RNS Number : 9229A
Medicsight Plc
08 August 2008
Press release 8 August 2008
Medicsight PLC
("Medicsight" or "the Group")
Interim Results
For the Six Months Ended
30 June 2008
Medicsight PLC, industry leader in the development of Computer-Aided Detection (CAD) and image analysis software to assist in the early
detection and diagnosis of disease, is pleased to announce its Interim Results for the six months ended 30 June 2008.
Highlights
* Preliminary Agreement with the Systems Integration (PACS) Division of
Toshiba Medical Systems
* Global Partnership Agreement with INFINITT Company Limited ("Infinitt")
* Received Chinese State Food and Drug Administration (SFDA) regulatory
approval for MedicRead Colon
* Received Brazilian National Health Surveillance Agency (ANVISA)
regulatory approval for MedicRead Colon and ColonCAD
* Signed an exclusive CAD clinical research agreement with leading American
CT colonography (CTC) radiologists Dr Perry Pickhardt and Dr David Kim
David Sumner, Chief Executive of Medicsight PLC commented: "We are delighted with the progress the Company has made during the first
half of 2008. We continue to bolster our contract pipeline adding the Toshiba PACS division and Infinitt to our list of distribution
partners. Approvals continue to be received from regulatory bodies in China and Brazil who have recently cleared the MedicRead Colon and
ColonCAD products for sale. In addition we are on track with the regulatory processes in Japan and the US. Finally and in line with
expectations, Medicsight expects to launch its online MedicRead Colon solution and Lung and Liver applications at RSNA this year."
For further information, please contact:
Medicsight plc
David Sumner +44 (0)20 7605 7950
www.medicsight.com
Nomura Code Securities Limited
Juliet Thompson, Managing Director +44 (0)20 7776 1200
Jon Senior www.nomuracode.com
Media enquiries:
Abchurch
Heather Salmond Tel: +44 (0) 20 7398 7700
heather.salmond@ Mob: +44 (0) 7855 018 606
abchurch-group.com
Stephanie Cuthbert Tel: +44 (0) 20 7398 7700
stephanie.cuthbert@ Mob: +44 (0) 7843 080947
abchurch-group.com
www.abchurch-group.com
Chief Executive's Review
I am pleased to report our interim results for the six months ended 30 June 2008, Medicsight has achieved a number of key milestones and
is making progress in line with the Company's expectations.
Commercial Partnerships
In February 2008, Medicsight signed a Preliminary Agreement with the Systems Integration (PACS) Division of Toshiba Medical Systems
("Toshiba") for the resale of MedicRead ColonCAD throughout Japan. The Company believes that this heralds the beginning of an on-going
partnership with Toshiba, a leading global provider of diagnostic medical imaging systems and comprehensive medical solutions.
In April 2008, Medicsight signed a Partnership Agreement with INFINITT Company Limited ("Infinitt"). Infinitt has agreed to integrate
Medicsight ColonCAD into its Colon solution for global distribution. As well as being South Korea's leading PACS supplier, Infinitt also
has a growing presence in both the USA and Japan with a global network of offices, partners and sales channel representatives in 26
countries.
In addition to the agreements already signed, Medicsight is working to secure further contracts with other medical imaging companies to
achieve wider distribution of its products.
Regulatory Approvals
In the six months ended 30 June 2008, Medicsight was granted regulatory approval for MedicRead Colon from the Chinese State Food and
Drug Administration (SFDA) and the Brazilian National Health Surveillance Agency (ANVISA). More recently, the Company received Brazilian
ANVISA regulatory approval for its ColonCAD product.
The Company is currently working to obtain Japanese Ministry of Health, Labour and Welfare (MHLW) regulatory approval for its MedicRead
Colon product. Medicsight has engaged a team of experts to prepare the Company's application to secure US Food and Drug Administration
(FDA) clearance. The Company is confident that it will shortly be in a position to file a 510(k) submission for review by the FDA.
Clinical Progress
In May 2008, the Company signed an exclusive CAD clinical research agreement with leading American CT colonography (CTC) radiologists Dr
Perry Pickhardt and Dr David Kim from the University of Wisconsin Medical School, USA. In 2004, Dr Pickhardt's group was the first to
establish a third-party reimbursed CT colonography colorectal cancer screening programme. Since then Drs Pickhardt and Kim have both played
an instrumental role in building the clinical evidence base that has proven the comparable effectiveness of CTC for the detection of
colorectal neoplasia within an asymptomatic population in relation to optical colonoscopy. Their specialist advice and experience of CTC
practice will enhance the clinical validation of Medicsight's Colon CAD products set in the context of the world's largest healthcare
market.
