RNS Number:9654S
Medisys PLC
08 December 2003
Embargoed until 0700 8 December 2003
Medisys PLC
("Medisys" or "the Group")
Preliminary Results for the Year Ended 30 September 2003
Medisys PLC, the medical products group, today announces its preliminary results
for the year ended 30 September 2003.
Financial Highlights
*Group results reflect significant revenue growth and much improved
operating performance resulting from new product launches, increased sales
of established products and reduced costs.
*Turnover before exceptional items increased by 11% to #39.6 million
(2002: #35.7 million). On a constant exchange rate basis turnover increased
by approximately 20%.
*Total selling, distribution and administrative expenses before
exceptional items decreased by #3.9 million compared to 2002, a reduction of
28%.
*Profit before amortisation, research and development expenditure and
exceptional items #4.1 million (2002: loss of #2.5 million).
*Operating loss before exceptional items much reduced to #2.0 million
(2002: loss of #19.5 million).
* Exceptional charges totalling #3.2 million (2002: #13.4 million)
incurred in the year, of which #2.1 million are non-cash, principally in
relation to the write down of certain financial assets (#0.6 million), write
downs of development stage equipment (#1.3 million), one-off costs incurred
in setting up the manufacturing facility at Beyonics, a sub-contract
manufacturer (#0.6 million) and the anticipated cost of a product recall on
the previously discontinued Advance product (#0.5 million).
*Loss before tax and exceptional items #2.5 million (2002: loss of #19.6
million).
*Earnings before interest, tax, depreciation, amortisation and
exceptional items of #1.1 million (2002: EBITDA loss #14.8 million).
Operational Highlights
*Flight product to be launched in-store by Wal-Mart in the US under the
ReliOn(R) NewTekTM brand early in 2004.
*QuickTek blood glucose monitoring product recorded sales of #4.0 million
in its first full year through GEMCO mail-order partner.
*Sales of the Assure family of glucose monitoring products increased by
31% to #15.3 million (2002: #11.7 million).
*Co-Marketing Agreement with Smiths Group terminated - Group currently
seeking recovery of a $1.95 million milestone payment due from Smiths in
relation to the Futura Safety Syringe.
* Pre-marketing clinical trials of the Futura Safety Syringe now
successfully completed and positive data received.
* Medisys to commence initial commercial launch of the Futura Safety
Syringe through its existing distributors and also using its own sales force
in the second quarter of 2004.
*Futura Scalpel to be re-launched, also through existing distributors and
the Group's own sales force early in 2004.
David Conn, Chief Executive Officer said: "The year under review represented a
turning point in the Group's operating performance and it is gratifying that our
efforts to increase revenues and to decrease costs have resulted in a positive
EBITDA (before exceptional items) for the first time in the history of Medisys.
"For the current year, management remains totally committed to improving the
underlying profitability of the business through increasing revenues from
currently marketed products, launching new products, in particular NewTek and
the Futura Safety Syringe, and continuing to maintain a tight control on costs."
Enquiries:
Medisys PLC (08/12/03) 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 8 December 2003
Medisys PLC
("Medisys" or "the Group")
Preliminary Results for the Year Ended 30 September 2003
During the financial year ended 30 September 2003 Medisys made further progress
towards its objective of becoming a market focussed organisation, introducing a
number of new products and significantly growing its sales of existing products.
Achieving, for the first time, positive EBITDA before exceptional items is a
major milestone in the history of the Group.
OPERATIONAL REVIEW
Long Term Care ("LTC") Products
Medisys has increased its market leading position in the LTC segment of the US
blood glucose monitoring market to approximately 37% compared to 35% a year ago.
The Assure family of products which includes Assure, Assure II and Assure 3 are
performing particularly well, having recorded a 31% increase in sales in 2003.
While some of this increase came from converting existing users of the mature
Supreme product, much of the growth came from new customers.
As expected, the Supreme product continued to show declining sales, since it is
now at an advanced stage of its product life-cycle. This trend is expected to
continue, although the Hypoguard sales team has demonstrated considerable
success in converting existing customers to the Assure range of products as
mentioned above.
