Interim Results for the six months ended 30 June 2008
The Medical House PLC ("TMH") (AIM:MLH) the drug delivery specialist, announces its interim results for the six months ended 30 June, 2008.
Highlights:
- Turnover grew by 43% to £1.4m (2007: £992k)
- Operating profit of £342k (2007: £140k)
- Achieved first FDA 510(k) approval for the ASI disposable autoinjector device technology
- Three major pharmaceutical companies as licensees for the ASI technology
- • Post period end event - £5m deal signed with Dr Reddy's for a customised
auto-injector device
Executive Chairman, Ian Townsend, said:
"The Board of TMH is greatly encouraged by trading since the end of the profitable first six months of the Company's financial year. We are looking forward to the future with every confidence."
For further information:
The Medical House PLC | tel: 0114 261 9011 |
Ian Townsend, Chairman | www.themedicalhouse.com |
Buchanan Communications | tel: 020 7466 5000 |
Tim Anderson / Rebecca Skye Dietrich | |
NomuraCode Securities Richard Potts / Wolf Dornbusch | tel: 020 7776 1200 |
The Medical House plc (the "Company" or "TMH")
Interim results for the six months ended 30 June 2008
Chairman's Statement
I am very pleased to report an operating profit of £342 k for the six months ended 30 June 2008 (£140k : 2007) which is a record performance for TMH.
These results reflect the continuing growth and development of TMH in the global drug delivery market. Progress has been made on all fronts and in all our current projects with our various licensees and partners.
Sales grew by 43% to £1.4m in the period (2007: £992k) and importantly we also achieved our first FDA 510(k) approval for our ASI disposable autoinjector device technology.
As our development as a global drug delivery company gathers pace, we remain confident of concluding further licensing agreements for our device technologies. Recently, we have added Dr Reddy's Laboratories as a licensee and we are delighted to welcome them as a partner and trust that this relationship will expand further. It is always pleasing to conclude agreements such as this one; growing pharmaceutical companies generally have ongoing requirements for drug delivery systems for their injectable products pipeline and success with a particular device can be extended across a product range. We now have three major pharmaceutical companies as licensees and trust that we will be adding to this growing list as we move forward.
Our largest project to-date continues to progress well and shareholders will note that in April we announced that our pharmaceutical company partner had received US FDA regulatory approval on a variation of the drug that is to be used with our ASI disposable autoinjector, which is a very encouraging and significant event. The device continues to meet expectations and we anticipate building commercial launch quantities late in 2009.
We continue to work towards a successful launch of the needle-free human growth hormone delivery system being developed for Merck Serono, a system which we believe will represent the most advanced reusable needle-free injector available today.
As I have mentioned on a number of occasions, our most significant level of interest from potential pharmaceutical companies licensees relates to our ASI disposable autoinjector technology, which we believe has considerable scope for additional application, as increasing numbers of injectable products require innovative delivery systems to differentiate them from competing products.
There are several factors driving this interest, most notably the number of new biologic drug products being developed (the majority of which must be injected) and the increasing numbers of generic drugs which are scheduled for launch in the foreseeable future. We see a number of exciting opportunities in a wide range of both elective and emergency therapeutic areas including autoimmune diseases, oncology and hepatitis, to name but a few.
It is also worth noting that an increasing numbers of new drugs are in sustained release formulation, which minimises the number of injections needed by patients undergoing a particular therapy. The process of achieving sustained release properties may tend to create a more viscous drug, thus making an injection (whilst still using a relatively fine needle) more challenging.
Autoinjectors for such viscous formulations need to generate high force which increases the risk of breaking glass syringes during the injection process, which would be a highly unsatisfactory occurrence. As part of the ongoing investment in the improvement of our ASI disposable autoinjector, we have developed a system which enables us to offer an extremely effective means of injecting viscous drugs, whilst protecting against syringe breakage in such conditions.
The potential value of our technology is, in the opinion of our Board, considerably higher than TMH's recent market capitalisation would suggest, and it is therefore not surprising that from time to time we receive enquiries from parties interested in acquiring the Company.
Under the rules of the Panel on Takeovers and Mergers, an announcement has to be made if a share price moves beyond certain parameters irrespective of the status of any enquiry.
