Mediwatch Plc
Interim Results for the six months to 30 April 2012
25 June 2012
Mediwatch plc ("Mediwatch", "the Company" or "the Group", AIM: MDW), the innovative urological diagnostic company, is pleased to publish its interim results for the six months ended 30 April 2012.
Financial Highlights
- Sales revenues of £5,084,000 (H1 2011: £5,095,000)
- EBITDA before exceptional items of £295,000 (H1 2011: £272,000)
- Profit before Taxation and exceptional items of £89,000 (H1 2011: £67,000)
- Profit before Taxation of £39,000 (H1 2011: £67,000)
Operational Highlights
- Successful launch of new tablet computer based products (ultrasound scanners, uroflowmetry, and pelvic floor rehab) which were well received at the American Urologists Association annual conference and exhibition in Atlanta in May
- Increase in sales of Bardscan
- PSAwatch trials in the market are continuing positively
- Mobilewatch service proposition expanded from its positive beta test phase in Florida and is now in 6 locations across America with more growth planned
- Mediwatch USA expanding its sales reach into Western America and Canada and is increasing its presence in Latin America
- Expansion into Asia continues with new dealers in the region. Approvals in China are in progress
- Profit of £39,000 achieved after exceptional reorganisation costs of £50,000
Omer Karim, Mediwatch Chairman commented
"Whilst sales in the first half of the year has been similar to last year's I am pleased to be able to report that our sales volumes are continuing to grow, albeit we have been more aggressive in our margin. We have continued to take action to reduce our cost base and to change our methods of operation and this has necessitated us incurring some reorganisation expenses. However, we believe that the benefits of this restructuring will start to become evident in the second half of the year with the full benefit coming though in the next financial year"
Interim Results for the six months to 30 April 2012 (In Full)
Editors Notes: Mediwatch plc: Innovative Diagnostic Solutions
Mediwatch is a leader in its field. The Company is continually striving to develop and market faster, simpler and less invasive diagnostic products to save lives and restore quality of life for people with a variety of urological conditions. Founded in 1995, Mediwatch (www.mediwatch.com) has developed a range of medical equipment for the diagnosis of urological disorders.
The business focuses its design skills towards diagnostic products that can be used across the medical profession.
Overview
Mediwatch continues to generate a good level of sales in what have been difficult trading conditions. Despite challenging market conditions, programmes such as the new Urodynamic system and the new Portascan+ are beginning to build a significant niche for themselves and new projects, which are due to be launched in the second half of 2012 and throughout 2013, are expected to contribute significantly to the Group going forward.
Trading
In the six month period to 30 April 2012, Group turnover was £5.084 million, (H1 2011: £5.095 million). Revenue remained equally split with almost 50% from the US and 50% from UK, Europe and the rest of world (ROW), as it was in the comparative period last year. The product mix experienced during the first half of the 2012 financial year was also similar to that experienced in the first half of 2011. This was in line with management's expectations.
The Group achieved an EBITDA before exceptional items of £295,000 for the six months to 30 April 2012 (H1 2011: £272,000). The Group, as previously announced, has undertaken some further cost cutting and rationalisation in the first half of the year this has given rise to some exceptional costs of £50,000 (H1 2011 £nil) and even with the exceptional item included, profit is slightly ahead of the board's expectations at this stage. Whilst there has been a significant amount of cost cutting, some benefits of which will start to become apparent in the second half of the year, the real benefits will flow through in the next financial year. The flat nature of the market has meant that there continues to be pressure on margins in certain areas although the board have taken a number of initiatives to reduce production costs which again should show some product by product margin improvements as they come through.
Cash flow was down due to later receipt of R&D Tax credit than in previous year
UK Operations
Highlights from the UK operations include:
- A very strong performance in the UK domestic market
- Major European dealers continue to perform well but lower Middle East brought the Rest of World number down
- Cost reduction programmes are ahead of budget - and remain needed due to market pressure on margins
- New products from EBNeuro starting to be ordered
- Approaches from major international pharmaceutical companies to use Mediwatch equipment in global trials
US Operations
Highlights from the US operations include:
- Gross Margin was ahead of expectations with the gross margin percentage exceeding Budget by 3%, primarily due to cost reductions. The higher margins more than offset lower sales that occurred due to customers delaying purchases into the second half. So whilst USA sales were down on last year, the gross margin they produced was ahead of 2011
- Strong push into the female urology & urogynecology markets, which have been identified as key target markets for growth in the future
- Increased number of sales representatives including a focus on the American West Coast and Canada. Also investment is being made to increase sales in the Latin American market and to register Mediwatch products in 8 countries
- New marketing initiatives and fresh new look to the Mediwatch branding.
- Increase in market penetration in the service sector
Research and development
Expenditure on research and development, including capitalised costs, was £365,000 (H1 2011: £283,000) during the six months to 30 April 2012. The main spend being on:
- Development of a USB Ultrasound tablet computer which was exhibited at the recent American Urology Association show in Atlanta
- Development of a new range of state of the art Urodynamic systems scheduled to be released during 2013
- Registration and testing of new products around the world including China, Japan and the FDA in USA.
- Development of new products for the paediatric market
Management and employees
The board would like to take this opportunity to again thank all employees for their hard work and contribution in achieving the continuing success of the business and in supporting the reorganisation and rationalisation that has been undertaken.
There have been a number of senior management changes with Mark Hughes joining Mediwatch as Chief Financial Officer in March replacing Colm Croskery who has left to take up a position in a business in an unrelated sector. In addition, Dr Marcus Harrison stepped down from the board in March and will leave the Company at the end of June.
Current trading and outlook
Overall the Company's performance for the first half of 2012 was broadly in line with the board's expectations. With more of the benefits of the rationalisation and cost savings coming through and an increasing level of trading starting to be seen the Company is currently on track to meet market expectations for the year.
Consolidated Income Statement for the six months ended 30 April 2012-(see link BOP)
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