have developed a solid platform for growth through the
development of highly innovative products and a strong global distribution
channel.
"The outlook for Gyrus is very exciting. We have a clear strategy to enable us
to achieve our twin goals of above average growth and significant profitability.
We have set ourselves a target of a high teens annual revenue growth rate and
EBITA margins of 20% in the medium term. We are confident that we are well
placed to achieve this."
Enquiries:
Gyrus Group PLC On 5 March 2003:
Brian Steer, Executive Chairman Tel: 0207 831 3113
Dr Mark Goble, Group Managing Director Thereafter:
Tom Murphy, Group Finance Director Tel: 01189 219750
Financial Dynamics
Ben Atwell Tel: 0207 831 3113
Chairman's Statement
Overview
Having established a core business and validated our technology through
marketing partnerships, in 2000 we embarked on a strategy, through acquisition,
of direct sales and distribution in selected niche markets. As a result of this
strategy we have recorded some exceptional results over the last three years:
* Growth in sales of 600% - moving from a single technology/customer, to a
wider technology, product and customer base
* Integration of four significant acquisitions
* Leadership in two important niche markets
* Organic growth through technology integration
* Movement to profitability
We have now entered into the next phase of our development with the aim of
sustaining a high teens revenue growth rate and dramatically improved
profitability. Management are targeting an EBITA margin of 20% in the medium
term.
Key elements of this next phase are to:
* Establish a one company culture
* Develop global business units
* Build on two consolidated sales organisations; North America and
International
* Centralise our Research and Development direction, based in Reading
* Create a business unit focused on marketing partners and licensing
potential
Financial Review
The year ended 31 December 2002 recorded overall revenue growth of 49% to #75
million (2001: #50.3 million) and an increase in operating profit from #1.5
million to #8.3 million before amortisation of goodwill and exceptional items.
This reflects a year of operational success. We completed the integration and
consolidation of both the Smith & Nephew ENT Division and Somnus, and now have
many opportunities for further growth in 2003 from our solid base.
Some 83% of our revenue in 2002 was in US dollars. Whilst our business met
operating level expectations in local currency, the translation effects of a
weakened dollar impacted financial results. Without the currency impact,
revenue growth would have been 55% on a constant dollar basis. Nonetheless,
through the implementation of strong financial controls we were able to exceed
market profitability expectations.
Excluding the contribution from 2001 acquisitions, the existing direct selling
businesses demonstrated exceptionally strong underlying sales growth - Gyrus
Medical Inc (47%) and Gyrus International Ltd (34%). The continuing ENT
business, acquired in 2001, grew 7% for the year on a pro-forma basis and rose
13% (at a constant dollar rate) in the second half compared with the same period
of 2001. This turnaround resulted from our investment in the ENT business
subsequent to the acquisitions. Sales of ENT products outside NAFTA by Gyrus
International Ltd grew at 38% on a pro-forma basis. Our business with Johnson &
Johnson resulted in a 7% annual growth in product sales at Gyrus Medical Ltd.
Operating profit (EBITA) was #8.3 million (11.1% of sales) for the full year
compared to #1.5 million (3.0% of sales) in 2001. Increasing gross profits and
strong management of operating expenses enhanced operating profit. Gross margin
increased to 61.0% in 2002 as compared to 57.4% in 2001, led by changing sales
mix, manufacturing leverage, rising output and increased selling prices.
Operating expenses before goodwill amortisation totalled 49.9% of revenues,
including our ongoing investment in sales and marketing (28.0% of sales) and
research and development (10.5% of sales).
The Group reported a profit before tax of #2.1 million (2001: #6.0 million loss)
for the year, after recording #6.6 million of goodwill amortisation and an
exceptional gain of #1.98 million on the disposal of its drapes business. EPS
for the period, before goodwill amortisation and exceptional items, was 8.1p per
share (2001: 3.1p per share).
Cash and available borrowings at 31 December 2002 was #12.5 million as compared
to #11.1 million at 30 June 2002. Whilst the available cash increased from the
interim period, this was largely attributable to the proceeds from the sale of
the drapes business. In the second half cash was utilised to increase stock
levels to support the new product introductions, the seasonality of the otology
business and the growing sales volume. The Group expects that the cash and
available borrowings will be sufficient to meet its current goals and expects to
be cash generative in 2003.
