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Veos PLC (VEO)

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Friday 28 September, 2001

Veos PLC

Interim Results

Veos PLC
28 September 2001

For Immediate Release

28th September 2001

                                PRESS RELEASE

                                   VEOS PLC

              INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2001

SUMMARY

  * Increased medical marketing expenditure contributed to a pre-tax loss of
    £1,163,000 or 5.1p per share (2000: pre-tax loss of £656,000 or 2.9p per
    share)
  * Boots the Chemist started distribution of the OvesO cap in 420 stores in
    March 2001. The initial rollout of product and training of all pharmacy
    staff completed in May 2001. Sales are growing in line with Company's
    expectations at this early stage.
  * Recruitment of five nurses to assist with medical training with GPs and
    Family Planning Clinics in the UK
  * Contracts signed with Digital Wellbeing, a health and beauty website to
    enable consumers to fulfil orders for OvesO cap online and FP Sales
    Limited to extend distribution to family planning clinics.
  * Protocol for new UK study on the efficacy of Oves has been accepted by
    the Multi-Centre Research Ethics Committee. The study is due to commence
    in October 2001 and is being led by Mr. Ali Kubba, a leading UK
    gynaecologist and family planning practitioner.

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

'We are pleased with our progress in the UK market over the last six months,
and in my view, the key ingredients for success are now firmly in place. We
have extended the distribution channels for the OvesO cap to family planning
clinics and online consumers and the over the counter sales at Boots are in
line with our expectations.'

For further information, please contact:
Peggy Czyzak-Dannenbaum, CEO                          Tel: 020 7960 6066

Rob Wilkinson, Chief Operating Officer

Veos plc

www.veos.co.uk or www.oves.com

David Simonson/ Clare Maciocia                        Tel: 020 7606 1244

Merlin Financial






CHAIRMAN'S STATEMENT

Financial Highlights

The results for the six months to 30 June 2001 show a pre-tax loss of £
1,163,000 or 5.1p per share (6 months to 30 June 2000: loss of £656,000 or
2.9p per share). This increased loss reflects the additional medical marketing
expenditure outlined at the time of our preliminary results in March this
year. The Board is not proposing to pay a dividend for the period.

Commercial Development

I am pleased to present the Company's results for the six months to 30 June
2001.

The Company has made progress during 2001 in the following important areas:

Support of the medical community

In view of the crucial role healthcare professionals play in creating market
acceptance of the Oves contraceptive cap, much of the Company's efforts have
been directed towards this objective in the period. I am pleased to report a
positive response from most family planning professionals and practical
support from many influential members of the profession. The Margaret Pyke
Centre, which operates numerous family planning clinics, has agreed to become
a 'reference centre' for the Oves contraceptive cap and the Family Planning
Association has included Oves in its Contrapak for general practitioners. The
Company has recruited a team of nurses to continue medical training and
convert this interest into sales.

Retail sales through Boots the Chemist ('Boots')

Boots started distribution of Oves to 420 stores in March 2001, under a retail
exclusivity deal, which extends to March 2002 (extendable for a further year
thereafter on terms to be agreed). The rollout of the product and training of
all pharmacy staff was completed in May. Sales are growing in line with the
Company's expectations at this early stage. Plans are in place for a more
aggressive programme of advertising and direct marketing to start in early
2002.

Distribution channels

Contracts have been secured to extend distribution of the Oves cap to family
planning clinics and online consumers. FP Sales Limited, a subsidiary of the
Family Planning Association, is a leading distributor to the public family
planning network, which sees over one million women every year. Digital
Wellbeing operates a health and beauty website with over 150,000 customers and
offers the opportunity to order Oves online at www.wellbeing.com. The
Directors believe that these contracts, together with Boots' retailing reach,
will give the Company access to a substantial proportion of the target market.

UK efficacy study

The protocol for a new UK study on the efficacy of Oves has been accepted by
the Multi-Centre Research Ethics Committee. Formal approval is expected
shortly. As well as reinforcing the case for Oves in the UK market, it is
intended that the results will also be presented to the Food and Drug
Administration in the US to secure its approval and open up that market. The
study, led by Mr Ali Kubba, a leading UK gynaecologist and family planning
practitioner, is due to commence in October and will gather data from 200
women over 6 months. Mr Kubba has expressed his conviction that the study
should lead to a welcome 'rekindling of interest in female barrier methods'.
We look forward to reporting the results of this study in 2002.