The Haemolance safety lancet continued to sell strongly in 2003 with sales
increasing by 12% in US dollar terms. Haemolance commands nearly 50% of the LTC
market in the US and nearly 20% of the entire US safety lancet segment.
Retail Products
The retail segment represents approximately 60% of the total $2.5 billion US
blood glucose monitoring market. As announced on 29 July 2003, the Flight
product was introduced by Wal-Mart, the world's largest retailer, at the
American Association of Diabetes Educators convention in Salt Lake City during
August. The product was very well received by both diabetes educators and other
industry attendees. Feedback from diabetes educators was encouraging with many
commenting that the product would be likely to encourage more frequent testing
as it removes the need for users to handle test strips. In the intervening
period Medisys has been engaged in optimisation of the manufacturing process and
extensive testing of final verification and validation batches of the product.
The Group expects the product will be available in Wal-Mart stores early in
2004. The product will be sold under the name NewTekTM as part of Wal-Mart's
ReliOn brand which includes insulin, insulin delivery devices and the most
complete line of diabetes care products available from a US retailer.
The Assure II and QuickTek products are also being marketed through Wal-Mart's
on-line pharmacy, though development of sales through this channel is still at
an early stage.
Mail Order
The mail order segment represents approximately 20% of the US blood glucose
monitoring market. The Group made its first significant move into mail order
with the introduction in 2002 of the QuickTek product exclusively through GEMCO.
QuickTek is a value based product and is targeted in particular at Medicare and
Medicaid patients who have their medical care funded by the US government. The
product has performed very well since launch and recorded sales of #4.0 million
in 2003, its first full year on the market.
In November 2002, the Group introduced the Advance bio-sensor system into
mail-order, again through GEMCO distribution, though on a non-exclusive basis.
In mid 2003, the Advance system was replaced by the newer Advance Micro Draw
product, which is based upon more sophisticated strip chemistry and uses
capillary fill technology. At the end of November it was discovered, during
quality assurance testing, that the original Advance test strips sold between
November 2002 and May 2003 could give incorrect glucose readings at low glucose
concentrations. Following a period of detailed analysis, the Group has decided
to institute a voluntary recall of the original Advance strips. It is estimated
that the cost of the recall will be in the region of #0.5 million and this
amount has been recognised as an exceptional item in 2003. This charge will
cover the cost of recalling any product currently remaining in the hands of
GEMCO and its customers. The recall only applies to the original Advance strips
and it is therefore intended to replace the recalled product with Advance Micro
Draw strips. The recall has no impact on any other product apart from the
discontinued Advance product. Sales of the replacement Advance Micro Draw
product will be recognised at the time of shipment to GEMCO.
The Advance Micro Draw product is a capillary fill test strip which uses a very
small blood sample size, making it comparable with the leading products marketed
by the major healthcare companies. Since the arrangement with GEMCO is
non-exclusive, Medisys is also actively pursuing alternative distribution
channels for Advance Micro Draw, particularly with other potential mail-order
suppliers.
Medical Safety Products
As previously announced, the Group terminated the Futura Safety Products
Co-Marketing Agreement with Smiths Group Plc on 26 September 2003. While the
resultant further delay in the launch schedule for the Futura Safety Syringe is
disappointing, the Board concluded that this action was necessary to ensure that
the product had full commitment at launch. The Group is currently seeking
recovery of a $1.95 million milestone payment due from Smiths in relation to the
Futura Safety Syringe programme.
Following termination of the agreement, Medisys successfully completed the
pre-marketing clinical trials for the product, which had been underway at
selected clinical sites. The clinical trials were designed to obtain data on the
performance of the Futura Safety Syringe in a wide range of clinical settings.
The data will be used in developing and executing the marketing plan for the
product. The results from the completed trials were encouraging with the
clinicians who participated expressing a high degree of satisfaction and 76%
indicating that they would use the device. Studies have also been completed
internally to benchmark the Futura syringe against the leading retractable
safety syringe currently being marketed in the US. This exercise involved
comparing the performance of the Futura Safety Syringe against the competitive
product, based on key functional criteria. The results suggest that the Futura
product is comparable to the competing product, despite the fact that it will be
marketed at a considerably lower cost.
