Final Results

DawMed Systems PLC
22 March 2007


                                                                   22 MARCH 2007


                               DAWMED SYSTEMS PLC

                          ('Dawmed' or the 'Company')


                             FINAL AUDITED RESULTS

                      FOR THE YEAR ENDED 30 SEPTEMBER 2006

The Board of DawMed Systems plc ('DawMed' or 'the Company'), the medical devices
company, which designs, manufactures,  sells and services washer-disinfectors
used by NHS Trust hospitals, private hospitals and clinics, is pleased to 
present the Final Audited Results for the Company for the year ended 30
September 2006

KEY POINTS

-     Sole reason for the conversion from a healthy pre-tax profit of £133,300
to a loss of £70,900 was the breach of  contract by a trade debtor who, in the
opinions of the Directors and the Company's legal advisors, was and still is in 
breach of contract;

-     Board remains confident that the new strategy, implemented in the second
quarter of last year, is beginning to  bear fruit and, subject to the
restoration of a reasonable degree of normality in the NHS, is equally confident
in the  ability of the Company to improve its performance in the current year;

-     Three innovative products launched during the period comprised a new
'OPTIclens' machine for validated  decontamination of delicate surgical
instruments in Ophthalmic Departments and two AERclens' machines as a total 
solution for the  validated decontamination of all small endoscopes in ENT
Departments;

-     Performance of the 'Clinic' bench top WDD in the UK is expected to exceed
the levels of the previous year as a  result of general market awareness and the
anticipated recommendations of the 'A12' BDA document in the dental sector;  and

-     Orders are currently firming in the second quarter of this year with
growing acceptance of the Company's range of  products, and the overall business
is gathering momentum.


Commenting on today's announcement, Kevin Gilmore, Executive Chairman of DawMed,
said:


'Notwithstanding the difficulties of the NHS and its past and current effects
upon your Company, the Board remains confident that the new strategy,
implemented in the second quarter of last year, is beginning to bear fruit and,
subject to the restoration of a reasonable degree of normality in the NHS,
success in the legal proceedings and perhaps some benefits from the export
drive, is equally confident of the Company's ability to improve its performance
in the current year. However, whilst the Board is confident about its claims in
the legal proceedings, it has decided that prudence should prevail, in
consequence of which it has not factored such potential success into its budget,
forecasts or plans for the current year.'

--ENDS--



Enquiries:

DawMed Systems plc                                             Tel: [phone]
Kevin Gilmore, Executive Chairman                                 : 07785 396666

Beaumont Cornish Limited                                      Tel: [phone]
Roland Cornish

Bishopsgate Communications Limited                            Tel: [phone]
Dominic Barretto / Maxine Barnes

For further information please visit DawMed's website at www.dawmed.com


CHAIRMAN'S STATEMENT


I present the Final Audited Results for the year ended 30 September 2006.


It is unfortunate that a year of performance in line with the Board's
expectations, which indicated a Group EBITDA of £263,900, operating profit of
£91,800 and pre-tax profit of £133,300, representing an increase of 390% on the
£27,200 pre-tax profit of the previous year, ended with a Group pre-tax loss of
£70,900. The sole reason for the conversion from a healthy profit to a not
insubstantial loss was the breach of contract by a trade debtor, with whom the
Company had previously enjoyed an excellent relationship for some five years.
Your Company has issued legal proceedings and a trial date has been set for June
2007. The Board is confident of a satisfactory conclusion to these proceedings.


Notwithstanding the foregoing, the relevant year has been a successful period in
which the newly adopted strategy, described in my 2006 Interim Statement, began
to bear its anticipated fruit. Concentration on the new and more recent products
mentioned in that Statement, together with the continuing growth of the Support
Services activities produced the overall performance growth which was in line
with the Board's expectations. Accordingly, the Board is encouraged by the
underlying trends in the business, which undoubtedly justify the strategic
actions it implemented earlier in the year.


Financials


Total turnover for the year was reduced to £5.08M, being 17.6% below that of the
previous year. Eliminating the sales of SSD machines, there was a 5.0% growth in
remaining activities. Sales of Clinic machines improved substantially and
Support Services activities increased by 28.2% over the previous year. Sales of
spare parts produced steady growth of 11.4% due in part to the expanding
installed base of the Company's medical devices, whilst sales of chemicals for
Wassenburg machines showed a healthy 26.6% increase. Sales of Wassenburg
machines decreased over the previous year as a result of delays by the NHS in
the placing of orders and the delayed availability of the new Wassenburg
'pass-through' machines.