In June 2008, data presented at the European Society of Gastrointestinal and Abdominal Radiology (ESGAR) 2008 Conference found that
Medicsight's ColonCAD technology assisted radiographers in identifying 100% of the cancers within the study group.
Product Development
The Medicsight product roadmap continues on track enabling 2008 launches of MedicRead Colon 3.0, MedicRead Lung 1.0 and MedicRead Liver
1.0 as well as an online CTC software solution based on MedicRead Colon. Medicsight is continuing to improve the performance of its ColonCAD
product with a new version planned for 2009. In addition, the company has initiated the development of a CO2 insufflation device for CTC
(MedicCO2lon) and is exploring new image processing and analysis tools for optical colonoscopy. These additions will bolster the existing
CTC portfolio.
Financial Review
Revenue for the six months ended 30 June 2008 was �44,000 compared with �nil for the six months ended 30 June 2007.
In the six months ended 30 June 2008, the Company spent a total of �4,892,000 on operating costs compared with �3,566,000 for the six
months ended 30 June 2007, which is in line with company expectations.
Medicsight remains in a strong financial position with the funds available to execute the business plan.
Conclusion
Medicsight continues to make progress in line with the Company's expectations. In the first half of 2008, we have achieved a number of
significant milestones and laid the foundations for further successes. With significant financial resources at the Company's disposal,
Medicsight is well positioned for the product rollout in 2009 and beyond.
David Sumner
Chief Executive Officer
8 August 2008
INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENTS
6 months ended 6 months ended Year ended
30 June 2008 30 June 2007 31
December
2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Revenue
License and support fees 44 - 20
Cost of sales - - -
________ ________ ________
Gross profit 44 - 20
________ ________ ________
Sales and marketing expense (696) (492) (1,441)
Administrative expenses (3,005) (2,043) (4,243)
Research and development (574) (553) (1,240)
Share based expense (617) (478) (831)
________ ________ ________
Operating loss (4,848) (3,566) (7,735)
________ ________ ________
Finance income 371 39 732
________ ________ ________
Loss before taxation (4,477) (3,527) (7,003)
________ ________ ________
Taxation - - -
________ ________ ________
Loss on ordinary activities (4,477) (3,527) (7,003)
after taxation attributable to
equity holders of the parent
________ ________ ________
Loss per share - basic and (3p) (3p) (5p)
diluted
________ ________ ________
The notes on pages 10 to 14 form part of these interim financial statements.
INTERIM FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
ASSETS
Non current assets
Property plant and equipment 221 103 176
________ ________ ________
221 103 176
________ ________ ________
Current assets
Trade and other receivables 1,033 904 707
Marketable securities and 1,076 - -
treasury deposits
Cash and cash equivalents 20,314 27,928 25,246
________ ________ ________
22,423 28,832 25,953
________ ________ ________
Total assets 22,644 28,935 26,129
________ ________ ________
LIABILITIES
Current liabilities
Trade and other payables (2,007) (1,310) (1,671)
________ ________ ________
Total liabilities (2,007) (1,310) (1,671)
________ ________ ________
Net assets 20,637 27,625 24,458
________ ________ ________
SHAREHOLDERS' EQUITY
Ordinary shares 7,776 7,776 7,776
Share premium 57,306 57,306 57,306
Share based payment reserve 1,853 883 1,236
Currency translation reserve 33 23 (6)
Retained earnings (46,331) (38,363) (41,854)
________ ________ ________
Equity attributable to equity 20,637 27,625 24,458
holders of the parent
________ ________ ________
INTERIM FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months Year ended
ended ended 31
30 June 2008 30 June 2007 December
2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Cash flows from operating
activities
Cash used in operations (4,157) (3,145) (6,349)
Interest received 371 110 803
Interest paid - (1,645) (1,645)