Results from the clinical trials have underpinned the Board's confidence in the
performance of the Futura syringe and it is now the Group's intention to move
forward to market launch. An initial launch of the Futura Syringe will be
undertaken by the Group's 40 person sales and marketing team commencing early in
2004. The marketing plan for launch of the product will be presented to the
Group's sales team at the Hypoguard National Sales Meeting in mid-December and
will target key medical products distributors with whom the Group has existing
business relationships. Initial sales and marketing activities will be focussed
on generating demand for the product and undertaking in-service training and
demonstrations. The product will be marketed in newly designed packaging under
the FuturaSafety Syringe brand. It is anticipated that following receipt of new
packaging materials (which are currently on order and have a lead time of 12
weeks), first orders will be fulfilled commencing in the second quarter of 2004.
The Group is also continuing to explore alternative major distributor
partnership opportunities for the Futura syringe, which would help to ensure
maximum market penetration for the product.
The Futura Safety Scalpel was also made available exclusively to Smiths under
the Co-Marketing Agreement. The Group plans to re-launch an enhanced product,
also under the Futura brand, commencing in the first quarter of 2004. Again the
packaging has been re-designed and is currently on order.
FINANCIAL REVIEW
Turnover before exceptional items increased to #39.6 million from #35.7 million
in the prior year. On a constant US dollar exchange rate basis, revenues
increased by 20%.
Revenues from the Assure family of products were #15.3 million in the year
compared to #11.7 million in the prior year, a 31% increase. As expected,
customers are continuing to switch from the older Supreme product to the more
advanced Assure products. However, incremental sales growth beyond product
switching is also being seen as Hypoguard continues to expand its market leading
share of the LTC segment by converting new groups of nursing homes to Hypoguard
products.
The QuickTek product recorded sales of #4.0 million in its first full year of
sales following launch.
As expected, revenues from the Supreme product declined, on an annualised basis,
from #7.6 million in the prior year to #4.2 million in the year under review.
Supreme, which is primarily sold into the US long term care market segment, is
at an advanced stage of its product lifecycle and a continuation of this sales
decline is expected. The Group continues its programme of switching Supreme
users to other newer Hypoguard products, as discussed above.
Revenues from the Diascreen urine strips product line were #1.6 million in the
year compared to #2.0 million in the prior year. The private label contract with
PSS has not shown the level of sales that was anticipated and alternative
opportunities including other private label arrangements are now being pursued.
Over the past three months an increasing trend in urine strip sales through PSS
has been seen, though it is too early to determine whether this trend will be
sustained.
The Futura Safety Scalpel showed rapid sales growth, recording sales of #2.0
million in the year compared to #0.6 million in the previous year.
Sales of safety lancets were #7.3 million in the year (2002: #6.6 million).
Gross profit prior to exceptional items was #14.1 million (2002: #11.4 million)
producing a gross margin of 36% (2002: 32%). This increase in gross margin was
encouraging particularly at a time when new products were introduced, which can
often lead to declining margins in the initial stages. The net cost of meters
placed in 2003 was #3.3 million compared to a net cost of #2.6 million in 2002.
While the investment in meters is expected to show a return by way of future
strip revenues, the meters are expensed immediately upon placement in the
market.
Selling and distribution costs, before exceptional items, were #4.7 million (12%
of revenue) in the year, compared to #7.3 million (20% of revenue) in the prior
year. The decrease was largely attributable to the previously reported
restructuring that was implemented late in the 2002 financial year.
Administration expenses, before exceptional items, were #5.3 million (13% of
revenue) in the year compared to #6.6 million (18% of revenue) in the prior
year.
Research and development expenditure in the year, before exceptional items, was
#5.1 million (2002: #14.4 million). The reduction resulted from significantly
decreased expenditure on key development projects including the Futura Safety
Syringe and Flight as these products approached market launch.
