Preliminary Results
DawMed Systems PLC
20 March 2008
20 March 2008
DAWMED SYSTEMS PLC
('Dawmed' or the 'Company')
PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2007
The Board of Dawmed Systems plc ('Dawmed' or 'the Company'), the AIM listed
medical devices company, which designs, manufactures, sells and services
healthcare decontamination equipment and associated consumables used by NHS
Trust hospitals, private hospitals, clinics and Primary Care practitioners, is
pleased to present the Preliminary Results for the Company for the year ended
30 September 2007.
CORPORATE KEY POINTS
- AERclens sales substantially increased;
- Clinic sales were increased by 22%;
- Wassenburg sales were decreased, but now substantially increasing;
- Company's in-house research and development department continues to design
new products and modifications to existing equipment;
- Support Services Department continues to perform well;
- Largest contract to date secured in East Kent Hospitals NHS Trust;
- Significant increase in level of business achieved so far in current year;
and
- Return to profitability in current year in sight.
FINANCIAL KEY POINTS
- Total turnover for the year was £4.98m;
- Gross profit was £1.89m;
- EBITDA loss was £314,000;
- Operating loss was £500,400; and
- Net loss after interest and taxation was £577,500;
Commenting on today's announcement, Kevin Gilmore, Executive Chairman of Dawmed,
said: 'I am pleased to report that your Company has achieved some noteworthy su
ccesses during the first half of the current year and has enjoyed the largest
order book in its history. Particularly notable in these successes has been the
award of a major contract for the East Kent Hospitals NHS Trust, in respect of
which an RNS Announcement was made on 4 March 2008.
Notwithstanding that the year ended 30 September 2007 was an extremely difficult
one for the Company, the current year has started with a great deal more
optimism and the Board is hopefully looking forward to a return to profitability
in the current year.'
--ENDS--
Enquiries:
Dawmed Systems PLC Tel: 01608 682244
Kevin M Gilmore, Executive Chairman Mob: 07785 396666
Beaumont Cornish Limited Tel: 020 7628 3396
Roland Cornish
Bishopsgate Communications Limited Tel: 020 7562 3350
Dominic Barretto
For further information please visit Dawmed's websites at www.dawmed.com and at
www.gvmc.net/DAWMED_IR/index.html.
Chairman's Statement
I present the Preliminary Results for the year ended 30 September 2007.
These disappointing results are the consequence of a period of considerable
financial constraints on expenditure on both capital and revenue supplies laid
upon the NHS by the Government. This scenario was forecast as a possibility in
the 'Outlook and Future Prospects' section of my Statement in the Company's
Annual Report & Accounts 2006. I referred again to these restrictions on
spending in the Interim Report for the six months ended 31 March 2007 and it is
regrettable that the forecast proved to be accurate.
Notwithstanding your Company's extremely difficult year, I am pleased to report
that since the end of the financial year, the Company has achieved a significant
increase in the level of business. During the period of spending restrictions,
many hospitals were forced to delay many capital projects, such as the
replacement of washer disinfectors, until funds became available. Throughout
this time, the Company maintained its high level of support and contact with NHS
Trusts to ensure that it would be well placed to secure new business when
appropriate funding was secured. Since the end of the financial year, funding
has been released for a substantial number of major projects and your Company
has been successful in securing many of these contracts.
I am also pleased to report that during the year the legal proceedings, which
the Company's operating subsidiary company, Dawmed International Limited, inst
igated against a trade debtor, were settled out of Court on a full, final and sa
tisfactory basis. Dawmed International Limited received an appropriate compensa
tion payment for the breach of contract. I can further report that a sa
tisfactory ongoing relationship has been established with the said trade debtor
for an extended period of two years until 2012. This important achievement was
announced on 25 June 2007.
Financials
Total turnover for the year was £4.98M, a fall of 2% from the previous year. Sa
les of the AERclens machine increased substantially during the year and the
Clinic machine also experienced an increase in sales of 22%. Activities in
Support Services remained static in the year, whilst sales of spare parts
continue to generate steady growth of 13%. Sales of Wassenburg machines
decreased over the previous year as a result of the continued delays by the NHS
in placing orders due to the spending restrictions imposed by central
government. Sales of chemicals declined by 12% following the renegotiation and
extension of a long term contract.
