Interim Results

    RNS Number : 7998X
  DawMed Systems PLC
  30 June 2008
   

    For Immediate release                                                                                                        30 JUNE
2008

    DAWMED SYSTEMS PLC


    UNAUDITED HALF YEAR RESULTS


    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 consumables used by NHS Trust hospitals, private hospitals, clinics and Primary Care
practitioners, today announces Unaudited Half Year Results for the six months to 31 March 2008.

    KEY POINTS: 

    -     Significant recovery from last year's losses; 

    -      Turnover increased by 67% to £3.82m (2006: £2.29m);

    -      Sales of the Company's own products significantly increased;

    -    EBITDA profit of £61,900, before exceptional foreign exchange loss of £187,000 and non-recurring abnormal costs of £135,000
expected to be recoverable in second half, resulting in loss of £260,000;  

    -        Total operating costs decreased by 9%; 

    -    Underlying favourable performance turnaround of £501,000 before exceptional foreign exchange loss and non-recurring abnormal
costs;

    -        Operating loss of £367,700 and pre-tax loss of £398,500 both impacted by exceptional foreign exchange loss and non-recurring
abnormal costs, leaving underlying  losses of £45,700 and £76,500 respectively;    

    -        Substantial increase in sales of the Company's own manufactured products; 

    -        Recovery of the NHS has allowed sales of the Wassenburg equipment for use in the    
    Endoscopy Departments to return to a level that represents a fundamental element of the Company's business; and

    -    The supply agreement entered into in 2007 for an own-label version of the Clinic WDD is   performing strongly.

    Kevin Gilmore, Executive Chairman of Dawmed, commented:  "I am pleased to report a buoyant period of recovery from last year's losses,
with a first half underlying performance turnaround of £501,000, excluding the effects of the exceptional foreign exchange loss and the
non-recurring abnormal costs expected to be recoverable in the second half, and I look forward to the current profitable trading leading to
profitability for the second half of the year." 



    --END--



    Enquiries:

    Dawmed Systems PLC                                                        Tel: [phone]
    Kevin M Gilmore, Executive Chairman                                  Mob: [phone]        
            
    Beaumont Cornish Limited                                                Tel: [phone]
    Roland Cornish                                

    Bishopsgate Communications Limited                            Tel: [phone] 
    Maxine Barnes
    Siobhra Murphy                                

    For further information please visit Dawmed's websites at www.dawmedsystems.co.uk 


        


    Chairman's Statement
    for the six month period ended 31  March 2008


    I have pleasure in announcing that the unaudited results produced by your Company for the six months ended 31 March 2008 show a
considerable increase in turnover, a vital element of the recovery that was anticipated in the "Outlook and Future Prospects" section of my
Statement in the Company's Annual Report & Accounts 2007. 

    Financials

    Turnover for the period of £3.82 million showed a creditable improvement of 67% over the same period last year, resulting in a
substantial recovery from last year's losses. The Board anticipates that the current profitable trading will continue and achieve the
Board's forecasted return to profitability for the second half of the year.  

    The significant recovery of the NHS from the well noted period of extensive financial deficit has allowed sales of the Wassenburg
equipment for use in hospital Endoscopy Departments to return to the level that your Board expects should be generated from this market
leading range of products. 

    Furthermore, it has been especially encouraging in this first half year to have achieved increases in the sales of the Company's own
decontamination equipment, namely the AERclens and Clinic machines, into the high quality sectors of the Ear, Nose & Throat ("ENT")
Departments of hospitals and Dentistry markets respectively, where compliance with relevant standards is of growing importance.

    Satisfactory growth in the areas of Spares and Chemicals supplies has been in line with the Board's expectations and is anticipated to
be sustained as the Company's installed base of capital equipment is enlarged.  

    The Support Services Department continues to be well utilised, with an expectation of further growth during the balance of the year by
it continuing to provide national coverage for the constantly increasing installed base of equipment supplied by the Company.

    Although completely beyond the Board's control, the significant and unexpected decline in the value of Sterling compared to the Euro has
had a significantly adverse effect on the overall results for the period, with an exceptional foreign exchange loss of £187,000.  

    Total operating costs before depreciation but excluding finance charges and foreign exchange losses or gains, have decreased by 9% over
the same period last year. This reduction in expenditure follows ongoing changes to the infrastructure of the Company, which are continually
being made to ensure that the needs of business are met with optimum efficiency.