The direct consequence of the reduction in turnover was a gross margin of
£2.40M, which was a 5.4% decrease on the previous year. However, if the turnover
of the SSD machine sales is excluded from the year and from the previous year,
the comparative margin showed a 10.8% increase year-on-year. Encouraging
increases in margins were achieved by the Clinic, chemicals for Wassenburg
machines, spare parts and Support Services' activities. The overall gross margin
percentage increased to 47.4 from 41.3 in the previous year, thereby
underpinning the new strategy of concentration on the new products and Support
Services activities.


The spend on total overheads in the year was £2.52M, a modest 2.1% increase over
the previous year. The spend on operating overheads, before central costs and
depreciation/amortisation was £2.14M, again a modest 2.1% increase on the
previous year. However, these spends include the trade debtor provision pending
the outcome of litigation. If the trade debtor amount is excluded, the total
spend of £2.39M showed a 3.0% reduction over the previous year. The only areas
of increased overhead spend in the year were for marketing and sales of the
various new products and the design and implementation of the new web site. Some
additional administration was introduced into the Support Services Department to
strengthen its continuing growth.


Earnings after finance charges, after the trade debtor provision of £124,300,
but before interest, taxation, depreciation and amortisation ('EBITDA') and
including the profit on disposal of the SSD fixed assets, were £125,000 compared
with £264,800 in the prior year.


The operating loss for the year, before asset disposals, was £112,400 compared
with a profit in the previous year of £75,600. The major factor for the
shortfall was the aforementioned trade debtor provision and the aforementioned
loss of the further non-invoiced income from that source in the final quarter of
the year.


The disposal of the intellectual property and know-how assets of the SSD
equipment produced a profit of £65,400 after the deduction of all directly
related costs.


The net loss after interest and taxation was £70,900 compared with a net profit
after interest and taxation of £27,200 in the previous year.


The balance sheet showed shareholders' funds of £1,063,200 at 30 September 2006,
a reduction of £70,900 in the year reflecting the net loss incurred.


The working capital position was stable with net current assets improving by
£20,100, cash balances at £514,800 reducing by £86,300 in the year and no net
debt at the year-end.


Products and Services


The re-alignment of the Company's product portfolio, described in my last
Interim Statement, enabled a satisfactory overall increase in the margin
percentage to be achieved for the year.


Although the disposal of the intellectual property and know-how assets of the
SSD machines resulted in the elimination of the sales of such machines, the
retention of after sales services and sales of spare parts to our existing
customers' installed base of SSD machines has protected the income stream from
that sector.


The Support Services Department again performed well and recruitment of further
field engineers has continued in the current year to support the large and
growing installed base of machines, to ensure the business has full UK coverage
and to constantly improve efficiency.


The performance of the 'Clinic' bench top washer-disinfector-dryer constituted a
considerable improvement compared with the previous year, with a number of
significant multi-machine orders having been won.


The UK dental market is currently awaiting the imminent publication of the
British Dental Association's ('BDA') 'A12' document, which provides guidelines
and recommendations to all dentists on the decontamination of dental
instruments. Constant efforts are being made by the Company to increase
penetration into this market and the Directors believe that this should be aided
by the publication of the A12 document and by the 'pass-through' facility and
full compliance features of the Clinic.


Whilst sales of Wassenburg products suffered a decline in the last year as a
result of tightening of NHS funding for capital expenditure, resulting in many
purchasing decisions being delayed, these orders are now being confirmed. As
anticipated, the introduction of the new Wassenburg Drying/Storage cabinets,
which provide a sterile environment, has been a success with a satisfactory
number of units being sold in the year.


In order to satisfy customer demands to enjoy a wider choice of chemicals, steps
were taken to exert more active control over the sourcing of such products.
Accordingly, your Company now offers a wider range of chemicals and this range
of products is now an integral constituent of the product portfolio. Growth of
sales of these products during the year was not inconsiderable and provides an
ongoing revenue stream.


The Company's adherence to the fast turnaround of orders for spare parts, and
the provision of technical expertise and assistance in addressing customers'
needs, has provided steady and profitable growth year on year. Furthermore, the
retention of the supply of spare parts to the SSD range of machines in our
customers' installed base has assisted in the consolidation of our performance
in this sector.


