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Veos PLC (VEO)

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Tuesday 27 March, 2001

Veos PLC

Final Results

Veos PLC
27 March 2001


27 March 2001

                                PRESS RELEASE

                                   VEOS PLC

              PRELIMINARY RESULTS FOR THE YEAR 31 DECEMBER 2000

SUMMARY

  * Pre-launch marketing activity, product development and regulatory
    activities contributed to a pre-tax loss of £1,611,000 (1999: pre-tax-loss
    of £1,590,000).
  * Cash position of £2.9 million, with no borrowings, at year end.
    Continued tight control of overheads and costs.
  * Boots the Chemists agreed to stock the OvesTM cap in 420 of its largest
    branches in the UK and in March 2001 commenced selling the device over the
    counter.
  * An extensive education and training programme undertaken for the UK
    primary care and family planning communities - a pre-requisite for
    launching. A very positive response continuing to be generated.
  * Operational and quality systems implemented and certified to ISO 9002 /
    EN46002 by the French Medical Authority, G-Med.
  * Continued commitment to extending the range of applications for its
    existing technology, comprising the conception cap and snap-together
    cervical cap for drug delivery.
  * New clinical studies in support of the UK launch led by Dr Ali Kubba,
    Consultant Community Gynaecologist and Honorary Senior Lecturer at Guy's,
    King's and Thomas' School of Medicine in London. A post-coital efficacy
    trial scheduled to commence shortly in the US and intended to form the
    first stage of the FDA trial programme.
  * Appointment of Mr Tony Rutherford, as medical advisor to the Board, and
    appointment of Dr Erica Gollub as Chairman of Veos' Medical Advisory
    Board.

Commenting on the results, Paul Lever, Non-Executive Chairman of Veos, said:

'We are very pleased with our progress in the UK market and believe that we
should establish ourselves in our home market first before expanding
elsewhere. Although it is still early days, with the very positive response we
are receiving from the UK primary care and family planning communities and the
backing from Boots in the launch of the cap nationwide, we are increasingly
confident that the OvesTM cap will have a significant influence on women's
choice of contraception. In the long term, our growing standing in this market
will contribute to Veos' aim to become a major player in the female
reproductive healthcare market.'

                                    -Ends-

For further information, please contact:

Peggy Czyzak-Dannenbaum, CEO
Rob Wilkinson, Finance Director
Veos plc                                   Tel: 020 7960 6066

David Simonson
Melanie Toyne Sewell
Merlin Financial                              Tel: 020 7606 1244

Websites: www.veos.com and www.oves.com


EXTRACTS FROM 2000 1999 CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEWS

We are pleased to report that the Company continues to make progress towards
its stated objective of establishing itself as a major player in the female
reproductive healthcare market.

The period since admission of the Company's shares to trading on the
Alternative Investment Market of the London Stock Exchange has seen the
efforts of management to prepare for launch of its OvesTM contraceptive cap
rewarded. Our achievements to date include:


  * Boots The Chemists agreed to stock the OvesTM cap in 420 of its largest
    branches in the UK and in March 2001 commenced selling the device
    over-the-counter.

  * An extensive education and training programme for the UK primary care
    and family planning communities, a pre-requisite for launching, continues
    to generate a very positive response.

  * Operational and quality systems were implemented and certified to
    ISO9002/EN46002 by the French medical authority, G-Med.

Results and current trading

During the year ended 31 December 2000, the Group incurred a pre-tax loss of £
1,611,000, or 7.05p per share (1999: pre-tax loss of £1,590,000 or 12.59p per
share). Significant revenues have not been generated in the year and the loss
therefore principally represents the costs of managing pre-launch marketing,
product development and regulatory activities. The Board is not recommending a
dividend for the year.

The Group has £2,922,000 of cash and no borrowings at 31 December 2000. Fixed
overheads are running at approximately £90,000 per month, excluding marketing,
clinical and development expenditure.

