RNS Number:8857K
Lombard Medical PLC
09 May 2003
Embargoed for 7.00 a.m.
9 May 2003
Lombard Medical plc
Audited annual results
Lombard Medical plc ("Lombard"), the cardiovascular devices company, announces
its audited results for the year ended 30 September 2002. The audited annual
report and accounts are being posted on the Company's website
(www.lombardmedical.co.uk) and they will also be posted to shareholders today.
Copies of audited annual report and accounts will also be available from the
Company's offices at 67 Milton Park, Abingdon, Oxon OX14 4RX.
As a result of the publication of the audited report and accounts, the Company's
shares will today be released from their current suspension from trading on AIM
and will recommence trading.
Chairman's statement
The initiatives announced in the Strategic Review published in January 2003 have
been progressed. The business focus is on Anson Medical and PolyBioMed, both of
which are engaged in vascular related devices and technologies.
The key objectives of the Company following the Strategic Review are:-
- To progress three core product areas to generate a mix of licence and
distribution revenues.
- To develop innovative products that address growth sectors with
potential for unlocking new markets.
- To move into profitability within 2 years after two major product
launches and at least one licence agreement in 2003.
- To maintain robust IP protection.
- To operate a Company structure and Board responsibilities to leverage
greater value whilst minimising costs.
Results
The loss for the year ended 30 September 2002, before amortisation and
impairment of goodwill, amounted to #4,111,000 (period to 30 September 2001 loss
of #2,440,000).
The turnover for the year ended 30th September 2002 at #359,000 (period to 30
September 2001: #100,000) was disappointing.
The shortfall in sales was principally due to the slower roll out than
originally forecast of the Anson Aorfix(TM) AAA stent graft devices. This was
due to a strategic decision to keep the Aorfix(TM) Uni-iliac stent graft within
a limited number of key centres during the initial phase, in order to permit
these key centres of influence to become experienced in the use of the device.
A total of 12 Aorfix(TM) stent grafts have now been implanted in 9 patients. The
Company announced on 9th July 2002, that a total of six implants of the
Aorfix(TM) stent had been made, four of which were carried out by Professor
Hopkinson, a leading surgeon in the field of aneurysm surgery. Professor
Hopkinson commented at that time that he was impressed with the performance of
the Aorfix(TM) device, as it would have been very difficult to perform such
cases with other available stent grafts. Professor Hopkinson also presented the
Anson Aorfix(TM) stent graft at the Veith Symposium in New York in November
2002, and after his presentation there was substantial interest in both the
device and the manufacturing and testing methods used in its production.
Practitioners and distributors alike are eagerly awaiting the commercialisation
of the Aorfix(TM) Bifurcated stent graft in 2003, and Lombard believes this will
drive the Company forwards. Anson's initial device the Aorfix(TM) Uni-iliac
device, represents less than 5% of the world market for AAA stent graft devices,
with the significant majority share being attributable to the Bifurcated graft.
Lombard's shortfall in sales is also attributable to the disappointing
performance of its AME subsidiary. AME specialises in the marketing and
distribution of cardiovascular surgery, interventional cardiology and
neuro-surgical devices, equipment and supplies to the Middle East. AME has been
significantly affected by the current adverse political situation in the Middle
East region and the directors of the Company can see no ease to this situation
in the foreseeable future. The position of AME within the Company has been under
review, and the current strategy is to exit this sector of the Group's business
at minimal cost.
PolyBioMed (surface modifications, surface coatings and drug delivery coatings,
principally for medical devices) has become an area of strategic focus for the
company, with the growing worldwide interest in drug delivery coatings for
coronary stents. PolyBioMed is continuing to work in collaboration with a number
of stent companies in the area of drug delivery coatings, and is in the
pre-clinical phase with a variety of customised coatings. Coatings can be
tailored to molecule size and elution rates/volumes. The company has traded in
line with the Board's expectations.
DMC Medical (distribution and marketing of a range of devices for cardiac
surgery), although achieving a reasonable level of sales despite the complex US
distribution structure, is still not generating positive cash flow for the
Group. As with AME above, the Company cannot see this situation dramatically
improving in the foreseeable future and therefore the current strategy would be
to exit this sector of the Group's business at minimal cost.
The accounts incorporate a reduction in the carrying value of the operating
companies and investments through an impairment of the goodwill in the
consolidated balance sheet and the investments held in the holding company's
balance sheet. The adjustment reflects the recent market value of the Company
and the directors' current estimate of the realisable value of the investments,
in view of the inherent uncertainties and milestones still to be achieved. The
directors believe that with further funding and the meeting of pre-defined
milestones the future value of the businesses will be significantly greater.
Anson Medical
Anson's two core products are Aorfix(TM) Reinforced Grafts for treating
abdominal aortic aneurysms (AAA) and Refix(TM) Repositional Surgical Clips for
surgical closures.
Aorfix(TM) - the next generation AAA stent graft
The worldwide market for AAA stent grafts is estimated to be worth $700 million
by 2004. Abdominal aortic aneurysms occur in nine per cent of people over 65,
mostly men.
The market for AAA stent grafts has grown rapidly over the past three to four
years, but existing first generation devices are hitting a plateau. The market
appears to be waiting for new products and technology that can help treat more
vessels and thus expand the market for these types of products.
The Aorfix(TM) device is the first product in the next generation of stent graft
devices with the Uni-iliac version of the device already CE marked. The Aorfix
(TM) Bifurcated device is shortly to enter clinical trials, and is expected to
be awarded a CE mark later this year.
Major companies are seeking this technology, and a decision regarding a
worldwide distribution partner will be made when the clinical trials are
completed.
The methods that Anson uses to both manufacture and fatigue test its AAA stent
grafts, have attracted the interest of several companies. Anson has developed
valuable IP in this area, and there are discussions in progress with a view to
licensing.
RefixTM Repositionable Clips
RefixTM is a device that delivers through a small aperture surgical clips which
can be repositioned. More than 10 million surgical procedures are carried out
each year worldwide. As the medical market shifts towards keyhole surgery , the
demand for complementary and unique devices like RefixTM will increase. The
RefixTM device will also be crucial in an environment of increasing litigation
due to surgical errors.
Documents have been filed relative to the obtaining of the CE mark for this
product, and preparations are in hand for the filing of a 510k for approval to
launch in the US market. Negotiations are current with US regional distributors
and European national distributors for the open surgery version of Refix(TM)
An agreement was signed in December 2002 with Wilson Cook for the supply of
clips for endoscopic gastro-intestinal use.
