Interim Results

DawMed Systems PLC
23 June 2004


23 June 2004
                               DawMed Systems plc

                                Interim Results


DawMed Systems plc ('DawMed'), the medical devices company which designs,
manufactures, sells and services washer disinfectors used by NHS Trust
hospitals, private hospitals and clinics, today announces results for the half
year ended 31 March 2004.

Highlights (Six months to 31 March 2004)

•    Turnover increased by 3.4% to £2,253,100 (2003: £2,179,700)
     
•    Gross profit increased by 16% to £812,700 (2003: £703,600)

•    Cash at bank and in hand at £243,700 (2003: £0)

•    Sales of the Wassenburg flexible endoscope washer disinfectors saw another 
     half year of strong growth, with further growth anticipated in the second 
     half year and also in full year 2005.

•    Support and Services Department successfully increased revenues and 
     margins, which the Directors believe will continue for the foreseeable 
     future.

•    'Clinic' bench top washer disinfector dryer for the Primary Care market now 
     in production with procurement agency and end user interest increasing 
     alongside increasing direct and indirect sales orders.

•    Directors' confidence in the sales potential of the 'Clinic', which extends 
     beyond the UK market across the whole of Europe and, in due course,
     worldwide, remains strong.

Kevin Gilmore, Chairman of DawMed, said:  'Despite delays in production and
launching the sales of the 'Clinic' bench top WDD, we have increased turnover,
albeit marginally, and have significantly improved the overall gross margin.
The Company's investment strategy is beginning to bear fruit. The Company
intends to concentrate upon the exploitation of the products and services of its
past investment programmes to take the Company forward to profitability, growth
and value.'


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

Kevin Gilmore              Roland Cornish               
Chairman                   Chairman                     
DawMed Systems plc         Beaumont Cornish Ltd         
01709 730 730              Tel: [phone]


Chairman's Statement
for the six month period to 31st March 2004.


Results

The first half of the current trading year has seen modest growth in overall
sales of 3.4% to £2.25 million, compared to £2.18 million for the same period
last year, and a substantial improvement in the gross margin of almost 4%.

Sales of the Wassenburg flexible endoscope washer disinfectors saw another half
year of strong growth and the customer training and service departments
successfully increased profitable revenue streams.

The traditional business of large washer disinfector dryer ('WDD') machines for
hospital Sterile Service Departments ('SSDs') declined by 39.4% compared with
the corresponding period last year. This was due to the vacuum created by
completion of the NHS Purchasing and Supply Agency's two-year emergency
programme to upgrade the worst of the English Trust hospitals' SSDs in respect
of their decontamination equipment for reusable surgical instruments.

Overhead costs in the period increased by 11.7% over the same period last year,
predominantly on the Support and Service Department, new customer training
initiative and the new 'Clinic' machine, particularly to bring the latter into
production and to promote and exhibit it nationally and internationally.

The net loss for the half year was £0.21 million, equal to the loss in the same
period last year and in line with the Board's expectations.


Balance Sheet

Shareholders' funds at 31st March 2004 were £1.04 million after inclusion of the
proceeds of a new ordinary share issue of £0.54 million, before expenses, made
on December 12th 2003 to new institutional investors. This issue was made
primarily to provide ongoing marketing and structural support for the new '
Clinic' bench top machine, but also to provide additional working capital. The
net current assets position at the half-year showed a marked improvement
compared with the same period last year and also with the position at the end of
the previous financial year.


Products, Services and Infrastructure

The Wassenburg flexible endoscope washer disinfector continues to perform
strongly and the Directors believe that the Company's investment and sales
performance has established it as the market leader in this sector. Favourable
currency movements against the Euro have also improved contributions from this
product.

The planned investment to strengthen the marketing and sales of the new 'Clinic'
bench top WDD, designed specifically for the Primary Care markets, is beginning
to capture the demand for the product in the NHS and private practice sectors in
the UK. Procurement agency and end user interest in this product is increasing
and the 'Clinic' has been approved by Scottish Healthcare Supplies for use in
Primary Care in Scotland. Similar approval by the NHS is anticipated for use of
the 'Clinic' in Primary Care in England. Our established distributor network is
now actively involved with our in-house dedicated marketing and sales team in
promoting the 'Clinic' with the benefit of production machines now being
available. Direct and indirect sales orders are increasing and have already
established a secure platform for future volume sales of this exciting product,
the sales potential of which extends beyond the UK market across the whole of
Europe and, in due course, worldwide. Our confidence in the sales potential of
the 'Clinic' remains strong.

Whilst the completion of the NHS emergency programme to upgrade the worst SSDs
(in respect of decontamination equipment in English Secondary Care NHS Trust
hospitals) and the resultant vacuum in this traditional area of the Company's
business has caused a temporary diminution in our SSD equipment sales, and is
not currently showing any significant growth prospects over historic levels, a
number of other initiatives in this traditional SSD business are being
vigorously pursued to maximise our options and potential.

However, I hope that shareholders will be pleased to learn that at a recent
meeting convened by the British Healthcare Trade Association, the NHS
representatives confirmed that central funding will be available to English NHS
Hospital Trusts to ensure that non-compliant SSDs may upgrade their
decontamination equipment by application through the NHS Purchasing and Supply
Agency and that all such hospitals must continue to comply with National Care
Standards which cover decontamination of reusable surgical instruments.

The Company's in-house Support and Service Department has benefited from the
previous year's investment in additional service engineers, a customer trainer
and additional IT systems and has delivered substantial improvements in revenues
and margins which the Directors believe will continue for the foreseeable
future.