    Earnings after finance charges, but before interest, taxation, depreciation and amortisation ("EBITDA") were a loss of £260,100. This
loss arose primarily from the exceptional foreign exchange loss of £187,000 referred to above and non-recurring abnormal costs that are
expected to be recoverable in the second half of the year. Without the impact of such losses and costs your Company would have made a profit
in the period of £61,900. 

    The resulting operating loss of £367,700 and the net loss before and after tax for the half year of £398,500 were both also impacted
upon to the same degree, leaving underlying losses of £45,700 and £76,500 respectively. 

    But for these two events, the pre and post tax loss would have been circa. £76,500, representing an underlying favourable performance
turnaround of £501,000, or 87%, in the period. 

    The balance of shareholders' funds at 31 March 2008 was £127,900 compared with £632,200 at the same date last year, reflecting the
losses in the period as described above. Had the expected recoverability of the abnormal costs of £135,000 been recognised in these Half
Year Results, then the shareholders' funds at 31 March 2008 would have been £262,900.

    Products and Services

    In the Annual Report & Accounts for the year ended 30 September 2007, I gave a full description of the main characteristics and
applications of the Company's range of washer-disinfectors ("WD") for chemical disinfection and washer-disinfector-dryers ("WDD") for
thermal disinfection. All these products continue to enjoy the high and increasing level of post installation quality revenue from the
Chemical Sales, the Spares Sales and the Support Services Department's Sales that form an integral and important part of the overall
business. 

    The Clinic WDD, designed for use mainly in the primary care dentistry sector, continues to show good growth in this important market. In
particular, sales performance under the supply agreement entered into during 2007 for an own-label version of the Clinic is strong.  

    The AERclens total system for the decontamination of both small flexible and small rigid nasendoscopes used in ENT Departments of
hospitals is gaining ground in the marketplace, with orders increasing and the level of enquiries developing strongly.  

    Interest in the Opticlens, the WDD system for the decontamination of delicate rigid metal instruments used in ophthalmic and
neurological surgery, continues in the UK and Europe as a niche area of the markets.

    The traceability system, known as the Dawmed "DCTS", that was launched in 2007 has already achieved a number of sales confirming its
position as an important enhancement to the Company's product range.

    Business in the secondary care Endoscopy Departments of Hospitals, which use large flexible endoscope WDs, is performing strongly,
particularly following the introduction to the market in 2007 of the Wassenburg pass-through WD and the Wassenburg Dry 300 sterile
drying/storage cabinet.  


    Remainder of the Year and Future Prospects

    I am pleased to report that, at the time of writing, there are strong indications that the increased level of activity enjoyed in the
first half of the current financial year will continue for the foreseeable future.  

    The level of activity in the large flexible endoscope WD market remains buoyant, with the Company being involved in many opportunities
through the tendering process for large contracts, which have become a recent new feature of the market. Having achieved major successes in
this area to date, the Company is well placed to anticipate further success in the near future. Interest in, and more importantly orders for
the range of Wassenburg washer-disinfectors and the sterile storage/dryer cabinet are expected to maintain the improvement experienced in
the first half year through to the year end and beyond.

    Ongoing research by the export department, formed in 2007 to exploit the overseas potential for the Company's products, has identified
expansion opportunities into a number of European countries.  Against this background, your Board is now seeking to identify and appoint
distributors in a number of countries which provide the leading opportunities.

    I am also pleased to report that the sales momentum achieved in the market place by the Clinic WDD continues to increase.  Sales of this
product in the domestic market are growing and, as mentioned above, the export potential is being pursued actively.

    Sales of the AERclens system in the UK, which had previously suffered from the extensive NHS financial restrictions, are now developing
and your Board is confident that significant sales will result from the initial high level of interest. In addition, discussions are ongoing
with a number of overseas companies with the intention of pursuing sales of these products in the international markets. 

    The Board is confident that the range of products and services that is offered by your Company will allow the second half of the year to
maintain the level of growth that has been enjoyed in the first half.  Although the continued weakness of Sterling will result in margins on
the imported products (principally Wassenburg products) being impaired, your Board is hopeful that the underlying significant recovery in
the period will be repeated in the second half of the year. Notwithstanding future Sterling/Euro foreign exchange levels, the Board's latest
forecasts indicate pre and post tax profitability for the second half of the year. 

    The emphasis for the future continues to be the further implementation of the Company's now established strategy for sales growth and
profitability from all of the underlying higher margin business elements in the UK, the pursuit of export business to increase turnover and
to reduce the dependence upon the NHS, the control of the Company infrastructure to minimise overheads and the continuous utilisation of the
skills base and experience of our loyal and contributory staff.

