| Medical
House Interim Results
RNS Number:3555S
Medical House PLC
06 March 2007
For Immediate Release 6 March 2007
The Medical House PLC
Interim Results for the six months ended 31 December 2006
The Medical House PLC ("TMH") (AIM:MLH) the drug delivery
and orthopaedic
devices company, announces its interim results for the six months
ended 31
December 2006.
* Financial Performance
* Operating loss reduced by 25% to #473,000 for period when
compared
to six months ended 30th June 2006
* Turnover #2.7m (2005: #2.9m)
* Pre-tax loss before exceptional items #539,000 ( 2005: #392,000)
* Drug Delivery Systems
* 148% sales increase to #730,000 (2005: #294,000)
* #27m deal with major global pharmaceutical company, for customised
version of our ASI disposable autoinjector
* Discussions ongoing for further licence and development agreements
* Orthopaedic Instruments
* Turnover of #2.0m (2005: #2.7m) - in line with expectations
* Continued effect of major customer experiencing FDA delay -
adversely effecting order levels
* Restructuring continues to make Orthopaedic business more diverse
Executive Chairman, Ian Townsend, said:
"We are extremely pleased by the performance of our drug
delivery business,
which continues to make excellent progress as illustrated by the
licence and
supply agreement we signed in December 2006 for our ASI disposable
autoinjector
technology, with a major pharmaceutical company. Our ASI autoinjector
technology
continues to be favourably received and we remain confident that
further
development, licence and supply contracts will be signed in due
course."
For further information:
The Medical House PLC tel: 0114 261 9011
Ian Townsend, Executive Chairman www.themedicalhouse.com
Buchanan Communications tel: 020 7466 5000
Tim Anderson / Rebecca Skye Dietrich
Chairman's Statement
The Medical House specialises in the development and manufacture
of innovative
medical devices.
The principal operating businesses are:
1. Drug delivery systems: Medical House Products Limited
2. Instruments and implants for the orthopaedic market: Eurocut
Limited
We are pleased to report that our drug delivery business continues
to make
excellent progress as illustrated by the significant development,
licence and
supply agreement we signed in December 2006 for our ASI disposable
autoinjector
technology. As anticipated when announcing our 2006 annual results
on 10 October
2006, Eurocut has continued to find trading in its core orthopaedics
market
difficult. Therefore, new markets have been targeted with some
success but, as
expected, volumes from the new activities are low as it takes
time to win the
confidence of a new customer base.
The drug delivery business is a major success in an area which
has seen very
high valuations placed on companies with profiles similar to The
Medical
House's. Our orthopaedics activities are based on specialist engineering
expertise, but the business is currently diversifying as a result
of the soft
demand for orthopaedic instruments. The Directors believe that
the contrasting
performances of the two divisions is causing confusion amongst
investors which
is suppressing the value of the Group. The directors are therefore
actively
pursuing a strategy to maximise shareholder value with respect
to the
orthopaedic business.
In our results to 30th June 2006, we announced that we had received
approaches
for the purchase of our needle-free insulin injector business.
We continue to
actively explore the possibility of disposing of this element
of our activities
which no longer fits our business model of licensing and supplying
devices
solely to pharmaceutical and healthcare company clients.
Group Financials
The Group is reporting a pre-tax loss before reorganisation costs
of #539,000
(2005: #392,000) on sales which were slightly lower at #2.7m (2005:
#2.9m) for
the six months ended 31st December 2006. This represents a reduced
loss to that
reported for the six months ended 30th June 2006.
Drug Delivery Division: Medical House Products Limited (MHP)
Sales in the six months grew by 148% to #730,000 (2005: #294,000)
despite the
division not yet enjoying major benefits of the anticipated product
launches for
pharmaceutical company partners' drugs with our needle-free and
autoinjector
devices.
The highlight of the period was undoubtedly the signing of the
development,
licence and supply agreement with projected sales of #27m, with
a major global
pharmaceutical company, for a customised version of our ASI disposable
autoinjector. This agreement not only has significant financial
benefits for the
company but also enhances our company's credibility in our marketplace.
The
development phase of this project is progressing well.
Our ASI autoinjector technology continues to be favourably received
and we
remain confident that further development, licence and supply
contracts will be
signed in due course.