Consequently we had to make such an announcement despite the fact that the approach that we had received was of a very preliminary nature and, as has transpired was likely not to proceed to an offer. Notwithstanding this situation however, shareholders can be assured that it is our intention to work with our clients to further develop TMH into a substantial global drug delivery business.
The loss from discontinued operations of £317k was associated with settling the Eurocut loan and primarily comprises a write down of the balance of the debt. Whilst any write down is disappointing, under the present economic climate we felt it prudent to settle for £500k in cash, thereby eliminating any further uncertainty connected with this debt.
We are currently improving our website and would encourage all shareholders to register on the site, thus enabling us to communicate with them more effectively.
Prospects
The Board of TMH is greatly encouraged by trading since the end of the profitable first six months of the Company's financial year. We are looking forward to the future with every confidence.
The Medical House Plc
Interim Report 2008
Unaudited Consolidated Interim Profit and Loss Statement
for the six months ended 30 June 2008
Unaudited | Unaudited | Audited | |
Six months | Six months | * Six months | |
ended 30 | ended 30 | ended 31 | |
Jun-08 | Jun-07 | Dec-07 | |
£000 | £000 | £000 | |
Revenue | 1,422 | 992 | 780 |
Cost of sales | (42) | (102) | (73) |
Gross profit | 1,380 | 890 | 707 |
Other income | 363 | ||
Net income from operations | 1,380 | 890 | 1,070 |
Administrative expenses | (1,038) | (750) | (1,234) |
Operating profit / (loss) | 342 | 140 | (164) |
Analysis of operating profit / (loss) | |||
Operating profit / (loss) before exceptional items | 375 | 25 | 162 |
Intercompany debt waiver | 127 | ||
Other exceptional costs | (33) | (12) | (326) |
342 | 140 | (164) | |
Financing expense | (23) | (49) | (30) |
Profit / (loss) before income taxation | 319 | 91 | (194) |
Income tax | (103) | 161 | 537 |
Profit from continuing operations | 216 | 252 | 343 |
Discontinued operation | |||
Loss from discontinued operation (net of income tax) | (317) | (592) | (3,825) |
(Loss) for the period | (101) | (340) | (3,482) |
Earnings per share | |||
Basic loss per ordinary share on total operations | (0.17p) | (0.57p) | (5.79p) |
Diluted loss per ordinary share on total operations | (0.17p) | (0.57p) | (5.79p) |
Basic profit /(loss) per ordinary share - continuing operations | 0.36p | 0.42p | 0.57p |
Diluted profit/(loss) per ordinary share - continuing operations | 0.36p | 0.42p | 0.55p |
* Change of year end from June to December adopted, therefore a 6 month period
Unaudited Consolidated Interim Balance Sheet
for the six months ended 30 June 2008
Unaudited | Audited | Audited | |
30-Jun-08 | 30-Jun-07 | 31-Dec-07 | |
£000 | £000 | £000 | |
Assets | |||
Property, plant and equipment | 319 | 5,552 | 315 |
Intangible assets | 2,066 | 2,041 | 1,907 |
Deferred tax assets | 668 | 272 | 760 |
Total non-current assets | 3,053 | 7,865 | 2,982 |
Inventories | 80 | 1,436 | 87 |
Trade and other receivables | 1,273 | 1,360 | 2,567 |
Prepayments | 108 | 318 | 169 |
Corporation tax receivable | 48 | 48 | |
Asset held for resale | 380 | 380 | |
Total current assets | 1,889 | 3,114 | 3,251 |
Total assets | 4,942 | 10,979 | 6,233 |
Liabilities | |||
Finance leases | 77 | 872 | 47 |
Deferred income | 500 | 75 | 1,250 |
Total non current liabilities | 577 | 947 | 1,297 |
Bank overdraft | 284 | 2,905 | 365 |
Finance leases | 49 | 600 | 38 |
Trade and other payables | 387 | 612 | 344 |
Deferred income | 1,500 | 45 | 1,500 |
Accruals | 341 | 483 | 776 |
Total current liabilities | 2,561 | 4,645 | 3,023 |
Total Liabilities | 3,138 | 5,592 | 4,320 |
Equity | |||
Issued share capital | 601 | 601 | 601 |
Share premium account | 7,353 | 7,353 | 7,353 |
Other reserves | 487 | 487 | 487 |
Retained earnings | (6,637) | (3,054) | (6,528) |
Equity shareholders funds | 1,804 | 5,387 | 1,913 |
Total equity and liabilities | 4,942 | 10,979 | 6,233 |