The effect of the reduction in turnover combined with increased competition,
increasing costs and a change in product mix have contributed to a decline in gr
oss profit to £1.89M, a decrease of 21% on the previous year. In line with these
market conditions, the overall gross margin percentage has also decreased from
47% to 38%.
The expenditure on total overheads was £2.79M, an increase of 10% over the pr
evious year. This increase is attributable to a 14% increase in sales and ma
rketing costs as the Company has sought to increase turnover and develop the
market for new products, a 55% increase in Support Services overheads as the
department has been strengthened to meet anticipated growth and a 15% increase
in administration staff costs. Whilst these increases have had an adverse impact
upon the results for the year ended 30 September 2007, your Board believes that
this investment in infrastructure is necessary to achieve the greatest return
from the anticipated improvement in UK healthcare sector procurement.
The compensation received as settlement from the dispute with the trade debtor
amounting to £396,100 is shown in other operating expenses (net).
Earnings after finance charges but before interest, taxation, depreciation and
amortisation ('EBITDA') were a loss of £314,000 compared with a profit of
£108,100 in the prior year.
The operating loss for the year was £500,400 compared with a loss in the pr
evious year of £129,300. This shortfall is fundamentally the result of the
difficult trading conditions during the year caused by the restrictions on
spending within the NHS.
The net loss after interest and taxation was £577,500 compared with a net loss
after interest and taxation of £87,800 in the previous year.
The balance sheet showed shareholders' funds of £513,600 at 30 September 2007, a
reduction of £549,600 in the year reflecting the net loss incurred after share b
ased payments are offset.
The working capital position altered in line with the results for the year. Net
current assets fell by £424,800, cash balance reduced by £509,600 to £5,200 and
net debt at the year end had increased from a position of no net debt to
£1,015,000.
Products and Services
The Support Services Department continues to perform well, with the recruitment
of additional field engineers continuing in the current year to support the
large and growing installed base of machines. The geographical spread of the
service engineer team ensures that the department continues to maintain full and
efficient UK coverage.
The performance of the 'Clinic' washer disinfector dryer continues to develop
and is showing good growth prospects. In particular, I am pleased to report that
the Group has appointed an international distributor during the year and has
also secured a significant contract for the manufacture of a 'badged' product
for another medical device supplier.
Awareness of the decontamination requirements for nasendoscopes, primarily for
use by ENT (Ear, Nose and Throat) departments of hospitals, continues to develop
and is raising the profile and level of enquiries for the AERclens washer
disinfector. Your Board believes that the AERclens will become a major
contributor to the future growth of the business.
Although sales of Wassenburg products during the year suffered a decline as a
result of the aforementioned restrictions in NHS funding that delayed many capi
tal projects, orders for these machines have shown a substantial increase since
the year end. The introduction during the year of the Wassenburg Dry300 drying
and storage cabinet has been successful with numerous units being sold in the
year.
The continued emphasis on providing customers with a fast delivery time for
spare parts, combined with the provision of technical expertise and assistance
in addressing customers' needs, has again provided steady and profitable growth
year on year.
Enhanced Product Portfolio
Existing medical device products and new medical device products which were
introduced in the period, now comprise the following wide range:
•'Clinic' bench top washer disinfector dryer ('WDD') system for the
decontamination of surgical and dentists' instruments- providing washing,
thermal disinfection and drying for use in NHS hospitals, all NHS and
private dentists, clinics and other Primary Healthcare practitioners abroad;
• 'AERclens Chemical' washer disinfector ('WD') system for the complete
decontamination of small flexible nasendoscopes - providing washing and
chemical disinfection for use in all NHS and private ENT Departments of
hospitals and in Clinics and consulting rooms;
•'AERclens Thermal' WDD system for the decontamination of small rigid
metal nasendoscopes - providing washing, thermal disinfection and drying for
use in all NHS and private ENT Departments of hospitals and in NHS and
private Clinics and consulting rooms;
•'OPTIclens' WDD system for the decontamination of delicate rigid metal
ophthalmic surgical instruments - providing washing, thermal disinfection
and drying for use in all NHS and private Ophthalmic Departments of
hospitals and in NHS and private Clinics;
•Data Capture Traceability System ('DCTS') is a new product designed to
collect and store data from the Clinic, AERclens and OPTIclens products;
•Wassenburg original space-saving WD for the complete decontamination of
large flexible endoscopes providing washing and chemical disinfection for
use in NHS and private Hospital Endoscopy Departments in the UK;
•Wassenburg 'pass through' WD similar to the Wassenburg original space sa
ving 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 the WD is located;
•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 in the UK
Outlook and Future Prospects
As I have previously commented, your Company has been operating in a prolonged
period of severe spending restrictions that were imposed on the NHS by central
government. One of the main impacts of these restrictions was that many capital
projects, including replacements of endoscope reprocessing equipment such as the
AERclens and Wassenburg products, were delayed.