Enhanced Product Portfolio


Existing medical device products and new medical device products which were
introduced in the period, include:


  • 'Clinic' bench top washer-disinfector-dryer ('WDD') - providing washing,
    thermal disinfection and drying for use in NHS hospitals, all NHS and
    private dentists, clinics and other Primary Healthcare practitioners;

  • 'AERclens Chemical' washer-disinfector ('WD') system for the
    decontamination of small flexible endoscopes - providing washing and
    chemical disinfection for use in all NHS and private Ear, Nose and Throat
    ('ENT') Departments of hospitals, clinics, and consulting rooms;

  • 'AERclens Thermal' WDD system for the decontamination of small rigid
    metal endoscopes - a completely new product providing washing, thermal
    disinfection and drying for use in all NHS and private ENT Departments of
    hospitals, and in NHS and private clinics;

  • 'OPTIclens' WDD system for the decontamination of delicate rigid metal
    ophthalmic surgical instruments - a completely new product providing
    washing, thermal disinfection and drying for use in all NHS and private
    Ophthalmic Departments of hospitals, and in NHS and private clinics;

  • Wassenburg original space-saving WD for the decontamination of large
    flexible endoscopes providing washing and chemical disinfection for use in
    NHS and private Hospital Endoscopy Departments et al in the UK;

  • Wassenburg 'pass through' WD similar to the Wassenburg original space
    saving WD, but for use in NHS and private Hospital Endoscopy Departments
    which have sufficient accommodation for a 'Dirty Room' and an adjacent
    'Clean Room', in the wall between which this WD is placed;

  • Wassenburg 'Dry 300' - a storage/drying cabinet providing a daytime and
    overnight sterile environment for large flexible endoscopes for use in NHS
    and private Hospital Endoscopy Departments et al in the UK.


Outlook and Future Prospects


Ever since the Minister of Health vowed to resign that position if the NHS was
to be in financial deficit by the end of its financial year, namely 31 March
2007, the NHS has cut back massively on purchases of both capital and revenue
supplies to an extent which the Directors believe to be unprecedented. This
action has adversely affected many companies, including your Company during the
second half of last year, and will continue to do so during the first half of
the current year or until normality is resumed.


Notwithstanding the NHS expenditure cuts, orders are currently firming in the
second quarter of this year with growing acceptance of the Company's range of
products, and the overall business is gathering momentum. The direct sales force
in the UK has been increased in anticipation of your Company's current year
encompassing sales of the unchanged products and services, consolidation of the
new product introductions indicated above and maximisation of the sales
potential from all of those products at home and for export.


Sales of the AERclens Chemical system and the AERclens Thermal system are
anticipated to become an important contributor to the current year's overall
potential, particularly because no competitive validated total solution system
for both rigid and flexible small endoscopes is yet available, so far as the
Directors are aware.


Similarly, sales of the OPTIclens system in the current year will, in the
opinion of the Directors, benefit from the absence of any competitive validated
system for the decontamination of particularly delicate ophthalmic surgical
instruments.


The sales performance of the 'Clinic' bench top WDD in the UK is expected to
exceed the levels of the previous year as a result of general market awareness
and the anticipated recommendations of the 'A12' BDA document in the dental
sector. A funding support structure has been implemented in Scotland for NHS
dentists and every effort is being made to capitalise on this for sales in that
country.


Support Services Department activities are expected to increase its level of
business in the current year based upon the anticipated expansion of the
installed base of machines following increased sales of the Company's wider
range of medical device products.


The Company views the sale of chemicals as a candidate range of products for
sustained growth in the current year and in the longer term future, particularly
in connection with the three new medical device products launched during the
year.


In consequence of the implementation of the Company's new strategy in the second
quarter of last year, the Board has been intent upon lowering the Company's
dependence on the UK markets in general and on the NHS in particular by
exploiting the export potential of its range of products. In this endeavour, an
Export Department has been established, which will commence operations on 1
April 2007.


As part of the Company's export drive, the Company has announced that an
exclusive distributor agreement for a minimum annual volume of Clinics has
already been signed with a subsidiary of a substantial European organisation for
an own-label version of the 'Clinic'. This represents a significant breakthrough
for the Company into a market of high growth potential.


The markets in which the Company operates are competitive and demand not only
constant product innovation, but also tight control over manufacturing costs if
acceptable margins are to be achieved. As part of these endeavours, the Board is
currently engaged in efforts to reduce manufacturing costs with a planned
achievement in the second half of the current financial year. If such efforts
are successful, it is expected that, whilst some benefit would be derived in
that half, the full benefits would come through in the next financial year.


On behalf of the Board and the shareholders I am pleased to thank all of our
employees for their assiduous efficiency and resultant contribution to the
achievement of your Company's targets.


Notwithstanding the difficulties of the NHS and its past and current effects
upon your Company, the Board remains confident that the new strategy,
implemented in the second quarter of last year, is beginning to bear fruit and,
subject to the restoration of a reasonable degree of normality in the NHS,
success in the legal proceedings and perhaps some benefits from the export
drive, is equally confident of the Company's ability to improve its performance
in the current year.