Remainder of the Year and Future Prospects

Despite considerable challenges in the first half of our current financial year,
notably the disruption caused by the vacuum in the SSD market place described
earlier and also the delays in 'productionising' and launching the sales of the
'Clinic' bench top WDD, we have increased turnover, albeit marginally, and
significantly improved the overall gross margin.

The strategy of your Company, which was set out some three and a half years ago,
was a commitment to invest, heavily for a company of our size, for a period of
some three years in order to:

    (i)   upgrade its existing range of traditional SSD equipment to the 
          state-of-the-art now achieved and explore alternative initiatives for 
          its exploitation,

    (ii)  start up and develop the flexible endoscope market in the UK with the 
          carefully researched Wassenburg machine to become the market leader, a
          position it now claims to have achieved, and

    (iii) diversify from, and reduce the level of our dependence upon the 
          traditional SSD business with the NHS, whose policies and funding 
          within Secondary Care have become unpredictable.

The Directors believe that, whilst the Company has suffered unprecedented delays
almost entirely due to external influences beyond its control, the strategic
objectives are now being met.

Accordingly, the conversion of our investments into growth and associated
profitability is already underway and we look forward with confidence to:

    (i)   the flexible endoscope WDD business performing satisfactorily in the
          second half to produce a satisfactory end of year performance for this 
          product as well as this market sector providing further growth 
          potential for 2005,

    (ii)  the sales launch and line production of the new 'Clinic' bench top WDD 
          delivering significant and profitable performance in 2005,

    (iii) the alternative initiatives in the Company's traditional SSD sector
          improving the growth prospects,

    (iv)  the continued growth of revenues and margins by the Support and
          Service Department.

In summary, your Company's investment strategy is beginning to bear fruit and
perhaps the most important component of it, viz. the lessening of our hitherto
dependence upon the NHS by targeting other markets, including exports, is no
longer just an intention, but a fact of our corporate life. Moreover, unless an
external opportunity too good to refuse arises in the foreseeable future, the
Company intends to concentrate upon the exploitation of the products and
services of its past investment programmes to take the Company forward to
profitability, growth and enhanced value.


Kevin M Gilmore
Chairman
23 June 2004


Unaudited Consolidated profit and loss account
for the half year ended 31 March 2004
                                                                 Unaudited                    Unaudited
                                                             31 March 2004                31 March 2003
                                                                     £'000                        £'000

Turnover                                                           2,253.1                      2,179.7
Cost of sales                                                      1,440.4                      1,476.1

Gross Profit                                                         812.7                        703.6
Administrative expenses                                            1,013.2                        906.9

Operating (loss)                                                   (200.5)                      (203.3)
Interest receivable                                                    3.2                          1.8
Interest payable                                                      12.2                         10.5

(Loss) on ordinary activities                                      (209.5)                      (212.0)

Taxation                                                                 -                            -

(Loss) for the half year                                           (209.5)                      (212.0)

(Loss) per share                                                   (1.20p)                      (1.39p)

Diluted (loss) per share                                           (1.19p)                      (1.38p)



Unaudited Group Balance Sheet
as at 31 March 2004
                                                                      Unaudited                     Unaudited
                                                                  31 March 2004                 31 March 2003
                                                                          £'000                         £'000

Fixed Assets                                                              673.2                         583.1

Current Assets
Stock                                                                     548.0                         583.3
Debtors                                                                 1,544.1                       1,089.8
Cash at bank and in hand                                                  243.7                             -

                                                                        2,335.8                       1,673.1

Creditors: amount falling due within one year                           1,816.1                       1,504.1

Net current assets                                                        519.7                         169.0

Total assets less current liabilities                                   1,192.9                         702.1
Creditors: amounts falling due after more than one                        154.8                          71.5
year

Net assets                                                              1,038.1                         630.6
________________________________________________________________________


Capital and reserves
Called up share capital                                                923.2                          763.2
Share premium account                                                1,709.7                        1,171.7
Merger reserve                                                       (350.5)                        (350.5)
Profit and loss account                                            (1,244.3)                        (953.8)

Shareholders' funds                                                  1,038.1                          630.6


Notes to the accounts:

(1)  The calculation of loss per share is based upon the loss of £209,500 (2003: 
     loss of £212,000) and on 17,519,030 shares (2003: 15,252,301 shares), being 
     the weighted average number of shares in issue during the period.

     The diluted loss per share shows the effect on the calculation as if the 
     share options and warrants granted had been converted to shares.

     The diluted loss per share for the six months to 31 March 2003 has been
     revised from previously reported.

(2)  Copies of the interim report and accounts will be available in 30 days at 
     the offices of Beaumont Cornish Limited, 63 Coleman Street, London, EC2R 5BB


Independent Review Report by the Auditors to DawMed Systems plc
Six months ended 31 March 2004


Introduction

We have been instructed by the company, to review the consolidated profit and
loss account for the six months to 31 March 2004 and the Group Balance Sheet at
31 March 2004 and have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.

This report, including the conclusion, has been prepared for and only for the
company for the purpose of their interim report and for no other purpose.  We do
not, therefore in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.


Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors.  It is best
practice that the accounting policies and presentation applied to the interim
figures should be consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for them, are
disclosed.


Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board.  A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed.  A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions.  It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly we do not express any audit opinion on the financial information.


Review conclusion

On the basis of our review, which does not constitute an audit, we are not aware
of any material modifications that should be made to the financial information
as presented for the six months ended 31 March 2004.


Baker Tilly
Chartered Accountants
Birmingham
23 June 2004


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