PolyBioMed
PolyBioMed develops drug delivery coatings for coronary and peripheral stents
and vascular grafts, as well as polymer coatings that can be used to reduce
friction and inflammatory responses caused by devices, infection from biofilm
formation on device surfaces and blood clot formation on indwelling devices in
the cardiovascular system.
The coronary stent market is set to more than double to in excess of $5 billion
in the next three years due to drugs delivered locally via polymer coatings on
the surface of the stent. It is expected this will result in a significant
reduction of stent blockages (restenosis). PolyBioMed's coating technology has
shown to be capable of delivering a variety of drugs and it is currently working
with two companies in developing drug eluting stents. One of these companies is
a major player in the world coronary stent market, and is close to entering
pre-clinical trials with PolyBioMed's drug delivery coating.
PolyBioMed has also developed and patented a second-generation drug delivery
polymer coating, which can precisely control the dosage and elution profiles for
both hydrophilic and hydrophobic drugs. In addition the coating can contain and
elute more than one drug at different times including heavier compounds such as
genetic material. It is believed this new generation polymer coating will give
greater flexibility for local drug delivery treatment of diseases including
in-stent restenosis.
AME
With the turbulence in the Middle East markets since 11 September 2001 it has
been incredibly difficult to develop business in this market place. This
situation has now been compounded by recent events in Iraq, which will have a "
knock on" effect on business in other Arab markets, even if the situation in
Iraq is resolved. Our strategy would be to exit this business at minimum cost,
as we do not see a significant upturn in the business in the coming years.
DMC
The early expectation for the cardiovascular products of DMC has not been
realised. Although a certain level of sales has been achieved, this does not
cover the overheads of the business, and therefore it has not generated positive
cash flow for the group. We do not foresee a major change in this progression,
and have therefore decided to exit this business also at minimal cost to the
Group.
Funding and outlook
The Company is committed to meeting employment and certain operational costs, as
well as supporting its main trading subsidiaries through intercompany funding.
Forecasts have been prepared taking into account the requirements to complete
product development and achieve commercial sales. Bank and loan facilities held
at the date of approval of the financial statements within the group are fully
utilised and are insufficient to continue funding the forecast trading
activities of the group for a further twelve months from the date of approval of
the financial statements. Accordingly the directors plan to secure additional
funds which would enable the Group to continue its activities for the
foreseeable future.
In the Strategy Statement issued on 22 January 2003, the Company announced that
it was in the process of evaluating funding options to fulfil its stated
strategy and to ensure success. The Company has not been able to raise
additional equity funding to fulfil its stated strategy and to secure its future
as a stand-alone AIM quoted entity and does not expect to be able to do so given
the general market conditions and the stage of its development.
Funds are therefore now expected to be provided as a result of an offer for the
Company announced by a new unlisted company, Advanced Medical Technologies PLC
('AMT') on 2 May 2003. Under the terms of its offer AMT will provide funds from
new equity of at least #2.5m, arrange continuance of the existing bank facility
of #1m until 30 January 2004 and the Loan Notes 2007 will be exchanged for
shares in AMT. The Company also has an option to defer repayment of the loan
from Lion Capital Partners PLC until 28 February 2004. The forecasts indicate
that these terms will provide the group with sufficient funds and facilities to
meet its requirements until January 2004. The funding is primarily dependent on
the offer being accepted by the holders of not less than 90% of the Company's
shares, or such lesser percentage as AMT may decide. There is also uncertainty
over the amount of funds which may be raised from existing shareholders, outside
of the concert party, with an option to subscribe for new shares in AMT, the
timing of future commercial sales and whether further funds can be raised to
meet the projected requirements from January 2004 onwards.
However, the directors believe that the offer is likely to be accepted and that
progress with the Company's focussed strategy will allow it to obtain additional
funds before the end of January 2004 and therefore it is appropriate that these
financial statements are prepared on the going concern basis.
Alistair Taylor
Chairman
9 May 2003
Directors' report for the year ended 30 September 2002
The directors present their report and the audited financial statements of the
Company and Group for the year ended 30 September 2002.
Principal activities
The Company was initially floated on the AIM market in October 2000 with the
specific intention to build, primarily through acquisition, a group of companies
exploiting the high growth area of medical devices principally in the
cardiovascular area. In October 2001 the Company completed the acquisition of
LionMedical Limited.
The operating review is contained within the Chairman's statement.
Results and dividends
The Group's results for the year are set out in the profit and loss account.
DOCPROPERTY "COMP" /* MERGEFORMAT DOCPROPERTY "COMP" /* MERGEFORMAT
The directors do not recommend the payment of a dividend.
Post balance sheet event
An offer to acquire the whole of the share capital of the company was announced
by Advanced Medical Technologies PLC on 2 May 2003. The offeror has been
incorporated as a new company in order to make the offer, and acceptance of the
offer would result in further funding being provided for the group. Details are
included in note 1 to the financial statements.
Directors and their interests
The directors who held office during the year with their interests in the
ordinary shares of the Company, are as follows:
31 March 30 September 30 September
2003 2002 2001*
A H Taylor 7,206,622 7,206,622 7,153,113
C G Stainforth 142,858 142,858 142,858
J W E Kerslake 57,143 57,143 57,143
S J Terry (appointed 17 October 2002) - - -
A J Elbrick 14,286 14,286 14,286
P N Gray (appointed 25 April 2002) 250,000 250,000 175,000
W D Potter 7,143 7,143 7,143
M T Rothman 49,012 49,012 20,004
* = or date of appointment if later.
The directors' interests in #1,000 8% unsecured convertible redeemable Loan
Notes 2007 were as follows:
31 March 30 September
2003 2002
P N Gray #50,000 #50,000
S J Terry #25,000 -
Under certain circumstances the Loan Notes 2007 are convertible to ordinary
shares of the Company (see note 15).
The directors interests in share options or warrants to subscribe are as
follows:
At 30 September
2001 and 2002 Exercise price Period of exercise
A H Taylor A Warrants 214,286 70p To 26/10/07
B Warrants 1,600,258 77p To 26/10/07
Options 594,472 17.4p 20/02/02 to 19/02/11
C G Stainforth A Warrants 142,858 70p To 26/10/07
B Warrants 1,066,844 77p To 26/10/07
J W E Kerslake A Warrants 42,857 70p To 26/10/07
B Warrants 320,050 77p To 26/10/07
Options 471,429 70p 11/04/04 to 11/04/11
A J Elbrick A Warrants 14,286 70p To 26/10/07
B Warrants 106,686 77p To 26/10/07
W D Potter A Warrants 7,413 70p To 26/10/07
B Warrants 53,343 77p To 26/10/07
M T Rothman A Warrants 20,004 70p To 26/10/07
B Warrants 149,387 77p To 26/10/07
The mid market price of ordinary shares at 30 September 2002 was 6.25 p.