Our ASI device can be used in conjunction with almost any pre-filled
syringe and
offers major economic, safety and convenience advantages by enabling
patients to
self-inject their medications without any clinical expertise.
This in turn
creates significant competitive advantages for pharmaceutical
companies who
incorporate their injectable drug products within such a device.
In the past
year a number of self-injected drugs have been successfully launched
with
pre-filled, disposable autoinjectors and all indications are for
this trend to
gain further momentum as newly-developed biologic drugs (which
are more likely
to require injection) are brought to market. Our technology is
also extremely
adaptable as it can be easily adjusted to vary volume, speed and
depth of an
injection. This flexibility of the ASI technology allows us to
provide clients
with a specific solution to their requirements and, as a result,
most future
agreements for the ASI are likely to involve some form of customisation.
In addition to the contracts we have already announced, we have
further
developed the ASI platform technology with designs well advanced
for a "mini"
version of the device (for therapies which require users to carry
their drugs
with them at all times) and a version which automatically mixes
dry
formulations with liquid diluents, prior to automated injection.
In addition to
our existing system for delivery of viscous (e.g. sustained release)
drugs,
these variants within the ASI range of autoinjectors have significant
commercial
potential and our intellectual property management strategy is
focused on
protection of this innovation.
Sales growth in the short term largely depends on the demand
for our clients'
drug products which are being partnered with our devices. These
products are at
various stages of commercialisation but the timing of their commercial
launches
is in the hands of our customers. However, with the development,
licence and
supply agreements already in place, we remain very confident of
a future of
sustained growth for many years to come.
Orthopaedic Division: Eurocut Limited
Sales in the six months to 31st December were #2m (2005: #2.7m)
in line with the
expectations we communicated to shareholders in the 2006 year-end
results. Sales
were held back due to a much quieter overall orthopaedic market
which has
similarly affected our competitors in the orthopaedic instrumentation
field. We
were also affected by the continued absence of the orders which
have been
deferred due to a major customer experiencing delays in US FDA
regulatory
approval. This particular position has not changed since our last
announcement;
however, we continue to work closely with our customer on this
product line.
During the last six months we incurred reorganisation costs of
#56,000 due to
redundancy expenses, as we continue to restructure Eurocut into
a diverse
business, serving a variety of markets and with several income
streams. With the
appointment of additional business development staff and, whilst
utilising our
existing skills and machinery, our non-orthopaedic orders are
steadily
increasing and we fully expect this growth to gather momentum
in the coming
months.
New customers invariably wish to see evidence of our capability
to produce a
quality product in a timely manner. Consequently, small orders
are typically
received in the first instance, followed by more regular, larger
orders. During
the past six months we have completed a number of such initial
orders for a
diverse range of products. Over the next six months we now expect
to receive the
benefits of these efforts and the volume of our non-orthopaedic
business should
steadily increase from here. The added advantage of the new areas
we have
entered is that the margins we are able to achieve are generally
much higher
than those currently available in orthopaedics.
With no signs yet of a major pick up in the orthopaedic market,
the recovery in
Eurocut's sales and profits will come from these new markets,
customers and
products. In order to demonstrate our commitment to our new customers
in
different industries, we have formed a new company, TMH Precision
Engineering,
which will be responsible for all non-medical work. A new website
is being
created and a sales force, with experience in relevant markets
has been
recruited. Eurocut, which has an established brand name in the
medical world,
will supply only medical products.
Outlook
The drug delivery division will continue to progress on all fronts
and we remain
very confident of its continued success in formalising further
collaboration
agreements and partnerships. Short term results will be influenced
by the pace
of the recovery at Eurocut, and the performance of the newly-formed
TMH
Precision Engineering. Meanwhile, given the performance of our
orthopaedic
operations, and the current depressed market valuation of the
Group, the
Directors continue to review all strategic options for the orthopaedic
and
needle-free businesses. Finally, I would like to thank all my
colleagues who
have worked extremely hard to create a company of which they can
all be very
proud.
