27 January 2012
Mediwatch plc ("Mediwatch" or "Company" or "Group") announces that its final results for the year ended 31 October 2011 will be issued during the week commencing 30 January 2012.
The Group also issues the following trading update in advance of the announcement of the final results:
Mediwatch has maintained its turnover and increased profits and cash flows from operations during the year to 31 October 2011, in spite of Mediwatch's major markets in Europe and the USA suffering from economic turbulence. However, profit before tax for the year ended 31 October 2011 is expected to be £322,000 (unaudited) (2010: £233,000), materially lower than market expectations.
Revenues for the year ended 31 October 2011 are expected to be marginally higher at £10.6m (unaudited) (2010: £10.5m). Unfavourable global economic conditions, together with increased competition in the urodynamic market and delays in commercialising PSAwatch, hampered the Group's ability to increase turnover. In addition, gross margins have come under some pressure in the second half of the year to 31 October 2011 due to increased costs from some suppliers, which the Group was not able to pass on to customers, and increased competition in the urodynamic capital and consumer markets.
However, the re-organisation and cost reduction programme that commenced in Q1 2011 has continued in the second half, including the outsourcing of major elements of the Group's manufacturing and a reduction in fixed overheads. This has lead to further cost savings, although cost cutting in certain research and development projects has encountered delays.
Despite a delay during the year arising from the transfer of manufacturing of the test strip to a new site, PSAwatch is now at an early stage of commercialisation with clinical trials in France to gain reimbursement approval, direct marketing starting in Germany, Hong Kong, Mexico and China, growing sales in the UK private sector and the potential for further co-operation and trials with two international pharmaceutical companies.
The Directors have been encouraged by significant sales growth in developing markets including the Far East and Russia during the period, which provides a platform for future growth.
The Company continues to focus on internal efficiencies and the tight management of its cost base. During 2012 the Board anticipates the conclusion of a number of important research and development projects which are expected to strengthen and update the Group's existing product lines in urodynamics and ultrasound while reducing unit costs.
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