S J Terry and P N Gray, having been appointed since the last annual general
meeting, together with A J Elbrick and W D Potter who retire by rotation, are
offering themselves for re-election as directors at the annual general meeting.
Messrs Taylor and Kerslake have contracts which were determinable at the
earliest on 11 April 2003 and other directors have contracts which are
determinable within one year.
Directors' interests in contracts significant to the Group are set out in note
25 to the financial statements.
Political and charitable donations
The Group made no political or charitable donations during the year (2001:
#nil).
Research and development
The Group is committed to research and development in order to develop its
business and bring its products to market. Costs of #1,473,000 during the period
relate specifically to this aspect of the Group's activities (2001: #739,000).
Payment policy
It is the Group's policy to agree terms with its suppliers, terms of settlement
which are appropriate for the markets in which they operate and to abide by such
terms where suppliers have also met their obligations.
The Company had 54 days purchases outstanding at 30 September 2002 (2001: 33
days), based on amounts invoiced by suppliers during the year.
Substantial shareholders
At 31 March 2003 the Company was aware of the following interests of 3% or more
in the Company's ordinary share capital
Percentage of the
issued share
capital
Number of shares
A H Taylor 7,206,622 13.3
A W Anson 3,212,156 5.9
B Wixted 3,000,000 5.5
Morgan Nominees Limited 2,975,616 5.5
Lion Capital Partners PLC 2,706,476 5.0
P W Phillips 2,312,446 4.3
K Al-Lamee 1,988,744 3.7
HSBC Global Custody Nominee (UK) Limited 1,760,000 3.3
T M Cooke 1,736,106 3.2
R O Connelly 1,728,965 3.2
Auditors
PricewaterhouseCoopers transferred their business to a limited liability
partnership, PricewaterhouseCoopers LLP, on 1 January 2003, following which
PricewaterhouseCoopers resigned and the directors appointed
PricewaterhouseCoopers LLP as auditors. A resolution to reappoint
PricewaterhouseCoopers LLP as auditors to the Company will be proposed at the
annual general meeting.
By order of the Board
Rhod Jones
Company Secretary
9 May 2003
Statement of Directors' responsibilities
Company law requires the directors to prepare financial statements for each
financial year that give a true and fair view of the state of affairs of the
Company and Group and of the profit or loss of the Group for that period. The
directors are required to prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group will continue in
business.
The directors confirm that suitable accounting policies have been used and
applied consistently. They also confirm that reasonable and prudent judgements
and estimates have been made in preparing the financial statements for the year
ended 30 September 2002 and that applicable accounting standards have been
followed.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that the financial statements
comply with the Companies Act 1985. They are also responsible for safeguarding
the assets of the Company and Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The maintenance and integrity of the Lombard Medical plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
By order of the Board
Rhod Jones
Company Secretary
9 May 2003
Independent auditors' report to the members of Lombard Medical plc
We have audited the financial statements which comprise the consolidated profit
and loss account, the balance sheets, the consolidated cash flow statement and
the related notes.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the annual report and the
financial statements in accordance with applicable United Kingdom law and
accounting standards are set out in the statement of directors'
responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and United Kingdom Auditing Standards
issued by the Auditing Practices Board. This report, including the opinion, has
been prepared for and only for the company's members as a body in accordance
with Section 235 of the Companies Act 1985 and for no other purpose. We do not,
in giving this opinion, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or in to whose hands it may
come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the directors' report is not
consistent with the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and transactions is not disclosed.
We read the other information contained in the annual report and financial
statements and consider the implications for our report if we become aware of
any apparent misstatements or material inconsistencies with the financial
statements. The other information comprises only the directors' report and the
chairman's statement.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the Company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Fundamental uncertainty - going concern
In forming our opinion, we have considered the adequacy of the disclosures made
in the financial statements concerning the basis of preparation. The financial
statements have been prepared on the going concern basis and the validity of
this depends on the Group successfully obtaining adequate additional funds to
continue its activities. The financial statements do not include any
adjustments that would result from a failure to secure such funds. Details of
the circumstances relating to this fundamental uncertainty are described in Note
1. Our opinion is not qualified in this respect.
Opinion
In our opinion the financial statements give a true and fair view of the state
of affairs of the Company and the Group at 30 September 2002 and of the loss and
cash flows of the Group for the year then ended and have been properly prepared
in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London
9 May 2003
Consolidated profit and loss account for the year ended 30 September 2002
Note Before Amortisation Year Before Amortisation 24 July
amortisation of goodwill ended 30 amortisation of goodwill 2000
of goodwill September of goodwill to 30
2002 September
Total 2001
#'000 #'000 #'000 #'000 #'000 Total
#'000
Turnover 2 359 - 359 100 - 100
Cost of sales (131) - (131) (24) - (24)
Gross profit 228 - 228 76 - 76
Development and (4,240) - (4,240) (2,659) - (2,659)
administrative
expenses
Amortisation and 10 - (25,092) (25,092) - (6,116) (6,116)
impairment of
goodwill
Net operating (4,240) (25,092) (29,332) (2,659) (6,116) (8,775)
expenses
Operating loss 3 (4,012) (25,092) (29,104) (2,583) (6,116) (8,699)
Interest 6 66 - 66 151 - 151
receivable
Amounts written 12 (250) - (250) - - -
off investments
Interest payable 6 (153) - (153) (8) - (8)
Loss on ordinary (4,349) (25,092) (29,441) (2,440) (6,116) (8,556)
activities
Taxation on loss 7 238 - 238 - - -
on ordinary
activities
Loss for the 20 (4,111) (25,092) (29,203) (2,440) (6,116) (8,556)
financial period
Basic loss per 9 (54.0) (38.5)
share in pence
All activity relates to continuing operations.
The Group has no recognised gains and losses other than the loss above and
therefore no separate statement of total recognised gains and losses has been
presented.
