Mediwatch PLC Half Yearly Report

3rd June 2013

Interim Results for the six months to 30 April 2013

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 2013.

Financial Highlights
-- Sales revenues of GBP4,911,000 (H1 2012: GBP5,084,000)
-- Gross Margin increases by GBP35,000 despite lower sales
-- Operating Profit of GBP161,000 (H1 2012 GBP78,000)
-- EBITDA of GBP311,000 (H1 2012: GBP245,000)
-- Profit before Taxation up 210% at GBP121,000 (H1 2012: GBP39,000)

Operational Highlights

-- Successful launch of New Clinic+ Urodynamics system, NANO Portable UDX system, Mediwatch Procedure Couch and Venus Pelvic Floor device, which were well received at the European Association of Urology annual conference and exhibition in Milan in April and the American Urological Association annual conference and exhibition in San Diego in May
-- Restructuring of UK sales to deliver the same effectiveness with lower cost
-- New distribution contracts signed in the USA
-- Strong sales growth of capital goods in the USA
-- New Distributors signed in Latin America
-- PSAwatch is continuing positively with potential for large scale work-place screening
-- Successful ISO 13485:2003 and CMDCAS renewal
-- Regulatory approvals in China and Latin America are in progress

Omer Karim, Mediwatch Chairman commented

"The Board is encouraged with the results for the first half of the 2013 financial year; in particular it is pleasing to see that the cost reductions have firmly benefited the bottom line. With new product launches well underway and more to come later in the year; the Group is positioned for a positive second half""

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"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

Whilst overall sales have been flat compared to last year the cost reductions made both in product cost of sales leading to higher gross margin as well as in lower selling and administration expenses has resulted in a profit before tax increase of 210% over the 2012 half year.

Mediwatch's vision for the future is to develop affordable equipment for the treatment of conditions in its targeted clinical areas. The new product launches planned for 2013 have started well. The first of these a new urodynamic range of Clinic and Encompass, the new Nano, a new procedure couch and the tablet Portaflow were well received at European Association of Urology meeting in Milan in April and the American Urologists Association annual conference and exhibition in San Diego in May. There is more to come later in the year.

Trading

In the six month period to 30 April 2013, Group turnover was GBP4.9 million, (H1 2012: GBP5.1 million). The Group has seen the continuing effects of the US economy emerging from the global slowdown ahead of other markets with the US business showing good growth in revenues and it now accounts for some 55% (51% H2 2012) of Group revenues. Revenue in the UK (which services Europe and the Rest of the world) has declined and, following the failed attempt to partner with Genesis in an attempt to improve these sales, the UK sales team has been restructured to reduce cost with minimal impact on the team's effectiveness and the UK profitability has been enhanced. The product mix experienced during the first half of the 2013 financial year was also similar to that experienced in the first half of 2012.

The Group achieved an EBITDA of GBP311,000 for the six months to 30 April 2013 (H1 2012: GBP245,000). Profit is very slightly ahead of the Board's expectations at this stage.

Cash flow was down due to increasing working capital requirement in the USA from the increasing sales. Additional debt funding has also been taken on in the UK to support the Research and Development effort.

UK, Europe and ROW Operations

Highlights from the UK operations include:
-- On budget performance in profit despite lower sales
-- PSAwatch continues to gain momentum
-- Restructuring of UK sales to deliver the same effectiveness with lower cost
-- Successful ISO 13485:2003 and CMDCAS renewal

US Operations

Highlights from the US operations include:
-- Strong sales growth, 13% increase on the first half of 2012
-- Gross Margin percentage higher than last year
-- Savings on selling and administration expenses over 2012
-- New distribution contracts signed
-- Strong sales growth of capital goods
-- New Distributor agreements signed in Latin America and Canada

Research and Development

Expenditure on research and development, including capitalised costs, was GBP263,000 (H1 2012: GBP363,000) during the six months to 30 April 2013. The main spend being on:
-- Development of a new cart system
-- Upgrade of product software to latest standards

-- Producing the products which were launched at the European Association of Urology annual conference and exhibition in Milan in April and the American Urologists Association annual conference and exhibition in San Diego in May

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.

Current trading and outlook

The Group is currently trading just above management's budgets and we expect to meet market expectations for the year.

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4. PRESS RELEASE

Copies of this report will not be issued to shareholders but will be available for download from www.mediwatch.com. If you would like to receive a hard copy of the interim report please contact the Mediwatch offices on +44 (0)1788 547 888 to request a copy.

Full report from link below: added soon