During the year Veos commissioned the manufacture of two new production moulds
for a total of £98,000 and since the year end has also purchased a Tiromat
thermo-forming packaging machine for £75,000. These purchases complete the
automation of production processes for the OvesTM cap, permitting manufacture
of all three sizes of the cap at an economic cost. No further capital
expenditure for production of the contraceptive cap is anticipated.

The first deliveries of OvesTM caps were made to Boots The Chemists in March
2001 to stock the 420 stores that will carry the product. Progress of the UK
launch is discussed below.

UK launch of the OvesTM contraceptive cap

We have deliberately focussed our resources on the UK contraceptive market and
we believe significant progress has been made. It is too early to gauge the
public's response to the availability of OvesTM in Boots. Nonetheless, the
management team at Veos is increasingly confident, reinforced by the reactions
of medical and family planning practitioners, that the product will
significantly influence women's choices of contraception. We further believe
the OvesTM cap has the potential to take its place alongside the Pill and the
condom, to which many women are seeking alternatives.

The Company has developed a highly targeted marketing programme for the UK
launch of the OvesTM cap, principally involving public relations activity to
raise awareness amongst key groups of women. Initial marketing is being
directed not only towards existing cap and diaphragm users, but also women who
want a change from hormonal contraception and couples who dislike using
condoms. The Company is developing more ambitious plans to reach this wider
audience and gain market share.

Clinical development

Ensuring the support and confidence of the medical community is an essential
part of the Company's strategy. As a result, the Company has announced that it
will be undertaking new clinical studies in support of the UK launch of the
OvesTM contraceptive cap.

A study of the efficacy of the OvesTM cap is to be led by Dr Ali Kubba,
Consultant Community Gynaecologist and Honorary Senior Lecturer at Guy's,
King's and Thomas' School of Medicine in London, and will involve 100 women
over six months. This trial will also confirm the tolerability of the OvesTM
cap, previously studied and favourably reported, and assess the impact of
medical advice and support on the product's efficacy.

A further study, involving a post-coital efficacy trial, is scheduled to
commence shortly in the United States. Dependant on protocol agreement with
the Food & Drug Administration ('FDA'), this is intended to form the first
stage of a trial programme, which, it is hoped, will lead to FDA approval of
the OvesTM cap.

International potential

Your Board intends to focus its commercial strategy solely on the UK market
for the OvesTM cap to establish a successful home market before extending
distribution elsewhere.

Review of the French market has identified a distributor interested in testing
the market amongst post-partum women, but also revealed lower margins than
anticipated due to fragmented distribution of such products in France. This
has led to a re-evaluation of the Group's European strategy. In the Board's
view, it is clear from experience in the UK that thorough preparation of the
medical community, careful assessment of distribution channels and a marketing
plan tailored to local cultural and regulatory conditions are essential for
success in each market.

Detailed plans for the distribution of OvesTM in continental European markets
will be developed in the light of UK experience. While these plans are being
developed, limited scale distribution in France and Germany will be controlled
from the UK, resulting in closure of the French office.

New product development

The Company has a continuing commitment to extending the range of applications
for its existing technology. During the year ended 31 December 2000 the Group
secured:


  * European Community and FDA approvals for its conception cap.

  * Approval of a European patent for a 'snap together' version of the
    Company's cervical cap for use as a drug delivery mechanism.

The conception cap has been designed for use by couples trying to conceive by
means of in-home assisted insemination. The European approval (CE mark) is for
over-the-counter sales, whereas the US approval is for a prescription device.
The Company is taking advice from fertility specialists in the UK and US to
assess the commercial potential of this product. Further clinical trials will
be required to define the benefits to consumers, in order to ensure an ethical
positioning of the product and determine the size of the market. The Company
holds a patent for a conception cap in kit form, comprising the cap, an
ovulation predictor, a non-latex condom and a pregnancy test. Once the
benefits are clear, the directors intend to seek to collaborate with one or
more providers of the other constituents of the kit to bring it to market.