Consolidated balance sheet as at 30 September 2002
Note 2002 2001
#'000 #'000
Fixed assets
Intangible assets 10 67 25,168
Tangible assets 11 611 494
Investments - unquoted 12 4,263 -
4,941 25,662
Current assets
Stocks 13 102 216
Debtors 14 250 268
Cash at bank and in hand 1,420 4,875
Restricted deposits relating to bank loan 23 1,419 -
3,191 5,359
Creditors - amounts falling due within one year 15 (1,244) (1,586)
Net current assets 1,947 3,773
Total assets less current liabilities 6,888 29,435
Creditors - amounts falling due after more than one year
Loans 15 (3,342) -
8% unsecured convertible redeemable loan notes 2007 15 (2,385) -
Net assets 1,161 29,435
Capital and reserves
Called up share capital 18 5,406 5,403
Share premium account 20 31,145 31,119
Other reserve 20 1,469 1,469
Contingent shares to be issued 12 900 -
Profit and loss account 20 (37,759) (8,556)
Equity shareholders' funds 20 1,161 29,435
The financial statements were approved by the board of directors on 9 May 2003
and were signed on its behalf by:
John Kerslake
Director
Company balance sheet as at 30 September 2002
Note 2002 2001
#'000 #'000
Fixed assets
Tangible assets 11 6 10
Investments 12 2,971 32,921
2,977 32,931
Current assets
Debtors 14 135 109
Cash at bank and in hand 1,299 4,715
Restricted deposits relating to bank loan 23 1,419 -
2,853 4,824
Creditors - amounts falling due within one year 15 (884) (1,033)
Net current assets 1,969 3,791
Total assets less current liabilities 4,946 36,722
Creditors - amounts falling due after more than one year
Loans 15 (1,400) -
8% unsecured convertible redeemable loan notes 2007 15 (2,385) -
Net assets 1,161 36,722
Capital and reserves
Called up share capital 18 5,406 5,403
Share premium account 20 31,145 31,119
Other reserve 20 1,469 1,469
Contingent shares to be issued 12 900 -
Profit and loss account 20 (37,759) (1,269)
Equity shareholders' funds 1,161 36,722
The financial statements were approved by the board of directors on 9 May 2003
and were signed on its behalf by:
John Kerslake
Director
Consolidated cash flow statement for the year ended 30 September 2002
Note 2002 2000
#'000 #'000
Net cash outflow from operating activities 21 (4,054) (2,222)
Returns on investment and servicing of finance
Interest received 66 147
Interest paid (150) (4)
Issue costs paid (118) -
Net cash (outflows)/inflows from returns on investments and
servicing of finance (202) 143
Taxation received 238 -
Capital expenditure and financial investment
Purchase of intangible fixed assets - (25)
Purchase of tangible fixed assets (218) (259)
Increase in restricted cash deposits (1,400) -
Net cash outflow from capital expenditure and financial
investment (1,618) (284)
Acquisitions and disposals
Purchase of subsidiary undertakings 12 (84) (4,360)
Overdrafts acquired with subsidiary undertakings - (89)
Net cash outflows from acquisitions and disposals (84) (4,449)
Net cash outflow before financing (5,720) (6,812)
Financing
Issue of ordinary shares 22 - 13,225
Ordinary share issue expenses - (1,296)
Issue of Loan Notes 2007 2,500 -
Repayment of loans (158) (241)
Repayment of Loan Notes 2006 (75) -
Repayment of lease finance (2) (1)
Net cash inflow from financing 2,265 11,687
(Decrease)/increase in cash in the period 23 (3,455) 4,875
Notes to the financial statements for the year ended 30 September 2002
1 Accounting policies
Basis of accounting
The financial statements are prepared under the historical cost convention and
in accordance with applicable United Kingdom Accounting Standards. A summary of
the more important Group accounting policies follows.
Basis of consolidation
The consolidated profit and loss account and balance sheet include the financial
statements of the Company and its subsidiary undertakings. The results of
acquired undertakings are included in the consolidated profit and loss account
from the date control passes. Intra-group sales and profits are eliminated on
consolidation.
Basis of preparing the financial statements - going concern assumption
The financial statements have been prepared on the going concern basis, which
assumes that the Group will continue in operational existence for the
foreseeable future.
The Company is committed to meeting employment and certain operational costs, as
well as supporting its main trading subsidiaries through intercompany funding.
Forecasts have been prepared taking into account the requirements to complete
product development and achieve commercial sales. Bank and loan facilities held
at the date of approval of the financial statements within the Group are fully
utilised and are insufficient to continue funding the forecast trading
activities of the Group for a further twelve months from the date of approval of
the financial statements. Accordingly the directors plan to secure additional
funds which would enable the Group to continue its activities for the
foreseeable future.
Funds are expected to be provided as a result of an offer for the Company
announced by a new unlisted company, Advanced Medical Technologies PLC ('AMT').
Under the terms of its offer AMT will provide funds from new equity of at least
#2.5m, arrange continuance of the existing bank facility of #1m until 30 January
2004 and the Loan Notes 2007 will be exchanged for shares in AMT. The Company
also has an option to defer repayment of the loan from Lion Capital Partners PLC
until 28 February 2004. The forecasts indicate that these terms will provide the
Group with sufficient funds and facilities to meet its requirements until
January 2004.
The funding is primarily dependent on the offer being accepted by the holders of
90% of the Company's shares. There is also uncertainty over the amount of funds
which may be raised from existing shareholders with an option to subscribe for
new shares in AMT, the timing of future commercial sales and whether further
funds can be raised to meet the projected requirements from January 2004
onwards. However, the directors believe that the offer is likely to be accepted
and that the Company will be able to obtain additional funds before the end of
January 2004 and therefore it is appropriate that these financial statements are
prepared on the going concern basis.
This basis of preparation assumes that the Company and its subsidiaries will
continue in operational existence for the foreseeable future. If the Company or
its subsidiaries were unable to continue in operational existence for the
foreseeable future, adjustments would have to be made to revise the balance
sheet values of assets to their recoverable amounts, to provide for further
liabilities that might arise, and to reclassify fixed assets as current assets
and long-term liabilities as current liabilities.
Investments
Investments are held at cost and provision is made for any impairment in value.
Fixed assets
The cost of tangible fixed assets is their purchase cost, together with any
incidental expenses of acquisition. Depreciation is calculated so as to write
off the cost of tangible fixed assets, less their estimated residual value, on a
straight line basis over their estimated economic lives. The principal economic
lives used for this purpose are:
Plant and equipment 3 to 10 years
Office equipment 3 to 5 years
Goodwill and intangible assets
Goodwill arising on consolidation represents the excess of the fair value of the
consideration given over the fair value of identifiable net assets acquired.