    Kevin M Gilmore
    Executive Chairman

    30 June 2008


    Consolidated Income Statement
    for the half year ended 31 March 2008


                                                Restated    Restated
                                   Unaudited   Unaudited   Unaudited
                                    6 months    6 months     year to
                                          to          to          30
                                    31 March    31 March   September
                                        2008        2007        2007
                                       £'000       £'000       £'000

 REVENUE                            3,818.7     2,288.7     4,976.1 
 Cost of sales                     (2,689.7)   (1,304.9)   (3,086.0)
 Gross profit                       1,129.0      983.8       1,890.1
 Administrative expenses          (1, 496.7)   (1,395.1)   (2,390.5)
 LOSS FROM OPERATIONS                (367.7)    (411.3)      (500.4)
 Finance income                        -          4.3              -
 Finance costs                        (30.8)      (33.0)      (77.1)
 LOSS BEFORE TAXATION                (398.5)    (440.0)      (577.5)
 Tax expense                               -       -               -
 LOSS FOR THE FINANCIAL PERIOD       (398.5)    (440.0)      (577.5)
 BASIC LOSS PER SHARE (Note 3)       (1.93p)     (2.15p)     (2.82p)
 DILUTED LOSS PER SHARE (Note 3)     (1.93p)     (2.15p)     (2.82p)

      Group Balance Sheet
    as at 31 March 2008


                                            Restated               Restated
                                 Unaudited   Unaudited         Unaudited 30
                                  31 March    31 March       September 2007
                                      2008        2007                £'000
                                     £'000       £'000

 NON-CURRENT ASSETS
 Property, plant and equipment       116.9        98.1                103.4
 Intangible assets                    52.0       249.1                165.6
                                     168.9       347.2                269.0
 CURRENT ASSETS
 Inventories                         869.7       661.4              1,062.0
 Trade and other receivables       3,026.7     1,112.6              1,249.8
 Cash and cash equivalents               -        64.7                  5.2
 TOTAL ASSETS                      4,065.3     2,185.9              2,586.0
 CURENT LIABILITIES
 Financial liabilities           (1,027.3)     (479.4)            (1,020.2)
 Trade and other payables        (2,910.1)   (1,064.9)            (1,052.2)
                                 (3,937.4)   (1,544.3)            (2,072.4)
 NON-CURRENT LIABILITIES
 Trade and other payables                -       (9.4)                    -
 TOTAL LIABILITIES               (3,937.4)   (1,553.7)            (2,072.4)
 NET ASSETS                          127.9       632.2                513.6

 Called up share capital           1,030.7     1,023.2              1,030.7
 Share premium account             1,878.2     1,872.2              1,878.2
 Other reserve                     (350.5)     (350.5)              (350.5)
 Profit and loss account         (2,430.5)   (1,912.7)            (2,044.8)
 SHAREHOLDERS' EQUITY                127.9       632.2                513.6

      Consolidated Cashflow Statement
    for the half year ended 31 March 2008



                                              Restated                     Restated
                                 Unaudited   Unaudited         Unaudited year to 30
                                  6 months    6 months               September 2007
                                        to          to                        £'000
                                  31 March    31 March
                                      2008        2007
                                     £'000       £'000

 Cash flows from operating
 activities
 Loss from operations              (367.7)     (411.3)                      (500.4)
 Adjustments for:
 Depreciation and amortisation       107.6       109.4                        223.8
 charges
 Share based payment expense          12.8         9.0                         27.9
 Changes in working capital:
 Decrease in inventories             192.3        58.4                      (342.2)
 Increase in trade and other     (1,776.8)     (243.2)                      (380.4)
 receivables
 Increase in creditors             2,313.1        27.1                         69.5
 Cash generated from/(absorbed
 by) operating activities            481.3     (450.6)                      (901.8)
 Cash flows from investing
 activities
 Finance income received                 -         4.3                            -
 Finance expenses                   (30.8)      (33.0)                       (77.1)
 Purchase of non-current assets      (7.5)      (35.3)                       (71.5)
 Net cash used in investing         (38.3)      (64.0)                      (148.6)
 activities
 Cash flows from financing
 activities
 Overdraft                             7.3           -                         86.8
 Factoring and stock advances      (252.7)      (83.0)                        269.2
 Finance leases                      (3.1)       (7.4)                       (14.9)
 Other loans                       (199.6)       154.9                        199.6
 Net cash (used)/generated in
 financing activities              (448.1)        64.5                        540.7
 Net decrease in cash and cash
 equivalents                         (5.1)     (450.1)                      (509.7)
 Cash and cash equivalents at
 beginning of period                   5.1       514.8                        514.8
 Cash and cash equivalents at
 end of period                           -        64.7                          5.1