Business Review
Our mission is to provide the surgeon with a portfolio of products in our chosen
market sectors, which will enable a less traumatic surgical procedure through a
combination of faster operative times and speedier patient recovery. These
procedure based product systems will often be centred on our energy-based
technologies and driven by a generator that will evolve as a 'work station' for
each surgical speciality.
Our focus and mission is attractive when the underlying market drivers are
considered:
* Demographics - an ageing population drives market growth in many of our
sectors
* Economic and political pressures - rising health care costs drive
providers to reduce hospital stay and encourage day case surgery
* The patient demand for ever-higher standards of care and a better
quality of life with an expectation of relief from chronic disease
conditions.
The strategy within most business units incorporates our policy of placing
capital equipment to generate increasing sales of the associated single use
instruments. The installed base of generators rose from 1,250 in 2001 to 2,600
at the end of 2002. Disposable utilisation per generator per month held fairly
constant despite the increased placements. This utilisation will increase with
the addition of new instruments to progressively enhance the utility of the
generators to the point of becoming a workstation for a range of surgical
specialities.
Management and Divisional Structure
The knowledge, dedication and experience of our staff are critical factors to
our success. The breadth and quality of our management team is driving the
growth of a broad portfolio of products in selected market sectors on a global
basis. The company has the depth and critical mass in management terms to enable
effective succession planning at all levels, and is now beyond the stage of
vulnerability to individual management change. We expect the Group to grow
rapidly and are paying particular attention to training and organisational
change which broadens management experience and reflects the changing needs and
size of the business.
We are in the process of realigning our management structure and
responsibilities to focus on our twin goals of sustainable growth and optimal
profitability. These changes involve the creation of global business units
within our structure together with the consolidation of our North American sales
forces under one management and infrastructure. Each business unit will have
global management responsibility for its sector. Each of our four locations will
have specific business and functional responsibilities.
This new matrix organisation, supported by the Financial and Operations
functions, will form the basis of a new Gyrus culture and constitute the final
stages of integration and consolidation of the four acquisitions.
We believe these changes will give senior executives greater focus on their
respective market sectors on a global basis. Taking advantage of identified
opportunities, it is our goal to develop our non-US business further to help
accelerate overall growth, offset our dollar dependence and provide a broader
distribution base in the future.
The performance of each business unit during 2002, taking into account the
acquisitions made during 2001, is shown on a pro-forma basis in the table below.
The table excludes the drapes business which was sold during the year and, since
the effect of currency change clouds the underlying operational growth of each
business unit, the comparisons are made in the billing currency.
Business Revenues Underlying Revenues Underlying Gross
Unit FY Growth H2 Growth Profit %
2002 (Y-O-Y) 2002 (H2: Y-O-Y) 2002
Otology $22.3m 2% * $10.3m 5% 75%
Sinus $8.0m 33% * $4.5m 68% 67%
Head & Neck $12.3m 1% * $5.8m 5% 70%
Gynaecology $21.4m 40% $11.5m 36% 70%
Urology $1.9m 171% $1.1m 94% 75%
Marketing Partners $24.9m 9% $11.7m (3%) 40%
International Surgical #3.6m 100% #2.0m 67% 54%
International ENT #6.6m 38%* #2.8m 17% 53%
International Other #2.3m -8% #1.1m 11% 50%
* growth based on pro-forma 2001 results, including the revenue of businesses
acquired in June 2001 for the 12 months ended 31 Dec 2001.
Gyrus ENT
The acquisitions in 2001 of the Smith & Nephew ENT business and Somnus were made
in order to:
* Establish a leadership position in the profitable ENT market
* Acquire a competent sales and distribution organisation in this sector
* Provide a platform for the introduction of new products and
technologies
* Provide a product and technology (Somnoplasty) that expands the market
opportunity to $1.6 billion from the previously addressed markets of
$341 million.
At acquisition, the ENT business had been essentially flat and the Somnus
business, although growing, was losing $10 million per annum. We can report that
we have now integrated these businesses, eliminated the Somnus losses and, as of
the second half of 2002, begun to grow the combined entity.
In the head and neck sector of the business, the repositioning of Somnoplasty to
focus on the treatment of obstructive sleep apnoea has resulted in this segment
growing 40% with additional growth (8%) coming from the treatment of enlarged
turbinate tissues in the nose. Whilst for the full year Somnoplasty was
essentially flat, the second half growth was an encouraging 12%. The challenge
is to grow our position in the habitual snoring market, which, unlike sleep
apnoea, is a social rather than life threatening condition. This portion of our
business fell 25% for the year and 18% in the second half offsetting the growth
experienced from the repositioning of Somnoplasty.