The Company continues to evaluate potential applications for its silicone cap
technology in local delivery of drugs. The directors believe that the dramatic
spread of sexually transmitted diseases, such as chlamydia and gonorrhea, and
the incidence of genital and urinary tract infections present opportunities
for a barrier contraceptive capable of delivering a drug treatment.

Steps taken to develop additional markets for the Company's technology
include:


  * Agreement in principle to participate in a five-year study in Africa to
    assess the cap's potential to restrict spread of sexually transmitted
    infections.

  * Evaluation of suitable microbicides for delivery using the OvesTM cap.

  * Discussions with the Population Council and Crown Agents about Third
    World use of female barrier contraceptives.

Your Board recognises that the Group's new product opportunities will be
optimised by strategic alliances with appropriate commercial, pharmaceutical,
biotechnology and marketing partners.

New appointments

In furtherance of its strategy, the Company has assembled a strong scientific
advisory team with diverse medical experience. The appointment of Mr Tony
Rutherford, senior gynaecologist and fertility specialist at Leeds General
Infirmary, as medical advisor to the Board was announced at the Company's
Annual General Meeting in February 2001.

I am pleased to announce a further addition to the team. Dr Erica Gollub, a
Research Professor at the University of Pennsylvania, has been appointed as
Chairman of the Group's Medical Advisory Board. Dr Gollub is a highly
respected epidemiologist and an authority on matters of contraception and
public health.

The scientific advisory team will guide the Board on all medical issues and
will assist in evaluating new applications for its technology and other
potential new product opportunities.

Further senior appointments are planned to add professionals with
pharmaceutical or medical devices experience to the management team. These
appointments will strengthen the Group's supply chain management and marketing
capabilities in support of existing operations.



We would like to thank all the staff at Veos for their hard work over the last
year. We are looking forward to the year ahead and building on the launch
through Boots. We believe that the OvesTM cap represents an exciting
breakthrough in women's contraceptive choice. We will keep you informed of
further progress.



Paul Lever                              Peggy Czyzak-Dannenbaum

Non-Executive Chairman                    Chief Executive Officer



26 March 2001



CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the year ended 31 December 2000




                                          Note             2000            1999
                                                          £'000           £'000

Turnover - continuing operations                              3              18
Cost of sales                                               (2)             (4)


Gross profit                                                  1              14
Administration expenses                                 (1,800)         (1,547)


Operating loss - continuing operations                  (1,799)         (1,533)
Interest receivable and similar income                      194               2
Interest payable and similar charges                        (6)            (59)


Loss on ordinary activities before                      (1,611)         (1,590)
taxation
Tax on loss on ordinary activities                            -               -


Loss on ordinary activities after                       (1,611)         (1,590)
taxation
Dividends - on equity shares                                  -               -


Retained loss for the year                              (1,611)         (1,590)




Loss per share                                                p               p
Basic and diluted                           2            (7.05)         (12.59)





CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES

for the year ended 31 December 2000
                                                       2000                1999
                                                      £'000               £'000

Loss for the financial year                         (1,611)             (1,590)
Currency translation loss                               (1)                (15)

Total recognised losses for the year                (1,612)             (1,605)




CONSOLIDATED BALANCE SHEET

at 31 December 2000
                                           Note            2000           1999
                                                          £'000          £'000
Fixed assets
Tangible assets                                             132             76


Current assets
Stocks                                                       82             27
Debtors                                                     284             51
Cash at bank and in hand                                  2,922          5,438

                                                          3,288          5,516
Creditors: Amounts falling due within one                 (540)        (1,108)
year

Net current assets                                        2,748          4,408

Net assets                                                2,880          4,484

Capital and reserves
Called up share capital                                   2,286          2,286
Share premium account                                     4,756          4,748
Other reserve                                             4,100          4,100
Merger reserve                                          (1,360)        (1,360)
Profit and loss account                                 (6,902)        (5,290)


Equity shareholders' funds                                2,880          4,484



RECONCILIATION OF MOVEMENT IN SHAREHOLDERS FUNDS

for year ended 31 December 2000
                                                               2000       1999
                                                              £'000      £'000