      
    CHANGES IN SHAREHOLDERS' EQUITY

                                 Share capital  Share premium  Other reserve  Retained earnings    Total
                                         £'000          £'000          £'000              £'000    £'000

 At 1 October 2006                     1,023.2        1,872.2        (350.5)          (1,481.7)  1,063.2
 Total recognised income and
 expense                                     -              -              -            (440.0)  (440.0)
 Reserve movement arising from
 share based payment reserve                 -              -              -                9.0      9.0
 At 31 March 2007                      1,023.2        1,872.2        (350.5)          (1,912.7)    632.2
 Total recognised income and
 expense                                     -              -              -            (137.5)  (137.5)
 Reserve movement arising from
 share based payment reserve                 -              -              -                5.4      5.4
 Issue of shares in the period             7.5            6.0              -                  -     13.5
 At 30 September 2007                  1,030.7        1,878.2        (350.5)          (2,044.8)    513.6
 Total recognised income and
 expense                                     -              -              -            (398.5)  (398.5)
 Reserve movement arising from
 share based payment reserve                 -              -              -               12.8     12.8
 At 31 March 2008                      1,030.7        1,878.2        (350.5)          (2,430.5)    127.9


      Notes to the unaudited Half Year Results

    1    GENERAL INFORMATION

    Dawmed Systems plc is a public limited company ('Company') incorporated in the United Kingdom, whose shares are publicly traded on the
Alternative Investment Market (AIM). The Company is domiciled in the United Kingdom and its registered address is Eden Close, Hellaby,
Rotherham, South Yorkshire S66 8RW, United Kingdom.

    The Group's principal activities are the design, development, manufacture, sale, distribution, testing and servicing of washer
disinfectors and washer disinfector dryers for the primary and secondary healthcare sectors.

    2    BASIS OF ACCOUNTING

    The financial information has been prepared on the historical cost basis. The accounting policies set out below have been applied
consistently to all periods presented in this consolidated half yearly report and in preparing an opening IFRS balance sheet at 1 October
2006 for the purposes of the transition to IFRS.

    BASIS OF PREPARATION

    For all periods to 30 September 2007, the Group prepared its audited financial statements under UK Generally Accepted Accounting
Principles (UK GAAP). For the period ending 30 September 2008 the Group is required to prepare its annual consolidated financial statements
in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)).

    This half yearly report has been prepared in accordance with the accounting policies set out below (which are expected to be applied in
preparing the annual financial statements), taking into account the requirements and options in IFRS 1 'First-time adoption of International
Financial Reporting Standards'. The Group has not adopted the reporting requirements of IAS 34 'Interim Financial Reporting'. The transition
date for the Group's application of IFRS is 1 October 2006 and the comparative figures for the six month period ended 31 March 2007 and the
annual period ended 30 September 2007 have been restated accordingly. A reconciliations of the income statement (previously profit and loss
account) and balance sheet from previously reported UK GAAP to IFRS is not required as the transition to IFRS has not resulted in any
changes being required to the amounts already disclosed.

    The information relating to the six months ended 31 March 2008 and 31 March 2007 is unaudited, has not been reviewed by the Group's
auditors and does not constitute statutory accounts.

    The comparative figures for the year ended 30 September 2007 have been restated for the adoption of IFRS. The comparative figures for
the year ended 30 September 2007 are not the Company's statutory accounts for that financial year. Those accounts, which were prepared under
UK GAAP, have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was
unqualified, did not include references to any matter to which the auditors drew attention by way of emphasis without qualifying their
report, and did not contain statements under section 237(2) or (3) of the Companies Act. The financial information in this document does not
constitute statutory financial statements within the meaning of the Act.

    GOING CONCERN

    The Group primarily meets its day to day working capital requirements through an invoice factoring and stock financing facility which is
secured on trade debtors and stocks of finished goods. The nature of the Group's business is such that the timing of cash inflows can be
unpredictable. The availability of the invoice factoring facility provides an appropriate method of managing this level of unpredictability.
In addition, the Group's principal supplier of goods is providing extended credit facilities to assist in accommodating the substantial
increase in activity.