Ian Townsend
Executive Chairman
6 March 2007
Unaudited Consolidated Profit and Loss Account
for the six months ended 31 December 2006
Six months Six months Year
ended 31 ended 31 ended 30
Dec 06 Dec 05 Jun 06
Restated Restated
#000 #000 #000
Turnover 2,679 2,935 5,601
Cost of Sales -1,620 -1,522 -3,338
Gross Profit 1,059 1,413 2,263
Operating Expenses -1,532 -1,752 -3,232
Operating Loss -473 -339 -969
Analysis of Operating Loss
Operating loss before exceptional items -417 -289 -909
Exceptional items -56 -50 -60
-473 -339 -969
Net interest payable -122 -103 -187
Loss on ordinary activities before tax -595 -442 -1,156
Tax on ordinary activities - - 19
Retained loss for the period -595 -442 -1,137
Loss per ordinary share - basic -1.04p -0.72p -1.89p
Notes
1. The Medical House Plc (the "Company") is a company
domiciled in the United Kingdom. The Financial Statements of the
company for the half year ended 31 December 2006 comprise the
Company and its subsidiaries (together referred to as the "group").
2. The accounting policies have been applied consistently in
dealing with items which are considered material in relation to
the Consolidated Interim financial statements. In these financial
statements FRS 20 'Share-based payments' has been adopted for
the first time. This has not had a material effect on the Consolidated
Interim financial statements.
3. The information for the year ended June 2006 has been extracted
from the accounts of The Medical House Plc. The report of the
auditors was unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985.
4. Taxation has been provided at the estimated effective rate
for the period.
5. The calculation of loss per share is based on the loss after
taxation and the weighted number of ordinary shares in issue during
the period. (Six months ended 31 December 2006: 57,029,757 shares,
year ended 30 June 2006: 60,029,681 shares, and the six months
ended 31 December 2005: 61,457,765 shares).
6. Copies of this report are available to the public at the
Company's registered office, 199 Newhall Road, Sheffield, S9 2QJ
and have been sent to shareholders.
Unaudited Consolidated Balance Sheet
as at 31 December 2006
31 December 31 December 30 June
2006 2005 2006
Restated Restated
#000 #000 #000
Fixed Assets
Intangible Assets 1,889 1,409 1,637
Tangible Assets 5,755 5,408 5,471
7,644 6,817 7,108
Current Assets
Stock & Work in Progress 1,347 1,831 1,548
Debtors 1,365 1,269 1,078
2,712 3,100 2,626
Creditors falling due within one year -3,300 -3,780 -3,837
Net Current (Liabilities)/Assets -588 -680 -1,211
Total Assets Less Current Liabilities 7,056 6,137 5,897
Creditors falling due after one year -1,245 -1,281 -1,088
Provisions for liabilities & charges -81 -100 -81
Net Assets 5,730 4,756 4,728
Capital and Reserves
Called up share capital 601 615 547
Share premium account 7,353 7,521 5,824
Other reserves 525 497 511
Retained profits -2,749 -3,877 -2,154
Equity shareholders funds 5,730 4,756 4,728
Unaudited Consolidated Cash Flow Statement
for the six months ended 31 December 2006
Six months Six months Year ended
ended 31 ended 31 30 June 2006
December 2006 December 2005
Restated Restated
#000 #000 #000
Net Cash inflow/(outflow) from operating activities -120 -501 -424
Returns on investment & servicing of finance
Net cash outflow from returns on investment
& servicing of finance -122 -103 -187
Taxation - - -
Net cash outflow from capital expenditure -381 -266 -716
Net cash outflow before financing -623 -870 -1,327
Financing 1,369 -326 -52
(Decrease)/Increase in cash in the period 746 -1,196 -1,379
Reconciliation of Operating Loss to Net Cash
Outflow from Operating Activities
Operating Loss -473 -339 -969
Depreciation on tangible fixed assets 287 301 608
(Profit)/Loss on sale of tangible fixed assets -21 18 25
Share based payments 15 4 13
Amortisation of intangible fixed assets 2 - 5
(Increase)/Decrease in stocks 201 -283 -
Decrease/(Increase) in debtors -287 -98 93
Increase/(Decrease) in creditors 156 -104 -199
Net cash (Outflow)/inflow from operating activities -120 -501 -424
Reconciliation of Net Cash Movement to Net Debt
Increase/(Decrease) in cash in the period 746 -1,196 -1,379
Net cash movement from increase in debt 360 416 802
Movement in net debt resulting from cash flow 1,106 -780 -577
New finance leases -568 -175 -334
Movement in net debt during the year 538 -955 -911
Net debt at beginning of year -3,651 -2,740 -2,740
Net debt at end of period -3,113 -3,695 -3,651
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