Goodwill arising on acquisitions is carried forward as an asset and amortised
over its useful economic life on a straight line basis. Licence fees are
amortised on a straight line basis over the expected useful life of the patents
on the products licensed. The principal economic lives used for this purpose
are:
Goodwill 1 - 4 years
Licences 10 years
Impairment of fixed assets and goodwill
The carrying values of fixed assets are reviewed for impairment where there is
an indication that the assets might be impaired. First year impairment reviews
are conducted for acquired goodwill and intangible assets. Impairment is
determined by reference to the higher of net realisable value and value in use,
which is measured by reference to discounted cash flows. Indicative net
realisable value has been used in these financial statements due to the
considerable uncertainties attaching to future cash flows. Any provision for
impairment is charged in the profit and loss account for the year.
Foreign currencies
Assets and liabilities of subsidiaries in foreign currencies are translated at
the closing rates of exchange for the year. Differences on exchange arising
from the retranslation of the opening net investment in subsidiary companies,
and from the translation of the results of those companies at average rate, are
taken to reserves and, where material, are reported in the statement of total
recognised gains and losses. All other exchange differences are taken to the
profit and loss account in the period in which they arise.
Finance and operating leases
Costs in respect of operating leases are charged on a straight line basis over
the lease term. Leasing agreements, which transfer to the Group substantially
all the benefits and risks of ownership of an asset, are treated as if the asset
had been purchased outright. The assets are included in fixed assets and the
capital element of the leasing commitments is shown as obligations under finance
leases. The lease rentals are treated as consisting of capital and interest
elements. The capital element is applied to reduce the outstanding obligation
in each accounting period. Assets held under finance leases are depreciated
over the shorter of the lease term and the useful lives of equivalent owned
assets.
Stocks and work in progress
Stocks and work in progress are stated at the lower of cost and net realisable
value. Cost is determined on a first-in-first out basis and includes transport
and handling costs. In the case of manufactured products, cost includes all
direct expenditure including production overheads. Where necessary, provision
is made for obsolete, slow-moving and defective stocks.
Turnover
Turnover, which excludes value added tax, represents the invoiced value of goods
and services supplied.
Research and development
Expenditure on research and development is charged to the profit and loss
account as incurred.
Government grants
Government grants are recognised in the profit and loss account so as to match
them with the expenditure to which they are intended to contribute.
Pensions
The Group operates a defined contribution pension scheme for some of its
employees in the UK and the Republic of Ireland. Contributions payable during
the year are charged to the profit and loss account.
Deferred taxation
The new accounting standard on deferred taxation, FRS19, has been adopted in the
year with no resulting impact on the reported numbers.
Deferred taxation is provided on an undiscounted basis at the anticipated tax
rates on timing differences arising from the inclusion of items of income and
expenditure in taxation computations in periods different from those in which
they are included in financial statements. Liabilities are fully provided and
assets are recognised to the extent that it is more likely than not that they
will be realised.
2 Turnover
Turnover and loss on ordinary activities before taxation are derived from one
class of business. All turnover, results and net assets originate in the United
Kingdom and Eire. An analysis of turnover by geographical destination is given
below:
2002 2001
#'000 #'000
United Kingdom and mainland Europe 149 52
United States of America 144 39
Rest of the World 66 9
359 100
3 Operating loss
2002 2001
#'000 #'000
Operating loss is stated after charging/(crediting)
Depreciation of tangible fixed assets 102 32
Amortisation of licences 9 2
Amortisation of goodwill (note 10) 9,278 6,116
Impairment of goodwill (note 10) 15,814 -
Research and development expenditure 1,473 739
Exceptional costs in respect of potential acquisitions - 572
Operating lease rentals
- Motor vehicles 71 22
- Land and buildings 258 190
- Other assets 4 3
Auditors' remuneration (Company: #18,000: 2001: #18,000) 39 40
Government grants (102) (14)
Amounts paid to the Company's auditors in respect of non-audit fees for work
provided to the Company and its subsidiaries, amounted to #32,000 (2001:#10,000)
which is included in operating expenses. In 2001 an amount of #25,000 was paid
in respect of the initial introduction of the Company's shares on the AIM market
which was charged to the share premium account and a further amount of #240,000
was paid in respect of the acquisition of subsidiary undertakings and has been
charged to the cost of acquisition of those companies.
4 Directors' emoluments
Emoluments for the period were as follows:
Salary Pension Benefits Total Salary Pension Benefits Total
or fees contributions in kind 2002 or fees contributions in kind 2001
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
A H Taylor 150 15 20 185 71 7 6 84
J W E Kerslake 110 11 16 137 52 5 7 64
C G Stainforth 25 - - 25 20 - - 20
A J Elbrick 15 - - 15 10 - - 10
W D Potter 15 - - 15 10 - - 10
M T Rothman 35 - - 35 19 - - 19
P N Gray 6 - - 6 - - - -
356 26 36 418 182 12 13 207
Pension contributions are to be made to a money purchase scheme in respect of 2
directors.
5 Employee information
The average monthly number of persons including directors employed by the Group
during the period was:
By activity 2002 2001
Directors 6 5
Selling , marketing and distribution 6 3
Research and development 20 8
Administration and general 9 5
41 21
Staff costs for the above persons were:
2002 2001
#'000 #'000
Wages and salaries 1,519 702
Social security costs 147 65
Other pensions costs 88 29
1,754 796
6 Interest and related expenses
2002 2001
#'000 #'000
Interest receivable:
Interest receivable on bank deposits 66 151
Interest payable:
Loan notes 2006 (11) (8)
8% Loan Notes 2007 (19) -
Short term borrowings (3) -
Bank interest (10) -
LCP loan (107) -
Amortisation of loan issue costs (3) -
(153) (8)
7 Taxation on loss on ordinary activities
2002 2001
#'000 #'000
Tax credit in respect of prior periods 238 -
The tax credit arises from the utilisation of losses from research expenditure
to reclaim payroll taxes. Taxation losses carried forward at the end of the
period amounted to approximately #8 million (2001: #4 million) and the
unrecognised deferred tax asset at 30% is approximately #2.4 million (2001: #1.2
million). No deferred tax asset has been recognised in respect of these losses
as the directors consider it is, as yet, uncertain whether the losses will be
utilised.
The current tax credit of #nil is lower than the standard UK corporation rate of
30% applied to the loss for the period. The differences are explained below:
2002 2001
#'000 #'000
Loss before tax for the period at 30% (8,832) (2,567)
Amounts not deductible for tax purposes including amortisation of goodwill 7,731 2,020
Losses carried forward 1,101 547
- -
8 Losses of holding company
Of the loss for the financial period, a loss of #36,490,000 (2001:#1,269,000) is
dealt with in the accounts of the Company. The directors have taken advantage
of the exemption available under section 230 of the Companies Act 1985 and not
presented the Company's profit and loss account.