________ ________ ________
Net cash from operating (3,786) (4,680) (7,191)
activities
________ ________ ________
Cash flows from investing
activities
Purchase of equipment (106) - (149)
Other movement - - (15)
Proceeds on sale of equipment - (22) -
Purchase of marketable (574) - -
securities
Investment in treasury (502) - -
deposits
________ ________ ________
Net cash used in investing (1,182) (22) (164)
activities
________ ________ ________
Cash flows from financing
Net proceeds from issues of
ordinary share capital - 30,449 30,449
Finance lease principal - (4) (4)
repayments
Repayment of borrowings - (4,025) (4,025)
________ ________ ________
Net proceeds financing - 26,420 26,420
activities
________ ________ ________
Net (decrease)/increase in
cash and
cash equivalents (4,968) 21,718 19,065
Effects of exchange rate 36 46 17
changes
Cash and cash equivalents at 1 25,246 6,164 6,164
January
Cash and cash equivalents ________ ________ ________
at period end 20,314 27,928 25,246
________ ________ ________
INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Share Premium Share based payment Currency translation Retained earnings Total Equity
Capital reserve reserve
�000 �000 �000 �000 �000 �000
At 1 January 2007 6,322 28,311 405 (23) (34,836) 179
Loss for the period - - - - (3,527) (3,527)
Net exchange adjustments - - - 46 - 46
________ ________ ________ ________ ________ ________
Total recognised income and - - - 46 (3,527) (3,481)
expense
________ ________ ________ ________ ________ ________
Share based payments - - 478 - - 478
Ordinary shares issued 1,454 - - - - 1,454
Premium on Ordinary Shares - 30,546 - - - 30,546
issued
Share issue costs - (1,551) - - - (1,551)
________ ________ ________ ________ ________ ________
At 30 June 2007 7,776 57,306 883 23 (38,363) 27,625
Loss for the period - - - (3,476) (3,476)
Net exchange adjustments - - - (29) - (29)
Other movement - - - - - (15) (15)
________ ________ ________ ________ ________ ________
Total recognised income and - - - (29) (3,491) (3,520)
expense
________ ________ ________ ________ ________ ________
Share based payments - - 353 - - 353
________ ________ ________ ________ ________ ________
At 31 December 2007 7,776 57,306 1,236 (6) (41,854) 24,458
Loss for the period - - - - (4,477) (4,477)
Net exchange adjustments - - - 39 - 39
________ ________ ________ ________ ________ ________
Total recognised income and - - - 39 (4,477) (4,438)
expense
________ ________ ________ ________ ________ ________
Share based payments - - 617 - - 617
________ ________ ________ ________ ________ ________
At 30 June 2008 7,776 57,306 1,853 33 (46,331) 20,637
________ ________ ________ ________ ________ ________
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Basis of preparation of interim financial information
These interim consolidated financial statements are for the six months ended 30 June 2008. The interim financial report, which is
unaudited, has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards and
IFRIC interpretations adopted for use in the European Union ("IFRS"). The accounting policies and methods of computation used are consistent
with those used in the Group annual report for the year ended 31 December 2007 and are expected to be used in the Group Annual Report for
the year ended 31 December 2008. The six month period figures have not been audited as subject to review by the company's auditors.
The financial information for the year ended 31 December 2007 does not constitute statutory information. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The auditors' report on these accounts was not qualified and did
not contain statements under section 237(2) and (3) of the Companies Act 1985.
The interim consolidated financial statements are presented in pounds sterling because that is the currency of the primary economic
environment in which the group operates. All values are rounded to the nearest thousand pounds (�000) except when otherwise stated.
2. Segmental geographical reporting
The Group operates in one business area which is the development and commercialisation of medical imaging software. The Group considers
this business segment to be the primary reporting segment.