Results

The Company incurred a loss in the six months to 30 June 2001 of £1,163,000 (6
months to 30 June 2000 - loss £656,000), reflecting increased medical
marketing expenditure.

The Board does not propose payment of a dividend for the period.

Management

Since I last reported to you, the management team has been the main focus of
my attention. Following the recruitment of the business development team, the
Company now has a management structure, which we believe, will allow us to
carry the business forward into the full commercial exploitation of the
Company's designs and intellectual assets.

I would like to record the Company's gratitude to Michael La Vean, who stepped
down as a director in June, for his hard work in developing the Company's
products and wish him all the best for the future. I am delighted that he has
agreed to remain as a product development consultant to the Company.

Current Financial Position

The Group had £1,200,000 of cash at 31 August 2001 and current monthly
expenditure is approximately £200,000. In consequence of this, by the end of
September the Company's net assets will be less than half of its called up
share capital. In accordance with Section 142 of the Companies Act 1985, which
provides that the Directors must in such circumstances convene an
extraordinary general meeting to consider whether any, and if so what, steps
should be taken to deal with this situation, a notice to convene a meeting
will be sent to shareholders in the next few days.

Prospects

In my view, the key ingredients for success are now firmly in place. The
establishment of Oves as a significant player in the contraceptive market
remains an exciting and realistic goal. A significant commitment to marketing
and advertising will be required to increase market awareness and establish
the product as a leader in the female barrier category, a category which the
Directors believe should increasingly appeal to modern women concerned about
their sexual health. The Board is focused on clear priorities in the UK,
before addressing the wider international market opportunities.

In order to achieve its goals, further funds will be required in the near
future to provide consumer marketing support in the UK, to exploit the
potential for new products already inherent in the Company's designs and
intellectual property and to complete the UK efficacy study, which should lead
to FDA approval for the Oves cap. The Board is currently considering a number
of options to resolve this funding need and I will write to shareholders when
one or more of these options have become further advanced.



Paul Lever

Chairman



CONSOLIDATED PROFIT AND LOSS ACCOUNT
                                        6 months to  6 months to     Year ended

                                       30 June 2001 30 June 2000    31 December
                                                                           2000
                                  Note    Unaudited    Unaudited
                                                                        Audited
                                              £'000        £'000
                                                                          £'000

Turnover                                         20            2              3
Cost of sales                                  (14)          (2)            (2)


Gross profit                                      6            -              1
Administration expenses                     (1,224)        (766)        (1,800)


Operating loss - continuing                 (1,218)        (766)        (1,799)
operations

Interest receivable                              57          110            194

Interest payable and similar                    (2)            -            (6)
charges


Loss on ordinary activities                 (1,163)        (656)        (1,611)
before taxation
Tax on loss on ordinary                           -            -              -
activities


Loss on ordinary activities after           (1,163)        (656)        (1,611)
taxation

Dividends - on equity shares                      -            -              -


Retained loss for the period                (1,163)        (656)        (1,611)


Loss per share                       2            p            p              p
Basic and diluted                             (5.1)        (2.9)          (7.1)




STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

                                 6 months to      6 months to     Year ended 31

                                30 June 2001     30 June 2000     December 2000
                                   Unaudited        Unaudited           Audited

                                       £'000            £'000             £'000

Loss for the financial               (1,163)            (656)           (1,611)
period
Group currency translation                22               12               (1)
gain/(loss)

Total recognised losses for          (1,141)            (644)           (1,612)
the period




CONSOLIDATED BALANCE SHEET


                                   At 30 June      At 30 June  At 31 December

                                         2001            2000            2000

                                    Unaudited       Unaudited         Audited
                                        £'000           £'000           £'000

Fixed assets
Tangible assets                           175             126             132

Current assets
Stocks                                    109              31              82
Debtors                                   199             151             284
Cash at bank and in hand                1,629           3,923           2,922

                                        1,937           4,105           3,288
Creditors: Amounts falling              (327)           (391)           (540)
due
within one year