However, since the end of the year a number of NHS Trusts have allocated funding
to allow some of the delayed capital projects to proceed as well as some new
projects. As a result, your Company has been involved in submitting public
tenders and private quotations for these projects on a markedly increased scale.
I am pleased to report that your Company has achieved some noteworthy successes
during the first half of the year and has enjoyed the largest order book in its
history. Particularly notable in these successes has been the award of a major
contract for the East Kent Hospitals NHS Trust, in respect of which an RNS
Announcement was made on 4 March 2008.
The contract is one of the largest contracts that Dawmed International Limited h
as ever undertaken and covers four hospitals over a wide area of East Kent. The
whole project is underway and is anticipated to be completed by the end of April
2008.
This significant contract is a complete 'turnkey' project comprising the supply,
installation, testing and validation of all of the decontamination equipment
referred to above, combined with the total responsibility for carrying out all
of the enabling building works to accommodate the equipment.
The level of enquiries being dealt with for the second half of the year give
some confidence that the period of NHS draconian spending cuts may be over and
that a more normal period of activity will prevail.
As your Board predicted, the level of interest and consequent orders for the
AERclens products are increasing. In view of this, the Directors believe that
the AERclens products will become an important contributor to the current year's
overall performance.
Sales of the Clinic continue to improve and will benefit in the current period
from a full year's revenue from the international distributor and the 'badged'
product for another medical device supplier. An agreement has also been reached
to source certain components for the Clinic from overseas, which are now flowing
and will lead to an improvement in the margin for this product.
The signing of a Memorandum of Understanding between your Company and Schulke &
Mayr GmbH (the Germany based operating subsidiary company of Air Liquide, a
world leader in medical and industrial gases and chemicals with particular
interest in healthcare markets) for the sales, installations and servicing of
the AERclens washer disinfector decontamination equipment in Germany and
Austria, is regarded by your Board as a particularly important step forward in
the implementation of its strategy to increase its export business in Europe and
beyond.
The drive to develop a substantial level of exports is continuing. In
collaboration with the University of Leeds under a Knowledge Transfer
Partnership, the Company has a full time post graduate who is investigating the
European market for its products and identifying potential distributors.
The markets in which the Company operates continue to be competitive and
demanding. In addition, product innovation and value for money are rightly
demanded by customers, in consequence of which the Company's in-house research
and development department continues to design new products and modifications to
existing equipment.
On behalf of the Board and the shareholders, I would again like to express
thanks to all of our employees for their continued participation in and
dedication to the long term success of the Company.
Notwithstanding that the year ended 30 September 2007 was an extremely difficult
one for the Company, the current year has started with a great deal more
optimism and the Board is hopefully looking forward to a return to profitability
in the current year.