    The directors have prepared cash flow projections covering the next twelve months which anticipate a significant increase in the level
of business. These forecasts are supported by the current level of activity, a substantial order book and identified future projects.
Additionally, the continuing enhancement of existing machines and the growth in demand for the AERclens and Clinic machines are providing
prospects for growth. The directors consider that, with the continuation of the increased level of business that is being experienced, these
projections should be achievable. However, there can be no certainty in relation to these matters.

    These forecasts indicate that with the support and cooperation provided by the Group's principal supplier and the utilisation of the
invoice factoring and stock financing facility, the Group has adequate resources to meet its ongoing requirements. On this basis, the
directors consider it appropriate to prepare the financial statements on the going concern basis. The financial statements do not include
any adjustments that would result if the increase in the levels of business was not achieved. 

    BASIS OF CONSOLIDATION

    The consolidated financial information incorporates those of Dawmed Systems plc and its subsidiary undertaking for each reporting
period.

    In preparing this half yearly report, any intra-group balances, unrealised gains and losses or income and expenses arising from
intra-group trading are eliminated. 

    Subsidiaries are entities over which the Group has the power to govern the financial and operating policies to obtain economic benefit
to the Group. Subsidiary companies acquired during the year are consolidated using the purchase method. The results of subsidiary companies
acquired are included in the consolidated income statement from the effective date of acquisition.

    The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.

    The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as
goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition)
is recognised directly in the income statement.


    TRANSITION TO IFRS

    IFRS 1 grants certain exemptions from the full requirements of IFRSs in the transition period. The following exemptions have been taken
in these consolidated financial statements:

    i)    IFRS 3 - Business combinations

    The Group has elected not to apply IFRS 3 'Business Combinations' retrospectively to acquisitions that took place prior to 1 April 2006.
As a result, the carrying amount of goodwill in the UK GAAP balance sheet at 31 March 2006 is brought forward to the IFRS opening balance
sheet without adjustment.

    ii)    IFRS 2 - Share-based payment

    IFRS 2 has not been applied to share-based payments granted before 7 November 2002 nor those granted after 7 November 2002 that had
vested prior to 1 October 2006. The Group has adopted IFRS 2 'Share Based Payment' for share options granted after 7 November 2002 which had
not vested at 1 October 2006. The adoption of IFRS 2 has not required numerical adjustments to be made to the balance sheet at 1 October
2006 or to the income statement for the year ended 30 September 2007.

    REVENUE RECOGNITION

    Group revenue is the fair value of the consideration received or receivable by the Group for goods supplied and services provided,
excluding VAT and trade discounts.

    Where services are provided on annual contracts, revenue is spread evenly over the duration of the contract. Where annual contracts do
not apply then revenue is recognised at fair value by reference to the stage of completion of the provision of services.

    Sales of goods are recognised when goods are delivered and title has passed.

    Interest income is accrued on a time-apportioned basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that
asset's net carrying amount.



    RESEARCH AND DEVELOPMENT

    Where the future recoverability of development expenditure on a particular project can be foreseen with reasonable certainty such
expenditure is capitalised at cost under intangible assets in the balance sheet.

    These development costs are then amortised, commencing from the date that revenues begin to be earned from the project, over the
expected useful economic life. The useful economic life is determined such that the expenditure is then matched with the revenues then
earned.

    All other research and development expenditure is recognised as an expense as incurred.

    PROPERTY, PLANT & EQUIPMENT

    Property, plant and equipment assets are stated at cost less accumulated depreciation and any recognised impairment loss.

    Depreciation is charged so as to write off the cost of assets, over their estimated useful economic lives. The rates used for each major
asset category, which are reviewed annually, are:

    Leasehold improvements                                -    25%
    Plant and machinery                                         -    25%
    Fixtures, fittings and computer equipment     -    25%
    Motor vehicles                                                   -    25%

    Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
the term of the relevant lease.

    The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in profit or loss.

    IMPAIRMENT OF ASSETS

    At each balance sheet date the Group reviews the carrying value of its property, plant and equipment and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss.

    An impairment loss is only reversed if there is a subsequent increase in the recoverable amount that can be related objectively to an
event occurring after the impairment loss was recognised. 





    LEASING

    Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the Group. All other leases are classified as operating leases.

    Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the lease. The corresponding liability is to be included in the balance sheet as
a finance lease obligation. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and
is charged to the income statement over the period of the lease.

    Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. 

    BORROWING COSTS

    Borrowing costs are recognised as an expense when incurred.

    TAXATION

    The tax expense represents the sum of the current tax expense and deferred tax expense.