Total recognised losses                                     (1,612)    (1,605)
Net proceeds of share issue                                       8      5,664
Capitalised loans and share issues in Veos Ltd prior to           -      1,106
the share for share exchange

Net (reduction)/increase in shareholders funds              (1,604)      5,165

Opening shareholders funds                                    4,484      (681)

Closing shareholders funds                                    2,880      4,484


CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2000

                                                Note          2000         1999
                                                             £'000        £'000

Net cash outflow from operating activities        4        (2,489)        (965)

Returns on investment and servicing of finance                 188            2

Capital expenditure                                          (132)           12

Cash flow before financing and management of               (2,433)        (951)
liquid resources

Management of liquid resources                               2,435      (5,285)

Financing                                                     (82)        6,302


(Decrease)/increase in cash                       5           (80)           66



RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                                          2000            1999
                                                         £'000           £'000

(Decrease)/increase in cash                               (80)              66
Cash outflow from decrease in debt                          90             132
Cash movement from liquid resources                    (2,435)           5,285

(Decrease)/increase in net funds from cash             (2,425)           5,483
flows
Net capitalisation of loans                                  -             265
Exchange movement                                          (1)            (19)

(Decrease)/increase in net funds                       (2,426)           5,729
Net funds/(debt) at 1 January                            5,348           (381)

Net funds at 31 December                                 2,922           5,348


NOTES TO THE PRELIMINARY STATEMENT

December 2000


1. BASIS OF PREPARATION


    Veos plc was incorporated on 27 August 1999, and no trading activity was
    undertaken between that date and 9 December 1999. On 9 December 1999, Veos
    plc acquired 91% of the share capital of Veos Limited, a company
    incorporated in Jersey, and its subsidiaries by way of a share for share
    exchange. The remaining shares were purchased by Veos plc on the same
    terms shortly thereafter.

    The consolidated financial statements have been prepared using merger
    accounting. Under merger accounting the results and cashflows are combined
    from the beginning of the financial period and all comparatives are
    restated on the combined basis. These financial statements consolidate the
    financial statements of Veos plc, Veos Limited and its subsidiaries as
    though they had been in existence with its present constitution. Hence the
    group has reported results and cashflows for the two years ended 31
    December 2000 although the first statutory reporting period of the Company
    is the 16 months ended 31 December 2000.



2. LOSSES PER SHARE

                                                     2000           1999
                                                    £'000          £'000

These have been calculated on losses of             1,611          1,590


The weighted average number of shares used
was:
Basic                                          22,850,860     12,627,355




There were no diluting factors in the period.



3. CORPORATION TAX

There was no corporation tax charge for the year (1999: £nil).


4. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING
   ACTIVITIES


                                           2000                            1999
                                          £'000                           £'000

Operating loss                          (1,799)                         (1,533)
Depreciation of tangible                     76                              44
fixed assets
Loss on disposal of                           -                               2
tangible fixed assets
Working capital movements

                     Stock                 (55)                               7
                Debtors                   (233)                              32
                Creditors                 (478)                             483

Net cash outflow from                   (2,489)                           (965)
operating activities


5. ANALYSIS OF NET FUNDS

                          1 January     Cash flow       Exchange    31 December
                                                        movement           2000
                               2000
                              £'000         £'000          £'000          £'000

Cash                            153          (80)            (1)             72

Liquid                        5,285       (2,435)              -          2,850
resources

Borrowings                     (90)            90              -              -

Net funds                     5,348       (2,425)            (1)          2,922


Liquid resources are cash deposits with notice periods of greater than
twenty-four hours.


6. PRELIMINARY STATEMENT

This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 26 March 2001. It is not the Company's statutory
accounts. The statutory accounts for the period ended 31 December 2000 have
not yet been approved, audited or filed. Statutory accounts will be sent to
shareholders shortly.

Copies of this statement are available on request from the company secretary,
Veos plc, 10 Greycoat Place, London SW1P 1SB.



                                                     

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