Amortisation of acquired goodwill, resulting from the MEDgenesis acquisition,
was #1.1 million in the year (2002: #1.5 million).
The operating loss prior to exceptional items was #2.0 million (2002: loss of
#19.5 million). The net interest charge was #0.5 million compared to #0.1
million in the previous year with the increase due to the lower level of cash
balances held during the year. The loss on ordinary activities attributable to
shareholders, before exceptional items, was #3.8 million (2002: #20.7 million).
Exceptional items totalling #3.2 million were incurred in the year. These items
relate primarily to:
(a) A write down totalling #1.3 million in the carrying value of
certain capital equipment. The equipment concerned included both development
scale equipment no longer required as products transitioned into full scale
production and also certain equipment relating to the needleless valve
product, which is not now being taken to market.
(b) A write down totalling #0.6 million in the carrying value of
financial investments in The Medical House Plc and Drew Scientific Plc.
(c) One off costs of #0.6 million incurred in setting up the
manufacturing facility at Beyonics in Singapore.
(d) The anticipated cost of #0.5 million for the product recall on
the Advance product.
The loss on ordinary activities before interest (but after exceptional items) in
the year was #5.2 million (2002: loss of #32.9 million). The loss on ordinary
activities before tax was #5.7 million (2002: loss of #33.0 million).
The loss per ordinary share, before exceptional items, was 0.97 pence in the
year (2002: loss of 5.37 pence). The loss per ordinary share after exceptional
items was 1.78 pence in the year (2002: loss of 8.85 pence).
In line with stated Group policy, no final dividend is being proposed.
GROUP CASH POSITION
At the year end the Group had a net overdraft position of #0.2 million on its #5
million overdraft facility. EBITDA for the year before exceptional items was
#1.1 million. Medisys has now received confirmation from its bankers that its
existing banking facilities will be renewed. These facilities include a five
year term loan of $15 million with a repayment schedule of: $1.5 million in year
one, $3.0 million in each of years two, three and four and $4.5 million in year
five. In addition, the existing overdraft facility of #5 million will be
provided. The Board believes that anticipated cash flows from operations,
together with the renewed banking facilities, will be sufficient to finance the
Group's operations for the foreseeable future.
BOARD
David Robbins has resigned as a non-executive director of the Company effective
8 December 2003 to focus on his other business interests. The Board would like
to thank David for his valuable contribution to Medisys over the last two years.
It is the intention of the Board to appoint at least one new non-executive
director in the near future.
CURRENT TRADING AND PROSPECTS
While the current financial year is at an early stage, trading to date has been
in line with expectations with continuing growth being seen in the existing
blood glucose monitoring products. The Board is confident that this trend will
continue throughout the remainder of this financial year.
With NewTekTM due to be launched by Wal-Mart early in 2004, the Group is now
close to achieving its objective of securing significant private label sales for
this innovative new product. Similarly, the plans for an initial launch of the
Futura Safety Syringe through the Group's own sales force and existing
distributors will enable the product to be fully validated in the marketplace.
During this period of growth the Group expects to maintain selling, distribution
and administration costs close to the levels reported in 2003. Research and
development expenditure is expected to decrease further as new products are
launched.