The remaining head and neck business has been essentially flat over the full
year and is targeted in the second half of 2003 to increase revenues based on
the clinical performance of the G2 generator introduced for evaluation in
September 2002. This generator provides the capability, through the combination
of PK and Somnoplasty technologies, to shrink, excise, vaporise and contour
tissue with minimal bleeding and scarring within the head and neck surgery
field.
The sinus and rhinology market presents an opportunity for the newly launched
Diego system in the endoscopic sinus sector of the market, valued at $60
million, where we hold a 6% share. The placement in the fourth quarter of 105
Diego systems has been a major contributor to the turnaround with 33% growth for
the full year and 68% in the second half. Since the launch of Sepragel, a
biomaterial for post-operative nasal dressing licensed from Genzyme Biosurgery,
we have seen very rapid growth, achieving 30% share of the nasal packing market.
Together with Diego and the new co-marketing deal with Brain Lab in computer
assisted image guidance, this provides a very exciting portfolio of products.
The otology market presents us with outstanding opportunities on the back of the
significant market share (54%) we already have in the drainage tube and
prosthesis market. This slower growing (2% full year and 5% second half) but
highly profitable business will provide the basis for new products and
technology introductions in the near future.
Gyrus Medical Inc
Acquired in 2000, this lower abdominal surgical business continues to exhibit
exceptional growth of 47% for the full year ($31.7 million). Gyrus Medical Inc
(GMI) addresses tissue management and vessel sealing in both open and
laparoscopic surgery in Gynaecology, Urology and General Surgery - a market
valued at over $3 billion worldwide.
Our direct surgical business grew 46% on the full year. Since its introduction
in March 2001, PK technology has increased our business by 112% and average
selling prices by 28% per unit. GMI is a market leader in Gynaecology with 75%
share of its niche sector of the laparoscopic market which is growing at 24% per
annum.
As technology leaders in Urology with the PK saline system for benign prostate
hyperplasia (BPH), we have clinically demonstrated a reduction in bleeding,
surgical time, catheterisation and patient risk when compared to standard
monopolar TURP. A broader product portfolio in 2003 will expand the opportunity
in Urology, not only in BPH but also in bladder, kidney and cancer surgery
procedures.
Throughout 2002, we conducted scientific and clinical studies to substantiate
the use of radio frequency (RF) energy delivered through the PK Open Forceps as
a faster alternative to the use of conventional clips and surgical sutures to
seal blood vessels. The product is now in full release and provides a platform
to support our continued expansion plans in lower abdominal surgery. This
includes development of the general surgery market, the largest and most
challenging sector we address. So far we have only pursued very discrete
procedure niches such as bariatric surgery (stomach bypass for severe obesity),
laparoscopic splenectomy and laparoscopic fundoplication (surgical treatment of
acid reflux and hiatus hernia).
The OEM partners managed by GMI grew well at 50% for the full year and 36% in
the second half. Sales of the OEM products, including Bard, gastrointestinal
products and Ethicon Endo-Surgery were $1.6 million for the year, a growth of
42%. Guidant, in cardiovascular, had a particularly strong year with a 63% year
on year increase. This growth was lifted by expanding market size and share and
the introduction of a new product in 2002.
Gyrus International Ltd
Our international business continues to grow at a strong pace with sales of
#12.5 million in 2002, representing growth of 32%. Second half growth was
slightly slower (27%) due to a large stocking order from Kobayashi, our Japanese
ENT distributor, in the first half. Overall, non-NAFTA sales of ENT products
grew at 38% on a pro-forma basis. Somnoplasty is gaining momentum in Europe as
awareness of a less invasive surgical treatment option increases. Reimbursement
for snoring procedures was obtained in Italy, which will help support sales
growth.
Sales of PK instruments grew significantly in the UK, Europe, Australia and
China at 85%. Regulatory approval in China was received in H2, potentially
accelerating sales previously made on an evaluation basis. Overall growth was
offset somewhat by the anticipated decline in UK sales of third party products
by 8%, as the emphasis shifted to Gyrus branded products.