Kevin M Gilmore
Executive Chairman
20 March 2008
Dawmed Systems plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2007
2007 Restated
£ 2006
£
TURNOVER 4,976,158 5,077,316
Cost of sales (3,085,990) (2,673,102)
------------- -------------
Gross profit 1,890,168 2,404,214
Other operating expenses (net) (2,390,558) (2,533,549)
------------- -------------
OPERATING LOSS (500,390) (129,335)
Profit on disposal of fixed assets - 65,445
Interest receivable and similar income - 16,745
Interest payable and similar charges (77,127) (40,658)
------------- -------------
LOSS ON ORDINARY ACTIVITIES BEFORE
TAXATION (577,517) (87,803)
Taxation - -
------------- -------------
LOSS FOR THE YEAR (577,517) (87,803)
============= =============
LOSS PER SHARE (2.82)p (0.43)p
============= =============
DILUTED LOSS PER SHARE (2.82)p (0.43)p
============= =============
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 2007
2007 2006
£ £
FIXED ASSETS
Intangible assets 165,642 338,217
Tangible assets 103,365 83,040
------------- -------------
269,007 421,257
------------- -------------
CURRENT ASSETS
Stocks 1,062,003 719,827
Debtors 1,249,872 869,434
Cash at bank and in hand 5,156 514,781
------------- -------------
2,317,031 2,104,042
CREDITORS: Amounts falling due within
one year (2,072,430) (1,434,671)
------------- -------------
NET CURRENT ASSETS 244,601 669,371
------------- -------------
TOTAL ASSETS LESS CURRENT LIABILITIES 513,608 1,090,628
------------- -------------
CREDITORS: Amounts falling due after
more than one year - (27,451)
------------- -------------
NET ASSETS 513,608 1,063,177
============= =============
Called up share capital 1,030,665 1,023,165
Share premium account 1,878,239 1,872,239
Merger reserve (350,520) (350,520)
Profit and loss account (2,044,776) (1,481,707)
------------ ------------
SHAREHOLDERS' FUNDS 513,608 1,063,177
============= =============
Dawmed Systems plc
CONSOLIDATED CASHFLOW STATEMENT
for the year ended 30 September 2007
2007 Restated
2006
£ £
Cash flow from operating activities (901,815) 52,588
============= =============
Returns on investments and servicing of
finance
Interest received - 16,745
Interest paid (77,127) (40,658)
------------- -------------
(77,127) (23,913)
============= =============
Capital expenditure and financial
investment
Purchase of fixed assets (71,509) (98,302)
Receipts from sale of fixed assets - 83,336
------------- -------------
(71,509) (14,966)
============= =============
Financing
Factoring and stock advances 269,188 (94,393)
Finance leases (14,870) (5,606)
Other loans 199,579 -
----------- -----------
453,897 (99,999)
============= =============
Decrease in cash (596,554) (86,290)
============= =============
Reconciliation of operating loss to net
cash flow from operating activities
Operating loss (500,390) (129,335)
Depreciation and amortisation charges 223,759 210,560
Movement in stocks (342,176) (213,663)
Share based payment expense 27,948 16,892
Movement in debtors (380,438) 518,268
Movement in creditors 69,482 (350,134)
----------- -----------
Net cash flow from operating activities (901,815) 52,588
============= =============
Dawmed Systems plc
year ended 30 September 2007
Notes
1. The calculation of earnings per share is based upon the loss after taxation
of £577,517 (2006 restated loss: £87,803) and on 20,513,292 shares (2006:
20,463,292 shares) being the weighted average number of ordinary shares in
issue during the year.
Since the exercise price of the 2,846,676 (2006: 2,396,676) 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 2007 and 30 September 2006 shown above has
been extracted from the Statutory Accounts for those years on which the
auditors gave an unqualified opinion and did not include references to any
matters to which the auditors drew attention by way of emphasis of matter
without qualifying their opinion and did not contain a statement under
S237(2) or (3) of Companies Act 1985 . Statutory Accounts for the year
ended 30 September 2006 have been delivered to the Registrar of Companies.
The Statutory Accounts for the year ended 30 September 2007 are due to be
delivered to the Registrar following conclusion of the forthcoming Annual
General Meeting.
3. The preliminary results are prepared on the basis of accounting policies
set out in the most recently published set of annual financial statements
except for the adoption of FRS20. During the year, the group adopted FRS
20 'share based payments'. The adoption of FRS 20 is a change in accounting
policy which results in a prior year adjustment. The effect on the
comparative figures is a reduction in the group's profit before tax for the
year ended 30 September 2006 of £16,892. The share based payment reserve
has been credited directly to retained profits rather than to a separate
share options reserve and accordingly there is no impact on the balance
sheet at the end of the year.
A copy of this statement, which was approved on 20 March 2008, is available
from the offices of Beaumont Cornish Limited, 5th Floor, 10-12 Copthall
Avenue, London, EC21 7DE
This information is provided by RNS
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