- Ends -
Enquiries:
Medisys PLC (08/12/03) 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
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2003
2003 2003 2003 2002 2002 2002
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 39,586 (469) 39,117 35,720 - 35,720
Cost of sales (25,480) - (25,480) (24,310) (375) (24,685)
-------- -------- ------ ------- ------- ------
Gross profit 14,106 (469) 13,637 11,410 (375) 11,035
Selling and
distribution
costs (4,652) - (4,652) (7,313) (391) (7,704)
Administration
expenses (5,324) (431) (5,755) (6,575) (1,676) (8,251)
-------- -------- ------ ------- ------- ------
Profit/(loss)
before
amortisation,
impairment and
research and
development
expenditure 4,130 (900) 3,230 (2,478) (2,442) (4,920)
Research and
development
expenditure in
the year (5,055) (2,028) (7,083) (14,431) (204) (14,635)
Amortisation
of acquired
technologies - - - (1,160) (7,396) (8,556)
Impairment of
financial
assets - (600) (600) - (1,404) (1,404)
Amortisation
of acquired
goodwill (1,062) - (1,062) (1,453) (856) (2,309)
-------- -------- ------ ------- ------- ------
Operating loss
- continuing
operations 1 (1,987) (3,528) (5,515) (19,522) (12,302) (31,824)
Exceptional items
Costs of
fundamental
restructuring
- continuing
operations 2 - 351 351 - (1,105) (1,105)
-------- -------- ------ ------- ------- ------
Loss on ordinary
activities
before interest (1,987) (3,177) (5,164) (19,522) (13,407) (32,929)
Interest receivable 10 - 10 441 - 441
Interest payable
and similar charges (526) - (526) (498) - (498)
-------- -------- ------ ------- ------- ------
Loss on ordinary
activities
before
taxation (2,503) (3,177) (5,680) (19,579) (13,407) (32,986)
Tax on loss on
ordinary
activities (304) - (304) - - -
-------- -------- ------ ------- ------- ------
Loss on ordinary
activities
after tax (2,807) (3,177) (5,984) (19,579) (13,407) (32,986)
Minority interest
- non equity (969) - (969) (1,073) - (1,073)
-------- -------- ------ ------- ------- ------
Loss attributable
to shareholders (3,776) (3,177) (6,953) (20,652) (13,407) (34,059)
======== ======== ====== ======= ======= ======
Loss per ordinary
share
- basic and
diluted 3 (0.97)p (0.81)p (1.78)p (5.37)p (3.48)p (8.85)p
======== ======== ====== ======= ======= ======
CONSOLIDATED BALANCE SHEET
at 30 September 2003
2003 2002
#'000 #'000
Fixed assets
Intangible assets 19,424 21,591
Tangible assets 10,594 12,626
Financial assets 952 2,068
--------- --------
30,970 36,285
--------- --------
Current assets
Stocks 4,483 4,103
Debtors 5,563 6,652
Cash at bank and in hand 887 3,790
--------- --------
10,933 14,545
Creditors: amounts falling due within one year (7,097) (7,357)
--------- --------
Net current assets 3,836 7,188
--------- --------
Total assets less current liabilities 34,806 43,473
Creditors: amounts falling due after more than one year (8,358) (9,554)
--------- --------
Net assets 26,448 33,919
========= ========
Capital and reserves
Called up share capital 3,912 3,899
Share premium account 90,775 90,699
Capital redemption reserve fund 20 20
Other reserves 22,854 22,854
Profit and loss account (108,101) (100,528)
--------- --------
Equity shareholders' funds 9,460 16,944
Minority interest 16,988 16,975
--------- --------
26,448 33,919
========= ========
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2003
2003 2002
Notes #'000 #'000
Net cash outflow from operating activities 5 (819) (12,611)
--------- --------
Returns on investments and servicing of finance
Interest received 10 381
Interest paid (526) (498)
--------- --------
Net cash outflow from returns on investments and
servicing of finance (516) (117)
Corporation tax paid (224) -
Capital expenditure and financial investment
Purchase of intangible fixed assets (56) (343)
Purchase of tangible fixed assets (3,018) (5,666)
Proceeds from the sale of tangible fixed assets 196 785
Proceeds from sale of financial fixed assets 474 -
--------- --------
Net cash outflow from capital expenditure and
financial investment (2,404) (5,224)
--------- --------
Net cash outflow before use of liquid resources and
financing (3,963) (17,952)
Financing - proceeds from issue of share capital 89 10,972
--------- --------
Decrease in cash 6 (3,874) (6,980)
========= ========
Notes
1 -Turnover and segment information
Geographically
2003 2002
#'000 #'000
----------- -----------
Turnover
United Kingdom 433 1,531
United States 36,741 34,116
Other 1,943 73
----------- -----------
39,117 35,720
=========== ===========
(Loss)/profit on ordinary activities before taxation
United Kingdom (3,451) (13,370)
United States 2,983 (12,116)
Other (1,632) (1,684)
Central costs (3,064) (5,759)
----------- -----------
(5,164) (32,929)
Interest receivable 10 441
Interest payable (526) (498)
----------- -----------
(5,680) (32,986)
=========== ===========
Net assets by location of undertaking
United Kingdom (9,253) (2,737)
USA 39,277 37,184
Other 5,681 5,309
----------- -----------
35,705 39,756
Net debt (9,257) (5,837)
----------- -----------
26,448 33,919
=========== ===========
Geographical turnover is shown by location from which products and services are
supplied. Geographic turnover by location of customers is not materially
different.