6 months ended30 June 2008 UK�000 Other�000 Total�000
________ ______ ________
Revenue 44 - 44
Loss (3,236) (1,241) (4,477)
Segment assets 22,287 357 22,644
Segment liabilities (1,683) (324) (2,007)
Capital expenditure 23 83 106
________ ______ ________
6 months ended30 June 2007 UK�000 Other�000 Total�000
________ ______ ________
Revenue - - -
Loss (2,936) (591) (3,527)
Segment assets 28,850 85 28,935
Segment liabilities (1,240) (70) (1,310)
Capital expenditure 22 - 22
________ ______ ________
12 months ended31 December 2007 UK�000 Other�000 Total�000
________ ______ ________
Revenue 20 - 20
Loss (5,701) (1,302) (7,003)
Segment assets 25,896 233 26,129
Segment liabilities (1,554) (117) (1,671)
Capital expenditure 70 79 149
________ ______ ________
NOTES TO INTERIM FINANCIAL STATEMENTS
3. Earnings per share
6 months ended 6 months ended Year ended
30 June 2008 30 June 2007 31 December
2007
(unaudited) (unaudited) (audited)
______________ ______________ ______________
Loss for the period (�000) (4,477) (3,527) (7,003)
Weighted average number
of ordinary shares (000) 155,524 128,041 141,896
Loss per ordinary share
- basic and diluted (3p) (3p) (5p)
______________ ______________ ______________
The loss per share is based on the weighted average number of ordinary shares in issue during the year. The Company has recorded a loss
in all periods. No adjustment has been made to the basic loss per share, as the exercise of the share options would have the effect of
reducing the loss per ordinary share and is anti-dilutive.
4. Share options
The Company has granted share options to eligible employees since 2003. In the period ending 30 June 2008, the Company granted the
following plan:
Plan H - On 2 June 2008, the Company approved and granted 750,000 share options under Share Option Plan "H". Options issued under this
plan vest in equal one-thirds on the first, second and third anniversaries of the date of grant. The fair value of the options at the date
of grant was �120,000. A summary of the movement on the share option plans is:
30 June 2008 31 December 2007
Number of Shares Weighted Average Number of Shares Weighted Average
Exercise Price Exercise Price
__________ __________ __________ __________
Start of period 11,782,500 �0.72 3,684,000 �1.04
Granted 750,000 �0.68 9,325,000 �0.70
Forfeited (425,000) �0.73 (1,226,500) �0.76
Exercised - - - -
__________ __________ __________ __________
At period end 12,107,500 �0.72 11,782,500 �0.72
__________ __________ __________ __________
Exercisable at period end 3,641,667 �0.62 1,833,334 �0.76
__________ __________ __________ __________
The following data are a summary of the status of the share options outstanding at 30 June 2008:
Remaining contractual life
Share Option Plan Number (years)
________________ _______________ _______________
A 421,500 4.6
B 663,500 5.7
C 285,000 6.9
D 875,000 8.0
E 5,775,000 8.6
F 350,000 8.9
G 2,987,500 9.5
H 750,000 9.9
________________ _______________ _______________
12,107,500
____________
Options are fair valued using the Black-Scholes option pricing model. No performance conditions were included in the fair value
calculations. The following weighted average assumptions were used to estimate the fair value of stock options granted in the period:
Dividend yield Nil
Expected volatility 25% to 65%
Risk free rates 4.65% to 5.5%
Expected volatility is based on historical volatility over the last three years of MGT Capital Investments, Inc (the parent company).
The expected life is the average expected period to exercise (usually the vesting period). The risk free rate of return is the yield on
zero-coupon UK government bonds of a term consistent with the assumed option life.
In the period ending 30 June 2008 the Company recorded a share option charge of �617,000 (30 June 2007: �478,000).
5. Related Parties
The Company has related party relationships with its subsidiaries, its parent company (MGT Capital Investments Inc), directors,
employees and subsidiary companies of its parent company.
Other subsidiary companies of the parent also operate from 66 Hammersmith Road, London and some establishment, finance, IT and
administration costs are charged to, and from, these companies. In the six months to 30 June 2008 Medicexchange PLC charged Medicsight
�106,000 and MGT Capital Investments (UK) Limited charged Medicsight �331,000.
6. Reconciliation of net cash flows from operating activities
6 months ended 6 months ended Year ended
30 June 2008 30 June 2007 31
December
2007
(unaudited) (unaudited) (audited)
�000 �000 �000
__________ __________ __________
Loss for the period (4,477) (3,527) (7,003)
Adjustments for:
Depreciation 64 46 95
Loss on disposal of equipment - 3 8
Interest income (371) (110) (803)
Interest expense - 192 192
Foreign currency finance cost - (121) (121)
Share options 617 478 831
Changes in working capital
Trade and other receivables (326) (120) 77
Trade and other payables 336 14 375
__________ __________ __________
Cash used in operations (4,157) (3,145) (6,349)
__________ __________ __________
- Ends -
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