9 Loss per ordinary share
The loss per ordinary share has been calculated on the basis of the loss
attributable to shareholders of #29,203,000 (2001:#8,556,000) divided by the
weighted average number of shares in issue during the period of 54,052,627
(2001: 22,208,710) shares.
None of the Company's potential ordinary shares, arising as a result of existing
warrants and share options, are considered to be dilutive and therefore no
diluted loss per share is shown.
10 Intangible assets
Group
Goodwill on
acquisition Licences Total
#'000 #'000 #'000
Cost
At 30 September 2001 and at 30 September 2002 31,208 85 31,293
Amortisation
At 30 September 2001 (6,116) (9) (6,125)
Impairment provision (15,814) - (15,814)
Charge for the year (9,278) (9) (9,287)
At 30 September 2002 (31,208) (18) (31,226)
Net book value
At 30 September 2002 - 67 67
At 30 September 2001 25,092 76 25,168
11 Tangible fixed assets
Group Plant and Office Total
equipment equipment #'000
#'000 #'000
Cost
At 30 September 2001 448 153 601
Additions 193 25 218
Exchange difference 1 - 1
At 30 September 2002 642 178 820
Depreciation
At 30 September 2001 (69) (38) (107)
Charge for the year (61) (41) (102)
At 30 September 2002 (130) (79) (209)
Net book value
At 30 September 2002 512 99 611
At 30 September 2001 379 115 494
The net book value of plant and equipment includes #3,000 (2001: #4,000) in
respect of assets held under finance leases and hire-purchase contracts.
Depreciation charged on these assets during the period was #1,400 (2001: #400).
Company Office equipment
#'000
Cost
At 30 September 2001 15
Additions 4
At 30 September 2002 19
Depreciation
At 30 September 2001 (5)
Charge for the year (8)
At 30 September 2002 (13)
Net book value
At 30 September 2002 6
At 30 September 2001 10
12 Fixed asset investments
Company
Loans to Investments Total
subsidiaries in
subsidiaries
#'000 #'000 #'000
Cost
At 30 September 2001 2,073 30,848 32,921
Additions 4,105 1,013 5,118
At 30 September 2002 6,178 31,861 38,039
Provision for impairment (5,835) (29,233) (35,068)
Net book value at 30 September 2002 343 2,628 2,971
Interests in Group undertakings
The following subsidiary undertakings have been included in the Group
consolidation. All interests are held in the form of ordinary shares.
Name of undertaking Principal area of activity Country of
incorporation
Anson Medical Limited Medical implants Great Britain
AME Medical Limited Sales & marketing Great Britain
DMC Medical Limited Distribution of medical devices Republic of Ireland
PolyBioMed Limited Polymer biomaterials Great Britain
LionMedical Limited Investment holding company Great Britain
At the year end, all companies were 100% owned. The above companies operate
principally in their country of incorporation. All interests are held by the
Company.
Group
Unquoted
investments
#'000
Cost
Additions and at 30 September 2002 4,513
Provision for impairment (250)
Net book value at 30 September 2002 4,263
The group holds 15.0% of the ordinary share capital of EndoArt SA (investment
of #900,000), a company incorporated in Switzerland and 11.8% of the ordinary
share capital of Vascular Concepts Limited (investment of #3,363,000), a
company incorporated in the Isle of Man. These are both companies engaged in the
development of medical devices. An investment of #250,000 in YaBA has been fully
provided against in the year. The investments are not readily realisable, being
unquoted, and values can only be indicative of prospects given the early stage
of their development and the inherent uncertainties in their further progress
towards product or technology sales, on which the future value depends.
Acquisitions
On 31 October 2001 the Company acquired the whole of the issued share capital of
LionMedical Limited.
The acquisition has been accounted for using the acquisition method of
accounting.
Book value Revaluation
#'000 #'000 #'000
Investments - unquoted 2,536 1,977 4,513
Director's loan (158) - (158)
Other loan (3,342) - (3,342)
Net assets acquired (964) 1,977 1,013
Satisfied by:
Shares issued 29
Acquisition expenses paid 84
Other reserve - contingent deferred shares 900
1,013
The shares were issued at a price of 80 pence: the contingent deferred
consideration will be satisfied by the issue of shares at a price of 80 pence
each and the directors' best estimate of the likely consideration is #900,000.
Up to a maximum of #2,795,000 of shares at 80 pence each may be issued as
deferred consideration dependent on the value realised for the investment in
EndoArt.
The investments in unquoted companies held by LionMedical were revalued at
acquisition by the directors as a result of assessing the prospects of the
underlying businesses at that date.
Financial results of acquired companies
A summary of the financial results of the acquired company for the period from 1
April 2001 to the date of acquisition on 31 October 2001 and for their prior
financial period is set out below:
#'000
Period from 1 April to 31 October 2001
Turnover -
Operating loss (60)
Loss before and after taxation (194)
Period ended 31 March 2001 - loss after taxation (259)
The acquired company incurred a loss from interest charges of #107,000 for the
period from acquisition to 30 September 2002 and resulted in a net cash outflow
of #1,665,000 (#1,558,000 of this relating to repayment of loans).
13 Stocks
2002 2001
Group Company Group Company
#'000 #'000 #'000 #'000
Raw materials and consumables 6 - 6 -
Work in progress - - 5 -
Finished goods and goods for resale 96 - 205 -
102 - 216 -
14 Debtors
2002 2001
Group Company Group Company
#'000 #'000 #'000 #'000
Amounts falling due within one year:
Trade debtors 32 - 76 -
Other debtors 140 93 138 68
deWork in progress
Prepayments and accrued income 78 42 54 41
250 135 268 109
15 Creditors
2002 2001
Amounts falling due within one year
Group Company Group Company
#'000 #'000 #'000 #'000
#'000 #'000
Floating rate Loan Notes 2006 351 351 426 426
Obligations under finance leases - - 2 -
Trade creditors 449 196 739 341
Other taxation and social security 42 21 46 18
Other creditors 13 - 20 -
Accruals and deferred income 389 316 353 248
1,244 884 1,586 1,033
Pension contributions of #61,000 (2001:#24,000) are included in creditors
(Company: #48,000 (2001: #12,500))
The Loan Notes 2006 are repayable at any time at the holders' option or
otherwise by the Company at any time up to April 2006.
2002 2001
Amounts falling due after more than one year #'000 #'000 #'000 #'000
Bank loan 1,400 1,400 - -
LCP Loan (repayable within 1 to 2 years) 1,942 - - -
3,342 1,400 - -
8% unsecured convertible redeemable Loan Notes 2007 2,385 2,385 - -
5,727 3,785 - -
The bank loan is secured against a similar deposit ("security deposit") and
bears interest at 0.5% pa, the security deposit earning no interest. The loan
is repayable on 31 October 2004 and is further secured by a floating charge.