    The current tax payable is based on an estimation of the amount due on the taxable profit for the year. Taxable profit is different from
net profit as reported in the income statement because it excludes items of income or expenditure which are not taxable or deductible in the
year as a result of either the nature of the item or the fact that it is taxable or deductible in another period. The Group's liability for
current tax is calculated by using tax rates that have been enacted or substantially enacted by the balance sheet date.

    Deferred tax is accounted for on the basis of temporary differences arising from the differences between the tax base and accounting
base of assets and liabilities.

    Deferred tax is recognised for all taxable temporary differences, except to the extent where it arises from the initial recognition of
an asset or liability in a transaction that is not a business combination. Deferred tax is not provided for on the initial recognition of
goodwill. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against
which temporary differences can be utilised.

    Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in
which case it is dealt with within equity. It is calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled.




    FINANCIAL INSTRUMENTS

    Financial assets or liabilities are recognised when, and only when the company becomes a party to the contractual provisions of the
instrument.

    Classification of financial instruments

    Financial instruments are classified as financial assets, financial liabilities or equity instruments.

    Following the adoption of IAS 32, financial instruments issued by the Group are treated as equity only to the extent that they meet the
following two conditions:

    *     They include no contractual obligations upon the Group to deliver cash or other financial assets that are potentially unfavourable
to the Group; and

    *     Where the instrument will or may be settled in the Group's own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group
exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

    Recognition and valuation of financial assets

    Trade Receivables

    Trade receivables do not carry interest and are reduced by appropriate allowances for estimated irrecoverable amounts.

    Cash and cash equivalents

    Cash and cash equivalents comprise cash in hand and at bank. Cash and cash equivalents excludes overdrafts.

    Financial liabilities and equity

    Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

    Bank borrowings

    Interest bearing bank loans and overdrafts are recorded at their fair value. Finance charges are allocated to the income statement using
an effective interest rate, on the outstanding carrying value of the instrument.

    Trade payables

    Trade payables are not interest bearing and are stated at their amortised cost.

    Foreign exchange

    Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the income
statement.

    Warranty costs

    Provision is not made for the warranty costs on goods bought for re-sale as the liability for those warranty costs lies with the
manufacturer. Provision is not made for warranty costs on manufactured equipment as such costs are considered to be insignificant.

    Equity instruments

    Equity instruments are initially measured at fair value.

    GOVERNMENT GRANTS

    Grants received towards the purchase of property, plant and equipment are carried in the balance sheet as deferred income and credited
to the income statement over the expected useful lives of the assets acquired. Grants receivable for revenue expenditure are credited to
revenue when received.

    RETIREMENT BENEFITS

    Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Any contributions unpaid at the
balance sheet date are included as an accrual as at that date. The Group has no further payment obligations once the contributions have been
paid.

    SHARE BASED PAYMENT

    The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the IFRS1 exemption, IFRS 2 has been applied to
all grants of equity instruments after 7 November 2002 that had not been vested prior to 1 October 2006.

    The Group issues equity-settled share-based payments to certain employees, whereby employees render services in exchange for share
options.

    Where employees are rewarded using share based payments, the fair values of employees' services are determined indirectly by reference
to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date using an option-pricing model
(Black-Scholes) and excludes the impact of non-market vesting conditions.

    Equity-settled share based payments are expensed in the income statement.  Upon exercise of share options, the proceeds received net of
attributable transaction costs are credited to share capital, and where appropriate share premium.

    3    EARNINGS PER SHARE

    The calculation of basic loss per share is based upon the loss of £398,570 (2007: loss £440,030) and on 20,613,292 shares (2007:
20,463,292 shares), being the weighted average number of shares in issue during the period.

    Since the exercise price of the 2,846,676 share options is above the average fair price for the six months ended 31 March 2008 (2007:
2,396,676 share options), the diluted loss per share is equivalent to the basic loss per share.


    4    EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION ("EBITDA")

    Earnings before interest, tax, depreciation and amortisation ("EBITDA") amount to a loss of £260,100 and consist of the Loss from
Operations of £367,700 (2007: £411,300) less depreciation and amortisation charges of £107,600 (2007: £109,400).

    5    APPROVAL OF THE HALF YEAR REPORT

    The half year report for the six months ended 31 March 2008 was approved by the board of directors on 30 June 2008.  

    6    WEBSITE

    The half year report and accounts are being posted to shareholders and will be available on the website: www.dawmedsystems.co.uk 

This information is provided by RNS
The company news service from the London Stock Exchange
 
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IR SEEFWWSASELM