Gyrus Medical Ltd
Gyrus Medical Ltd manufactures and supplies products to the direct sales forces
of the Group divisions and to the Johnson & Johnson marketing partners, Mitek
and Gynecare. It has core competencies in the development of procedurally based
technology platforms which deliver new tissue management modalities through a
combination of electronics, material science and clinical expertise.
Mitek supplies the Gyrus VAPR system into arthroscopy for the removal and
shrinkage of soft tissue. Product sales to Mitek rose 7% to #7.3 million.
Growth was particularly strong in Europe where Mitek is the market leader.
As expected, product development revenues from Mitek declined in 2002 due to
cessation of the final Key Growth Product project in 2001. Outside this
specific initiative, Gyrus continues to develop new products for Mitek, the
latest of these called VAPR3 was launched in October. A new instrument for
arthoscopic shoulder surgery using the VAPR3 output was introduced in Q4.
Gynecare supplies the Versapoint system into hysterscopic gynaecology for the
removal of Benign Uterine Pathologies and the removal of the endometrial lining.
Sales showed only a small increase on 2001.
The Sales Organisation
A portfolio of 4,000 products and over 6,000 customers worldwide provides not
only a stable base but also the opportunity to introduce new products and add
value to existing products on a global basis.
Vital therefore to our strategy is our capability to promote the differentiated
benefits of our products directly to our customer, the surgeon, using three
focused channels in our global sales and distribution approach.
In North America we now have over 200 independent commissioned sales people
divided between our ENT and lower abdominal business. We have consolidated the
management and administration of these sales forces under one structure based in
Minneapolis. This will enable more effective and efficient direction and
management of the sales organisation, ensuring optimal territory coverage,
providing attractive commission rates that reflect our strategic focus, and
maintaining up-to-date training.
Outside of North America, our International organisation operates through
independent dealers and distributors, with the exception of a direct sales force
in the UK. It is focused on selected markets where the differentiation of our
products is valued. It is faced with the challenge of increasing its overall
share of Group direct revenue to 40% from its current level of 22%.
Our marketing partnership businesses sell our products through their own sales
organisations and service our indirect market sectors. Our sales here do not
reflect end user sales, largely due to their individual stocking practices and
product mix management. Overall, we believe end user sales growth to be in the
single digit range, providing a sound business where we can focus on increasing
profitability.
Research and Development
The Group's investment in R&D for 2002 was #7.9 million (10.5% of sales),
compared to #6.9 million before exceptional costs (13.7% of sales) in 2001. The
principal areas of investment have been in developing the new generator systems
for ENT, the Diego Powered Dissector System and the G2 head and neck surgery
workstation, as well as the expansion of the procedure specific instrument range
for use with the PlasmaKinetic (PK) Tissue Management System in lower abdominal
surgery.
The Diego Powered Dissector System for endoscopic sinus and nasal surgery was
introduced fully in September following a period of evaluation at centres of
excellence in the US. The key differentiators are in its ergonomics and "
straight-through" suction design, all of which contribute to both reduced
operating time and surgeon fatigue. One focal point for the forthcoming year
will be to expand the line of disposable blades and to include the capability of
delivering PK energy.
The G2 system combines the radio frequency (RF) energy modalities of Somnoplasty
with PK as a future workstation for head and neck surgery. Introduced to the
market in September, the PK applications under evaluation include the treatment
of tonsils and adenoids as well as thyroid, oesophageal and laryngeal surgery.
A faster version of Somnoplasty will be introduced in the first half of 2003 as
speed has been seen as a factor in the adoption of the technology.
A proportional increase in resources will be applied to building on the success
of Gyrus Medical Inc. From its niche leadership position in gynaecological
laparoscopy, we will be expanding the applications for the PK system into
general laparoscopic and open surgery as well as continuing to respond to the
needs of the urology market.
We recently released an update on progress with trials of our PK II technology
in cosmetic surgery. These trials demonstrated that whilst we can achieve the
same efficacy as a Carbon Dioxide Laser in the treatment of facial lesions, the
technology may also be able to produce a significant clinical effect with more
rapid healing for the treatment of sun-damaged and/or wrinkled facial skin.
This will be more fully assessed during clinical studies to be undertaken in
both the UK and US during the year.
Outlook and Conclusion
Whilst we are still a relatively small company, we believe we are well
positioned and well equipped to face the challenges of a rapidly changing
environment where fiscal, economic and political pressures have intensified as a
result of a loss of confidence in business practices and the influences of
global insecurity.