The LCP loan is repayable on 31 October 2003 and bears interest at 2% above base
rate and is secured by a floating charge.
The convertible redeemable loan notes are stated net of issue costs of #115,000.
The principal terms of the 8% unsecured convertible redeemable Loan Notes 2007
("Loan Notes 2007") are:
Convertible into 10,000 new Ordinary Shares of 10p each per #1,000 nominal of
Loan Notes at a conversion price of 10p per new Ordinary Share.
Coupon of 8% per annum interest.
The Company may redeem the Loan Notes 2007 in whole or in increments of no less
than #500,000 at any time from 22 February 2003 and upon redemption will pay to
the holders of the loan notes a redemption premium of 10% in addition to the
nominal value of the loan notes and interest. The holders of the loan notes
shall have 20 business days from the date of the notice of redemption to issue a
notice of conversion in respect of whole or part of the loan notes, in which
case the notice of redemption shall cease to apply to those loan notes comprised
in the notice of conversion. Subject to any prior redemption or conversion the
loan notes will be redeemed on 31 December 2007.
16 Financial instruments
Short term debtors and creditors have been excluded from financial instruments
under the exemption in FRS13. The Group's treasury policies are designed to
manage financial risks to the Group. Apart from overseas sales usually in US
Dollars, all transactions are primarily in sterling. The Group's foreign
exchange policy is continuously monitored and, if appropriate, financial
instruments will be utilised to hedge the risk. Throughout the period under
review, no financial instruments have been used in respect of foreign
currencies.
The Group initially financed its operations mainly through equity issues. The
acquisition in the year involved the assumption of existing debt. The Group's
objective has been to obtain sufficient funding to meet development activities
until full commercialisation of products and this was met through the issue of
convertible loan notes as a result of further equity funding not being
available.
During the period under review, cash has been deposited to maximise the interest
earned. At the year-end, the majority of the sterling funds of #2,839,000 were
in bank deposit accounts.
Maturity profile and interest rate risk of the 2002
group's liabilities
Loan notes Bank loan LCP loan Convertible
2006 Loan Notes
2007
#'000 #'000 #'000 #'000
In one year or less, or on demand 351 - - -
In more than one year, but not more than two years - - 1,942 -
In more than two years, but not more than five years - 1,400 - -
In more than five years - - - 2,385
Interest rate risk Floating Floating Floating Fixed
Floating rate borrowings, amounting to #3,693,000 in total, bear interest based
on bank base rates. The fixed rate borrowings bear interest at 8% plus a
premium of 10% of their issue value on redemption.
The loans and loan notes are unquoted and as a result it has not been possible
to place a market value on these instruments.
17 Pension obligations
The Group operates defined contribution pension schemes for its employees in the
UK and the Republic of Ireland. The assets of these schemes are held separately
from those of the companies, in independently administered funds.
18 Called up share capital
2002 2002 2001 2001
Number of Nominal Number of Nominal
shares value shares value
#'000 #'000
Authorised
Ordinary shares of 10p each 125,000,000 12,500 95,000,000 9,500
Allotted, called up and fully paid
Ordinary shares of 10p each 54,061,037 5,406 54,025,018 5,403
The authorised share capital was increased to #12,500,000 by the creation of
30,000,000 new ordinary shares of 10p each on 22 August 2002.
New share capital issued during the period was as follows:
Number of Nominal Consideration
shares value
#'000 #'000
Ordinary shares of 10p each
At 30 September 2002 54,025,018 5,403
31 October 2001, shares issued at 80 pence each as part
of the consideration on acquisition of subsidiary
36,019 3 29
undertaking
At 30 September 2002 54,061,037 5,406
19 Share options and warrants
At 30 September 2002 share options and warrants were outstanding as follows:
Number of Subscription Period in
ordinary which
shares of price per exerciseable
ordinary share
Share options issued to the Anson Medical Limited 232,200 17.4p 20/02/02 to 20/02/03
employees who were members of the Anson
Unapproved Share Option Plan 2000 at the date of 2,560,344 17.4p 20/02/02 to 19/02/11
acquisition of Anson
A warrants 1,750,000 70.0p To 26/10/07
B warrants 13,068,755 77.0p To 26/10/07
C warrants 142,857 70.0p To 26/10/07
Unapproved share option plan 471,429 70.0p 11/04/04 to 11/04/14
All share options and warrants were granted prior to 30 September 2001 with the
right to subscribe for ordinary shares of 10p each on a one for one basis. The
warrants may be exercised twice yearly within 60 days of the posting of interim
and full reports to shareholders. The options arising from the Anson Plan will
normally cease on cessation of the holder's employment.
20 Capital and reserves
Called up Share Other Contingent Profit Total
share premium reserve shares to and loss equity
capital account be issued account shareholders
funds
Group #'000 #'000 #'000 #'000 #'000 #'000
At 30 September 2001 5,403 31,119 1,469 - (8,556) 29,435
Loss for the year - - - - (29,203) (29,203)
New share capital issued 3 26 - - - 29
Created on acquisition of
LionMedical Limited (note - - - 900 - 900
12)
At 30 September 2002 5,406 31,145 1,469 900 (37,759) 1,161
Called up Share Other Contingent Profit Total
share premium reserve shares to and loss equity
capital account be issued account shareholders
funds
Company #'000 #'000 #'000 #'000 #'000 #'000
At 30 September 2001 5,403 31,119 1,469 - (1,269) 36,722
Loss for the year - - - - (36,490) (36,490)
New share capital issued 3 26 - - - 29
Created on acquisition
of LionMedical Limited - - - 900 - 900
(note 12)
At 30 September 2002 5,406 31,145 1,469 900 (37,759) 1,161
21 Reconciliation of operating loss to net cash outflow from operating
activities
2002 2001
#'000 #'000
Operating loss (29,104) (8,699)
Amortisation and impairment of goodwill 25,092 6,116
Depreciation and amortisation of licences 111 36
Decrease in stocks 114 24
Decrease/(increase) in debtors 18 (42)
(Decrease)/increase in creditors (285) 343
(4,054) (2,222)
22 Reconciliation of net cash flow to movement in net (debt)/funds
2002 2001
#'000 #'000
(Decrease)/increase in cash in period (3,455) 4,875
Cash outflow from increase in bank deposit 1,419 -
Cash inflow from issue of Loan Notes 2007 net of issue costs (2,382) -
Cash inflow from bank loan (1,400) -
Cash outflow from repayment of Loan Notes 2006 75 -
Cash outflow from repayment of lease finance 2 1
Cash outflow from repayment of loans 1,558 -
Changes in net (debt)/funds resulting from cash flows (4,183) 4,876
Non-cash changes:
Loan Notes 2006 issued on acquisition - (426)
Finance leases acquired - (3)
Amortisation of loan issue costs (3) -
LCP loan acquired with subsidiary undertaking (3,342) -
Loan from a director acquired with subsidiary undertaking (158) -
Movement in net funds in period (7,686) 4,447
Net funds at 1 October 4,447 -
Net (debt)/funds at 30 September (3,239) 4,447
Major non-cash items
Shares with a paid up value of #29,000 were also used as consideration for an
acquisition in October 2001 and no cash was therefore received in respect of
these.