Class of business
2003 2002
#'000 #'000
----------- -----------
Turnover
Diagnostics 36,495 31,123
Healthcare worker safety products 2,622 3,864
Licensing fees - 733
----------- -----------
39,117 35,720
=========== ===========
Loss on ordinary activities before taxation
Diagnostics 884 (14,472)
Healthcare worker safety products (2,984) (13,431)
Licensing fees - 733
Central costs (3,064) (5,759)
----------- -----------
(5,164) (32,929)
Interest receivable 10 441
Interest payable (526) (498)
----------- -----------
(5,680) (32,986)
=========== ===========
Net assets
Diagnostics 27,312 29,190
Healthcare worker safety products 8,393 10,566
----------- -----------
35,705 39,756
Net debt (9,257) (5,837)
----------- -----------
26,448 33,919
=========== ===========
2 -Exceptional Items
The exceptional costs incurred during the years to 30 September 2003 and 30
September 2002 are included in the profit and loss account under the following
statutory headings:
2003 2002
#'000 #'000
------------ ------------
Turnover 469 -
Cost of sales - 375
Selling and distribution costs - 391
Administration expenses 431 1,676
Research and development 2,028 204
Amortisation of acquired technology - 7,396
Impairment of financial asset 600 1,404
Amortisation of acquired goodwill - 856
Costs of fundamental restructuring (351) 1,105
------------ ------------
3,177 13,407
============ ============
2003
In November 2003, it was discovered that the original Advance test strips sold
between November 2002 and May 2003 could give incorrect readings at low glucose
concentrations. As a result it was decided to institute a recall of the Advance
strips. A provision of #0.5 million has been made at 30 September 2003 for the
cost of this recall which has been charged to turnover.
Following the closure of the Futura operations in 2002 it was decided this year
to wind down the research facility in Upland, CA. This involved scrapping a
number of items of plant and machinery at a cost of #0.8 million. This has been
classified as research and development expenditure.
The project to develop a needleless valve was suspended during the year. As a
result the equipment to manufacture the product has been written off at a cost
of #0.5 million which has been charged to research and development expenditure.
Additional costs relating to the closure of the production facility of #0.4
million were charged to administration and #0.1 million was charged to research
and development.
Exceptional one off costs were incurred in setting up the manufacturing facility
at Beyonics in Singapore. These costs totalled #0.6 million and were charged to
research and development.
During the year the market value of the group's holding in The Medical House plc
has fallen by #0.4 million. In the opinion of the directors this constitutes a
permanent diminution in value. The cost of this write down is included in
impairment of financial assets.
In October 2003 the group terminated its joint venture with Drew Scientific plc.
As a result of this decision the value of the company's investment in Drew
Scientific was reduced by #0.2 million. This cost has been classified as
impairment of financial assets.
In 2002, the group announced the merger of the selling, distribution and
administration functions of Futura Medical Corporation and Hypoguard USA Inc.
The cost of this reorganisation was #1.7 million, of which #1.1 million was
classified as costs of fundamental restructuring. Subsequent to the year end
settlement was reached resulting in payments lower than the amount provided at
30 September 2002 of #0.8 million. The resulting write back of #0.4 million has
been classified as a credit in costs of fundamental restructuring.