We have proved our ability to succeed in a difficult external environment over
the past two years. We have integrated four acquisitions effectively and
delivered organic growth. The outlook for Gyrus is very exciting. We have a
clear strategy to enable us to achieve our twin goals of above average growth
and significant profitability. Our focus on growth sectors of health care,
together with aggressive research and development programmes, provides plenty of
opportunities for the global business units and sales organisations to meet
expectations through organic growth. Where appropriate, we will support this by
licensing-in complementary technologies and acquiring product lines to feed down
our sales and distribution channels.
In balancing growth and profitability we are dependent on the excellence of the
competitive strengths of our global sales structure, our technologies and
strategic focus on selected niche markets of the surgical device market. We are
well positioned to grow market share.
In all the areas of our business in which we have invested, we are seeing good
returns, with revenues and market penetration growing strongly. We have all the
elements in place, and are confident that we will meet market expectations as we
go forward.
I would like to thank my colleagues on the Board for their wise counsel during
the year. My appreciation also extends to our employees for their unswerving
commitment and enthusiasm, and our partners and suppliers for their support. I
remain particularly grateful also for the loyalty and continued confidence of
our shareholders.
Brian L Steer
Executive Chairman
Gyrus Group PLC
Consolidated profit and loss accounts
Year Year 6 months 6 months
ended ended ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
As restated As restated
note 1 note 1
#000 #000 #000 #000
Turnover - continuing operations 75,008 50,338 35,929 33,138
_______ _______ _______ _______
Cost of sales (29,268) (21,439) (13,732) (13,083)
_______ _______ _______ _______
Gross profit 45,740 28,899 22,197 20,055
Gross profit %(gross profit / turnover) 61.0% 57.4% 61.8% 60.5%
Selling and distribution expenses
- before exceptional items (21,003) (13,099) (10,033) (8,722)
- exceptional items 0 (349) 0 (349)
_______ _______ _______ _______
Total selling and distribution expenses (21,003) (13,448) (10,033) (9,071)
_______ _______ _______ _______
Research and development expenses
- before exceptional items (7,899) (6,874) (3,463) (4,209)
- exceptional items 0 (291) 0 (291)
_______ _______ _______ _______
Total research and development expenses (7,899) (7,165) (3,463) (4,500)
_______ _______ _______ _______
General and administrative expenses
- before exceptional items and goodwill
amortisation (8,538) (7,412) (3,622) (4,723)
- exceptional items 0 (1,742) 0 (487)
- goodwill amortisation (6,632) (4,550) (3,316) (3,317)
_______ _______ _______ _______
Total general and administrative expenses (15,170) (13,704) (6,938) (8,527)
_______ _______ _______ _______
Operating profit / (loss) - continuing
operations
- before exceptional items and goodwill
amortisation 8,300 1,514 5,079 2,401
- exceptional items 0 (2,382) 0 (1,127)
- goodwill amortisation (6,632) (4,550) (3,316) (3,317)
_______ _______ _______ _______
Operating profit / (loss) - continuing
operations 1,668 (5,418) 1,763 (2,043)
_______ _______ _______ _______
Profit on the sale of an operation 1,983 0 1,983 0
_______ _______ _______ _______
Profit / (loss)on ordinary activities
before interest 3,651 (5,418) 3,746 (2,043)
_______ _______ _______ _______
Interest receivable 30 259 8 78
Interest payable and similar charges (1,563) (808) (789) (796)
_______ _______ _______ _______
Profit / (loss) on ordinary activities
before taxation 2,118 (5,967) 2,965 (2,761)
Taxation (charge)/ credit (83) 1,077 (53) 1,124
_______ _______ _______ _______
Profit / (loss)on ordinary activities
after taxation 2,035 (4,890) 2,912 (1,637)
_______ _______ _______ _______
Earnings / (loss)per ordinary share
Basic and diluted 2.5p (7.4)p 3.5p (2.0)p
_______ _______ _______ _______
Excluding goodwill amortisation &
exceptional items 8.1p 3.1p 5.1p 3.3p
_______ _______ _______ _______
Consolidated statement of total recognised gains and losses
Year Year
ended ended
31 December 31 December
2002 2001
As restated
note 1
#000 #000
Profit / (loss) on ordinary activities after taxation 2,035 (4,890)