Net current assets                      1,610           3,714           2,748

Net assets                              1,785           3,840           2,880

Capital and reserves
Called up share capital                 2,293           2,286           2,286
Share premium account                   4,795           4,748           4,756
Other reserve                           4,100           4,100           4,100
Merger reserve                        (1,360)         (1,360)         (1,360)
Profit and loss account               (8,043)         (5,934)         (6,902)


Equity shareholders' funds              1,785           3,840           2,880




RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
                                  6 months to    6 months to       Year ended

                                 30 June 2001   30 June 2000 31 December 2000
                                    Unaudited      Unaudited          Audited

                                        £'000          £'000            £'000

Total recognised losses               (1,141)          (644)          (1,612)
relating to the period
Net proceeds of share issues               46              -                8

Decrease in shareholders'             (1,095)          (644)          (1,604)
funds
Opening shareholders' fund              2,880          4,484            4,484

Closing shareholders' funds             1,785          3,840            2,880



CONSOLIDATED CASH FLOW STATEMENT


                                    6 months to    6 months to       Year ended

                                   30 June 2001   30 June 2000 31 December 2000
                                      Unaudited      Unaudited          Audited

                                          £'000          £'000            £'000

Operating loss                          (1,218)          (766)          (1,799)
Depreciation of tangible fixed               43             22               76
assets
Working capital movements:
Stocks                                     (27)            (4)             (55)
Debtors                                      85          (100)            (233)
Creditors                                 (213)          (627)            (478)
                                         ______         ______           ______
Net cash outflow from operating         (1,330)        (1,475)          (2,489)
activities

Returns on investment and                    55            110              188
servicing of financing

Capital expenditure and                    (86)           (72)            (132)
financial investment

Management of liquid resources            1,250          1,685            2,435

Financing                                    46           (90)             (82)
                                         ______         ______           ______
(Decrease)/increase in cash                (65)            158             (80)
                                         ______         ______           ______

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                 6 months to     6 months to        Year ended

                                30 June 2001    30 June 2000  31 December 2000
                                   Unaudited       Unaudited           Audited

                                       £'000           £'000             £'000

(Decrease)/increase in cash             (65)             158              (80)
Cash inflow from decrease in               -              90                90
debt
Cash outflow from liquid             (1,250)         (1,685)           (2,435)
resources

Decrease in net funds from           (1,315)         (1,437)           (2,425)
cash outflows
Exchange movement                         22              12               (1)

Decrease in net funds                (1,293)         (1,425)           (2,426)
Opening net funds                      2,922           5,348             5,348

Closing net funds                      1,629           3,923             2,922



1.     BASIS OF ACCOUNTING

        The interim financial statements consolidate the financial statements
        of Veos plc and Veos Limited and its subsidiaries using merger
        accounting. Under merger accounting the results and cash flows are
        combined from the beginning of the financial period and all
        comparatives are restated on the combined basis.

        2.     LOSSES PER SHARE

                               6 months to       6 months to         Year ended

                              30 June 2001      30 June 2000   31 December 2000
                                 Unaudited         Unaudited            Audited

                                     £'000             £'000              £'000

These have been                      1,163               656              1,611
calculated on

losses of:

Weighted average number 
of shares used:


Basic                            22,863,242       22,850,535         22,850,860


             There were no diluting factors in the period.



        3.     INTERIM REPORTBASIS OF PREPARATION

             This interim report was neither audited nor reviewed by the
        auditors and does not comprise statutory accounts within the meaning
        of Section 240 of the Companies Act 1985. It was approved by the Board
        on (21) September 2001. It has been prepared using accounting policies
        that are consistent with those adopted in the statutory accounts for
        the Group for the year ended 31 December 2000. It was approved by the
        Board on 27 September 2001.

             The figures for the year ended 31 December 2000 were derived from
        the statutory accounts for that year. The statutory accounts for the
        year ended 31 December 2000 received an audit report, which was
        unqualified and did not contain statements under Sections 237(2) or
        237(3) of the Companies Act 1985, and have been delivered to the
        Registrar of Companies.

        4.     INTERIM REPORT

             Copies of this report are being sent to shareholders. Further
        copies of this interim report may be collected from the Company's head
        office at 10 Greycoat Place, London SW1P 1SB.


 

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