2002
Following the signing of a distribution agreement with Smiths Group plc for the
distribution of the Group's safety products portfolio it was decided to merge
the selling, distribution and administration functions of Futura Medical
Corporation and Hypoguard USA Inc. This resulted in the closure of the
administrative centre in Solana Beach, CA and the distribution centre in
Livonia, MI in the final quarter of the financial year. As a result of this
reorganisation approximately 90 employees were made redundant. The majority of
these redundancies were in the operations and administrative functions although
at the same time the sales and marketing functions of Hypoguard USA were
restructured which also resulted in staff reductions. The cost of this
reorganisation was #1.7 million which was made up as follows:
- severance and provisions for property expenses amounted to #1.1
million and have been classified as costs of fundamental restructuring;
- the costs of running down the Futura sales and marketing function of
#0.4 million;
- other severance costs and the costs of running down the Solana beach
office of #0.2 million have been classified as administration costs.
Other exceptional costs incurred were:
- certain inventory relating to the Futura product portfolio was
written down. This resulted in a charge of #0.4 million to cost of sales.
- exceptional administration costs of #0.2 million relate to fixed
assets written down.
- the costs of writing down certain intellectual property amounted to
#0.2 million and have been charged to research and development.
Upon the closure of the Livonia site it was determined that the goodwill arising
on the MPI acquisition in 2000 had been impaired. As a result this goodwill
which had a net book value of #0.9 million was fully written down. This expense
was included within amortisation of acquired goodwill.
During the year ended 30 September 2000 the company subscribed for 1,250,000
redeemable preference shares of #1 each in Drew Scientific Investment Limited
("DSIL"), a subsidiary of Drew Scientific plc. The directors considered, having
regard to the status of the research and development programme, that there was a
permanent impairment in the value of this investment of #1,000,000. In addition
the value of the investment in the ordinary shares of Drew Scientific plc was
written down to its market value at 30 September 2003 since, in the opinion of
the directors this represented a permanent diminution in value. The cost of
these impairments totalled #1.4 million and was shown as impairment of financial
assets.
During the year the Group incurred aborted transaction costs of #1.3 million in
relation to the acquisition of a US-based point of care diagnostics business.
These costs are shown in administration expenses.
The directors, in line with the requirements of Financial Reporting Standard 11:
Impairment of Fixed Assets and Goodwill, considered the carrying value of
acquired technologies at 30 September 2002 having regard to the planned research
and development programme. As one of the products in which the acquired
technology was utilised was not being actively developed, the directors
considered it appropriate to write down the value of this acquired technology by
#7,396,000
4- Loss per ordinary share
2003 2002
------------ -----------
Basic
Loss attributable to ordinary shareholders (#'000) (6,953) (34,059)
Weighted average number of shares outstanding 390,329,713 384,714,837
Basic loss per share (1.78)p (8.85)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 2002 and 2003 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.
5 -Reconciliation of operating loss to net cash outflow from operating
activities
2003 2002
#'000 #'000
----------- ------------
Operating loss (5,164) (31,824)
Exceptional item - (1,105)
Depreciation and amortisation 3,121 4,707
Loss on disposal of fixed assets 540 61
Write down intangible fixed assets - 8,761
Write down tangible fixed assets 1,615 1,364
Write down financial assets 600 1,404
Increase in stocks (602) (522)
Decrease in debtors 825 2,671
Increase/(decrease) in creditors (1,754) 1,872
----------- ------------
Net cash outflow from operating activities (819) (12,611)
=========== ============
6 -Analysis of changes in net debt
At 30 September Cash flow Exchange rate At 30 September
2002 movements 2003
#'000 #'000 #'000 #'000
----------- -------- --------- ----------
Cash at bank 3,790 (2,838) (65) 887
Overdraft (73) (1,036) 1 (1,108)
----------- -------- --------- ----------
3,717 (3,874) (64) (221)
Bank loans (9,554) - 518 (9,036)
----------- -------- --------- ----------
Total (5,837) (3,874) 454 (9,257)
=========== ======== ========= ==========
This information is provided by RNS
The company news service from the London Stock Exchange
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