Currency translation differences arising on foreign currency net investments (2,795) (165)
Share related awards 62 107
_____ _____
Total recognised gains and losses relating to this year (698) (4,948)
_____
Prior year adjustment (as explained in note 1) 1,200
_____
Total gains and losses recognised since last annual report 502
_____
Consolidated balance sheets
Group Group
As at As at
31 December 31 December
2002 2001
As restated
note 1
#000 #000
Fixed assets
Intangible assets 120,528 127,272
Tangible assets 14,134 12,532
_______ _______
134,662 139,804
Current assets
Stocks 18,767 13,587
_______ _______
Debtors - due within one year 13,369 13,653
Deferred tax asset 1,526 1,200
_______ _______
Debtors 14,895 14,853
Cash at bank and in hand 3,021 2,757
_______ _______
36,683 31,197
Creditors: Amounts falling due within one year (10,732) (12,042)
_______ _______
Net current assets 25,951 19,155
Total assets less current liabilities 160,613 158,959
Creditors: Amounts falling due after more (20,825) (18,555)
than one year _______ _______
Net assets 139,788 140,404
_______ _______
Capital and reserves
Share capital 2,154 2,152
Share premium account 151,859 151,779
Merger reserve 3,860 3,860
Profit and loss account (18,085) (17,387)
_______ _______
Equity shareholders' funds 139,788 140,404
_______ _______
Reconciliation of movements in shareholders' funds
Year Year
Ended ended
31 December 31 December
2002 2001
As restated
note 1
#'000 #'000
Income / (loss) for the year attributable 2,035 (4,890)
to equity shareholders
New share capital issued (net of expenses) 82 96,367
Share related awards 62 107
Loss on foreign currency translation (2,795) (165)
_______ _______
Net (reduction) / addition to shareholders (616) 91,419
funds
Opening shareholders funds (originally 140,404 48,985
#139,204k before adding prior year _______ _______
adjustment of #1,200k)
At end of year 139,788 140,404
_______ _______
Consolidated cashflow statements
Year Year 6 months 6 months
Ended Ended ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Net cash flow from operating activities 3,932 (6,476) 1,584 (5,662)
Returns on investment and servicing of finance
Interest received 30 265 8 84
Interest paid (1,365) (1,019) (616) (1,014)
Interest elements in finance lease rentals (52) (66) (27) (32)
_______ _______ _______ _______
Net cash flows for returns on investments and
servicing of finance (1,387) (820) (635) (962)
Taxation (83) (123) (53) (76)
Capital expenditure and financial investments
Purchase of intangible assets 0 (275) 0 (275)
Purchase of tangible fixed assets (7,074) (4,883) (2,249) (2,971)
Proceeds from sale of tangible fixed assets 35 14 35 14
_______ _______ _______ _______
(7,039) (5,144) (2,214) (3,232)
Acquisitions / Disposals
Purchase of subsidary undertakings 0 (109,108) 0 (1,031)
Net cash acquired with subsidaries 0 2,371 0 0
Net cash from sale of business operation 2,700 0 2,700 0
_______ _______ _______ _______
2,700 (106,737) 2,700 (1,031)
Cash outflow before management of liquid resources
and financing (1,877) (119,300) 1,382 (10,963)
_______ _______ _______ _______
Management of liquid resources 0 5,700 0 6,936
_______ _______ _______ _______
Financing
Capital element of finance lease rental payment (161) (198) (88) (120)
Bank loans 2,595 17,798 0 5,405
Proceeds of issue of share capital net of costs 82 96,367 (6) 51
_______ _______ _______ _______
Net cash inflow (outflow) from financing 2,516 113,967 (94) 5,336
_______ _______ _______ _______
Increase in cash in period 639 367 1,288 1,309
_______ _______ _______ _______
Reconciliation of net cash flow to movement in net debt
Year Year 6 months 6 months
Ended Ended ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Increase in cash in the period 639 367 1,288 1,309
Cash (inflow)/outflow from (increase)/decrease
in debt and lease financing (2,434) (17,600) 88 (5,285)
Decrease in liquid funds 0 (5,700) 0 (6,936)
_______ _______ _______ _______
Changes in net (debt) / funds resulting from
cash flows (1,795) (22,933) 1,375 (10,912)
Inception of new finance leases (42) (53) 5 (25)
Translation difference 0 0 0 (40)
_______ _______ _______ _______
Changes in net (debt) / funds (1,837) (22,986) 1,381 (10,977)
Net (debt) / funds at beginning of period (16,087) 6,899 (16,087) (5,110)