Unaudited Consolidated Interim Cash Flow Statement
for the six months ended 30 June 2008
Unaudited | Unaudited | Audited | |
Six months | Six months | Six months | |
ended 30 | ended 30 | ended 31 | |
Jun-08 | Jun-07 | Dec-07 | |
£000 | £000 | £000 | |
Cash flow from operating activities | |||
Loss for the period | (101) | (340) | (3,482) |
Adjustments for : | |||
Depreciation | 35 | 304 | 238 |
Impairment | 48 | ||
Amortisation | 12 | 3 | |
Finance costs | 23 | 136 | 126 |
(Gain)/loss on sale of property, plant and equipment | 6 | 4 | (211) |
Loss on disposal of discontinued operations | 317 | 1,314 | |
Deferred income arising from sale of SQ pen for Insulin | (116) | ||
Deferred tax provision | 92 | (353) | (537) |
Share based payments | (8) | (4) | 8 |
364 | (241) | (2,609) | |
Change in inventories | 7 | (89) | 248 |
Change in trade and other receivables | 444 | (238) | (856) |
Change in prepayments | 61 | (75) | 29 |
Change in trade and other payables | (499) | (236) | 1,245 |
Change in deferred income | (750) | 22 | 2,746 |
(737) | (616) | 3,412 | |
Interest paid | (23) | (136) | (126) |
Net cash movement from operating activities | (396) | (993) | 677 |
Cash flows from investing activities | |||
Proceeds from sale of property, plant and equipment | 51 | 23 | 794 |
Purchase of property, plant and equipment | (74) | (91) | (25) |
Overdraft and debt disposed of with subsidiary | 680 | 1,511 | |
Capitalised development expenditure | (159) | (163) | (124) |
Cash movement in investing activities | 498 | (231) | 2,156 |
Cash flows from financing activities | |||
Repayment of principal on hire purchase loans | (21) | (338) | (293) |
Cash movement in financing activities | (21) | (338) | (293) |
Increase/(Decrease) in cash in the period | 81 | (1,562) | 2,540 |
Opening cash and cash equivalents | (365) | (1,343) | (2,905) |
Closing cash and cash equivalents | (284) | (2,905) | (365) |
Notes
1. The Medical House plc (" the Company") is a company domiciled in the United Kingdom. The Financial Statements for the half year ended 30 June 2008 comprise the Company and its subsidiaries
(together referred to as the "group")
2. The Consolidated Interim Financial Statements have been prepared on the basis of the recognition and measurement requirements of IFRSs in issue and endorsed by the EU and effective at 30 June 2008
3. The Consolidated Interim Financial Statements do not include all the information required for full annual Financial Statements and should be read in conjunction with the Consolidated Financial Statements of the Group as at and for the six months ended 31 December 2007
4. The accounting policies applied are consistent with those applied by the Group in it's financial statements as at 31 December 2007
5. The comparative figures for 6 months ended 31 December 2007 are the Company's statutory financial statements for that financial period. Those financial statements have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
The comparative figures for administrative expenses for the six months ended 30 June 2007 and for the six months ended 31 December 2007 are representative of the Group when it included Eurocut and as such not consistent with the six months ended June 2008, which represents the Medical House Group as a stand alone business.
6. The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
7. Taxation has been provided at the estimated effective rate for the period, based on the main stream rate of 28%. The profit in the period is covered by unused losses brought forward and therefore a deferred tax charge arises as a reduction in the deferred tax asset on these losses.
8. The calculation of loss per share is based on the loss after taxation and the number of ordinary shares in issue during the period. (60,118,869 shares as at 31st December 2007 and as at 30 June 2008). In determining the diluted earnings per share no adjustments were required from the basic earnings per share as all potential ordinary shares are anti-dilutive.
Publish Date: Monday, September 15, 2008