Kevin M Gilmore

Executive Chairman


22 March 2007


Dawmed Systems plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2006

                                                         2006             2005
                                                            £                £

TURNOVER                                            5,077,316        6,158,223

Cost of sales                                      (2,673,102)      (3,616,602)


Gross profit                                        2,404,214        2,541,621

Administrative expenses                            (2,516,657)      (2,466,066)


OPERATING(LOSS)/PROFIT                               (112,443)          75,555

Profit on disposal of fixed assets                     65,445                -

Interest receivable and similar income                 16,745           10,292

Interest payable and similar charges                  (40,658)         (58,619)


(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION                                              (70,911)          27,228

Taxation                                                    -                -


(LOSS)/PROFIT FOR THE YEAR                            (70,911)          27,228


(LOSS)/EARNINGS PER SHARE                               (0.35)p           0.14p


DILUTED (LOSS)/EARNINGS PER SHARE                       (0.35)p           0.14p



The operating loss for the period all arises from continuing operations.

No separate Statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the Profit and Loss Account.



Dawmed Systems plc
CONSOLIDATED BALANCE SHEET
30 September 2006
                                                              2006           2005
                                                                 £              £
FIXED ASSETS
Intangible assets                                          338,217        485,501
Tangible assets                                             83,040         65,907

                                                           421,257        551,408

CURRENT ASSETS
Stocks                                                     719,827        506,164
Debtors                                                    869,434      1,387,702
Cash at bank and in hand                                   514,781        601,071

                                                         2,104,042      2,494,937

CREDITORS: Amounts falling due within one year          (1,434,671)    (1,845,703)


NET CURRENT ASSETS                                         669,371        649,234


TOTAL ASSETS LESS CURRENT LIABILITIES                    1,090,628      1,200,642


CREDITORS: Amounts falling due after more than
one year                                                   (27,451)       (66,554)


NET ASSETS                                               1,063,177      1,134,088


Called up share capital                                  1,023,165      1,023,165
Share premium account                                    1,872,239      1,872,239
Merger reserve                                            (350,520)      (350,520)
Profit and loss account                                 (1,481,707)    (1,410,796)


SHAREHOLDERS' FUNDS                                      1,063,177      1,134,088





Dawmed Systems plc
CONSOLIDATED CASHFLOW STATEMENT
for the year ended 30 September 2006

                                                              2006        2005
                                                                 £           £

Net cash inflow from operating activities                   52,588     396,157

Returns on investments and servicing of finance
Interest received                                           16,745      10,292
Interest paid                                              (40,658)    (58,619)

                                                           (23,913)    (48,327)

Capital expenditure and financial investment
Purchase of fixed assets                                   (98,302)    (69,413)
Receipts from sale of fixed assets                          83,336         600

                                                           (14,966)    (68,813)

Financing
Issue of ordinary shares                                         -     262,527
Factoring and stock advances                               (94,393)   (254,929)
Finance leases                                              (5,606)    (12,172)

                                                           (99,999)     (4,574)

(Decrease)/increase in cash                                (86,290)    274,443

Reconciliation of operating (loss)/profit to net cash
flow from operating activities

Operating (loss)/profit                                   (112,443)     75,555
Depreciation and amortisation charges                      210,560     225,795
Movement in stocks                                        (213,663)      7,872
Movement in debtors                                        518,268     (32,319)
Movement in creditors                                     (350,134)    119,254

Net cash inflow from operating activities                   52,588     396,157


Notes


1.                    The calculation of earnings per share is based upon the
loss after taxation of £70,911 (2005 profit: £27,228) and on 20,463,292 shares
(2005: 19,909,867 shares) being the weighted average number of ordinary shares
in issue during the year.


Since the exercise price of the 2,396,676 (2005: 2,236,676) share options is
above the average fair price for the year and the prior year, the diluted
earnings per share is equivalent to the basic earnings per share.


2.                    The Consolidated Profit and Loss Account and Balance Sheet
information for the years ended 30 September 2006 and 30 September 2005 shown
above has been extracted from the Statutory Accounts for those years on which
the auditors gave an unqualified opinion. Statutory Accounts for the year ended
30 September 2005 have been delivered to the Registrar of Companies. The
Statutory Accounts for the year ended 30 September 2006 are due to be delivered
to the Registrar following conclusion of the forthcoming Annual General Meeting.


A copy of this statement is available from the offices of

Beaumont Cornish Limited, 5th Floor, 10-12 Copthall Avenue, London, EC21 7DE





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