_______ _______ _______ _______
Net debt at end of period (17,924) (16,087) (14,706) (16,087)
_______ _______ _______ _______
Analysis of net debt
Year Year
ended ended
31 December 31 December
2002 2001
#'000 #'000
Cash at bank and in hand 3,021 2,757
Bank overdraft (128) (503)
Finance leases (317) (436)
Debt due after one year (20,500) (17,905)
_______ _______
Net debt at end of period (17,924) (16,087)
_______
Reconciliation of operating income / (loss) to cash flow from operating
activities
Year Year 6 months 6 months
Ended Ended ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Operating income / (loss) 1,668 (5,418) 1,763 (2,043)
Goodwill amortisation 6,632 4,550 3,316 3,317
Intangibles amortisation 80 16 38 16
Depreciation charges 3,294 1,824 1,514 1,128
Loss on disposal of fixed assets 112 51 107 46
Increase in stocks (6,551) (883) (4,170) (703)
(Increase) / decrease in debtors (58) (6,159) 342 (3,267)
Decrease in creditors (1,307) (564) (1,332) (4,209)
Share related 62 107 6 53
______ _____ _____ _____
3,932 (6,476) 1,584 (5,662)
______ _____ _____ _____
Notes to the Financial Information
1. Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2001 or 2002. The financial
information for 2001 is derived from the statutory accounts for 2001 which have
been delivered to the registrar of companies. The auditors have reported on the
2001 accounts; their report was unqualified and did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985. The statutory accounts
for 2002 will be finalised on the basis of the financial information presented
by the directors in this preliminary announcement and will be delivered to the
registrar of companies following the company's annual general meeting.
The financial information has been prepared on the same basis as the prior year
except that FRS19: Deferred Tax has been adopted. The standard requires that
full provision is made for deferred tax.
The effect of the restatement is to decrease the tax charge in 2001 by #1.2m
(thereby reducing the 2001 loss on ordinary activities after tax by #1.2m) and
to increase net assets at 31 December 2001 by #1.2m. As a result of the
restatement, earnings per share (excluding exceptional items and goodwill
amortisation) would increase by 1.8p to 3.1p. The prior year adjustment does not
impact the financial statements for 2000.
The 2002 tax charge is decreased by #326,000 as a result of the adoption of
FRS19, compared with the previous deferred tax policy.
2. Segmental Information
Year Year 6 months 6 months
ended ended ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
Turnover by #'000 #'000 #'000 #'000
Destination
North America 58,450 40,794 27,820 26,479
United Kingdom 11,707 6,535 5,739 4,006
and Europe
Rest of World 4,851 3,009 2,370 2,653
_____ _____ _____ _____
75,008 50,338 35,929 33,138
_____ _____ _____ _____
By origin
North America 61,389 34,638 32,298 24,687
United Kingdom 13,619 15,700 3,631 8,451
_____ _____ _____ _____
75,008 50,338 35,929 33,138
_____ _____ _____ _____
3. Profit on the sale of business operation
On 29 November 2002 Gyrus ENT LLC, a wholly owned subsidiary of the Gyrus Group
PLC, disposed of a non-core business, creating the reported gain of #1,983,000.
Operating results up to the point of disposal for 2002 were:
#000
Turnover 1,756
Cost of sales (865)
_____
Gross Margin 891
Operating Expenses (286)
_____
Operating Profit 605
_____
4. Earnings / (loss) per share
The calculations of per share earnings / (loss) are calculated on the following
profit / (losses) and number of shares. 2001 numbers have been restated as per
note 1.
Year Year 6 months 6 months
ended ended ended ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Profit/ (loss)for the period (as restated per note 1) 2,035 (4,890) 2,912 (1,637)
Exceptional items (1,983) 2,382 (1,983) 1,127
Goodwill amortisation 6,632 4,550 3,316 3,317
_____ _____ _____ _____
Profit/ (loss) for the period excluding exceptional items
and goodwill amortisation 6,684 2,042 4,245 2,807
_____ _____ _____ _____
Weighted average number of shares for basic and fully
diluted earnings per share 82,987,572 66,422,608 82,987,572 82,902,557
_____ _____ _____ _____
5. Dividend
The directors do not recommend the payment of a dividend.
6. Approval
This Statement was approved by the Board of Directors on 4 March 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UUUGCWUPWUQA