23 Analysis of net debt
Acquisitions
30 September Cash Non-cash 30 September
2001 movements movements 2002
#'000 #'000 #'000 #'000
Cash at bank and in hand 4,875 (3,455) - 1,420
Restricted bank deposits - 1,419 - 1,419
Bank loan - (1,400) - (1,400)
Loan Notes 2006 (426) 75 - (351)
LCP loan - 1,400 (3,342) (1,942)
Finance leases (2) 2 - -
Convertible Loan Notes 2007 - (2,382) (3) (2,385)
Director's loan - 158 (158) -
4,447 (4,183) (3,503) (3,239)
Restricted bank deposits are held as security for the bank loan of #1,400,000.
24 Reconciliation of movements in shareholders' funds
2002 2001
#'000 #'000
#'000
Loss for the financial period (29,203) (8,556)
New share capital issued, including premium 29 37,818
Expenses of share issues - (1,296)
Contingent shares to be issued 900 -
Other reserve movement - 1,469
Net (decrease)/increase in shareholders' funds (28,274) 29,435
Opening shareholders' funds 29,435
Closing shareholders' funds 1,161 29,435
25 Related party disclosures
a) A H Taylor - a director,was a director and shareholder in three
companies acquired in April 2001, Anson Medical Limited, DMC Medical Limited and
AME Medical Limited. The total consideration received by Mr Taylor as a result
of these acquisitions was as follows:-
#
Anson Medical Limited (21.6% shareholding) 3,574,6674,875
DMC Medical Limited (8.0% shareholding) 320,000
AME Medical Limited (30.8% shareholding) 462,512
4,357,1794
All amounts were settled by the issue of new ordinary shares in the Company at a
price of 70 pence per share.
In addition Mr Taylor received 594,472 of the Company's share options
exercisable at 17.4 pence per share.
Mr Taylor had advanced #73,500 to AME Medical Limited by the date of
acquisition, this amount together with accrued interest was repaid following the
acquisitions.
Mr Taylor sold his 50% interest in LionMedical Limited to the Company at the end
of October 2001. The consideration was all payable in shares of the Company.
Mr Taylor held 170,773 shares in Lion Capital Partners PLC (see note e).
b) J W E Kerslake - a director, was a director of Anson Medical Limited, a
company acquired in April 2001. Mr Kerslake was also a director of and held
302,996 shares in Lion Capital Partners PLC (see note e).
He was a director of LionMedical Limited, a company acquired in October 2001.
c) C G Stainforth a non executive director of the Company, is a director
of Durlacher Limited ("Durlacher") and was formerly a director of Ermgassen
Limited ('Ermgassen'). Both these companies were advisors to the Company during
the year. Fees paid to Durlacher amounted to #41,700 (2001: #nil) and to
Ermgassen #39,500 (2001: #625,000) of which #9,500 (2001: #120,000) was
expensed, the balance of #30,000 being in respect of the acquisition of
LionMedical Limited. In 2001 fees paid to Ermgassen were: #25,000 in respect of
the initial fund raising, #450,000 in respect of the subsequent fund raising
(both charged to share premium); and #30,000 prepaid and treated as part of the
cost of acquisition of LionMedical Limited in 2002.
d) Messrs J W E Kerslake a director and A J Elbrick - a non executive
director of the Company held 302,996 and 4,545 shares in Lion Capital Partners
PLC respectively at 30 September 2002
(see note e).
e) Lion Capital Partners PLC ("LCP"), which holds 2,706,476 shares
in the Company
* Fees paid to LCP during 2002 in respect of fund raising amounted to
#128,900 and have been expensed.
* LCP owned 19% of the shares in LionMedical Limited at the date of
its acquisition by the company in October 2001 and as a result of that
transaction has a loan outstanding of #1,942,000 from the group.
* Interest payable on the loan of #1,942,000 and bridging finance
amounted to #118,000 during the year. The maximum amount due to LCP,
including bridging finance, during the year amounted to #2,142,000.
* J W E Kerslake, A H Taylor and A J Elbrick held 6%, 3.4% and 0.1%
respectively in LCP at 30 September 2002 and 2001.
* Consideration received by LCP in shares issued at 70 pence or cash in
April 2001 with respect to the acquisitions of Anson Medical Limited and
AME Medical Limited amounted to #1,890,680 and #132,800 respectively.
* Following the acquisition of PolyBioMed Limited (PBM) in April 2001 a
#100,000 loan by LCP to PBM was repaid including interest. Fees paid to
LCP during 2001 were #250,000 in respect of the acquisition of subsidiary
undertakings (included in cost of investment) and #95,000 in respect of
fund raising (charged to share premium).
f) On 31 October 2001, the company acquired the whole of the
issued share capital of LionMedical Limited ('Lion').
Mr A H Taylor owned 50% of the shares in Lion at the date of acquisition and Mr
Taylor and Mr Kerslake both directors of the company were directors of Lion.
LCP owned 19% of the shares in Lion at the date of acquisition.
Initial consideration of #29,000 was satisfied by the issue of 36,019 shares in
the company at 80 pence each. Up to a further #2,795,000 of consideration is
payable in further shares, contingent upon the value realised for the investment
in EndoArt.
26 Financial commitments and contingent liabilities
At 30 September 2002 the Group was committed to make the following payments
during the next year in respect of operating leases:
2002 Land 2002 Other 2001 2001 Other
and Land and
buildings buildings
#'000 #'000 #'000 #'000
Expiring within one year 58 - 195 -
Expiring between two and five years inclusive - 49 - 54
58 49 195 54
27 Capital commitments
At 30 September 2002 the Group had contracted but not provided for capital
expenditure of #8,000 (2001:#40,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSDFWASDSEDI