Interim Results

    RNS Number : 3589V
  International Medical Devices PLC
  28 May 2008
   

    International Medical Devices (IMD) Announces Results For The Six Months Ended 29th February 2008.


    International Medical Devices (IMD), the AIM listed healthcare company, announces its results for the six months ended 29th February
2008.

    Financial Highlights:

    *     Turnover increased by 22% - up from £5,063,000 to £6,184,000 for the comparable period last year.
    *     Operating profit before (exceptional charges) increased by 21% -up from £416,000 to £505,000.
    *     Sales and operating profit predominantly driven by organic growth, and focussing on sales of higher margin products.
    *     IMD won an endorsement to sell its Surety safety needle across the NHS. First orders received.
    *     The appointment of WJ McGrath as CEO of IMD.

    An exceptional charge of £1,273,000 was incurred during the period which resulted in a loss before tax of £977,000 compared to a
profit before tax of £302,000 in the comparable period in 2007. This Exceptional charge relates to issues resulting from the restructuring
of the Plc Board, with three executive directors leaving, the relocation and integration of Response Medical Equipment to the Group's main
business location in Selby and abortive acquisition costs.

    Lindsay Sanford, Executive Chairman of IMD, commented: "We are very happy with the progress the Group has made during this six month
period. I believe the actions taken to remove negative cost from the Group in integrating the principal trading companies in one location
will facilitate operating and marketing scale efficiencies and economies which we would not otherwise be able to achieve. These initiatives
will enable the Group to significantly reduce its overheads and provide future enhanced earnings opportunities. We remain committed to our
Buy and Build strategy as the most expedient way to create shareholder value. We will continue to focus on providing our customers with
innovative products where our streamlined routes to market are able to operate most effectively. 
      

    Ends

    For information, please contact:

    Lindsay Sanford
    William McGrath
      Chairman's Statement
    I am pleased to announce the results for the six months trading by International Medical Devices plc (IMD) to 29 February 2008.

    During this period, revenue amounted to £6,184,000 up from £5,063,000 for the comparative period to 28 February 2007. This increase of
22% has resulted from both organic growth and a full contribution made from all IMD's subsidiaries for the first time. For the period, gross
profit increased to £2,478,000 from £1,942,000, an increase of 28%. This significant increase in the profit margin relative to the
increase in revenue is a result of focusing on higher margin products.

    Operating Profit before exceptional charges and interest increased by 21%, amounting to £505,000 for the six months compared with
£416,000 in 2007. An exceptional charge of £1,273,000 was incurred during the period, however, and this is explained below. As a result,
IMD incurred a loss before tax of £977,000 compared with a profit before tax in the comparable period of £302,000 in 2007.

    I am delighted to welcome Bill McGrath to the Board of Directors. He joined IMD in August 2007 as a consultant and was appointed Chief
Executive in December 2007. Bill brings a wealth of experience to IMD both through managing businesses and identifying acquisition targets
through his distinguished career. Chris Thomas, John Butler, and Matthew Root have all stepped down during the period, and are no longer
with IMD.

    IMD was formed to make acquisitions in the fast growing healthcare sector and then to grow those businesses organically. Our strategy
remains that of 'buy and build' as the best way to create enhanced shareholder value, while at the same time continuing to develop and
realise organic growth. IMD continues to focus on providing its customers with innovative medical devices and products in niche areas, which
can readily be brought to market through IMD's existing routes to market and sales channels. Outlined below is a Review of IMD's Operating
Businesses.

    Acute Care Division
    The Acute Care division has performed to plan in the six month period. Management have taken on considerable additional responsibility
with the integration of other divisional operations at our main Selby location, as noted below. They have successfully achieved this
integration with minimal disruption, while at the same time growing the revenues for their own product portfolio.

    There are also further distribution opportunities under consideration, and I am confident that when the appropriate opportunities arise,
management will be in a position to take on these new products, and efficiently and profitably distribute these to the markets throughout
the UK.

    Aged Care Division
    EMS Medical (EMS) has not performed to IMD's original business plan and steps are being taken to address this issue. The business will
be restructured to accelerate that desired improvement. I am pleased to report that the second half has, however, started more positively
for EMS. Currently, the EMS management is focused on maximising the potential for the core product range which has historically delivered
high margins with a low operating cost base. Further options to develop the core product range are being reviewed, and will be considered
when appropriate.

    In our last Annual Report we highlighted a product that was being marketed through our Aged Care Division called Inogen, which at the
time we had high hopes for. Due to various issues including supply and pricing problems, IMD is currently reviewing whether it is in its
best interest to continue to distribute this product in the future. IMD's intention is to continue to supply a portfolio of products which
can be distributed seamlessly to its client base. 

    Devices Division
    The Devices Division comprises IMD's subsidiary, Response Medical Equipment. As noted, this company has been integrated into the
operational location of the Acute Care Division. This created considerable short-term business dislocation. Management are working hard to
bring in additional distribution agreements, as well as re-establishing major supplier relationships, and increasing trading through
existing product lines. Management are confident this division's business can be grown significantly in the coming year.

    Surety Progress
    We announced on 29 January 2008 that IMD had won an endorsement to sell the Surety retractable needle across the National Health
Service. The first orders have now been received. The Surety retractable needle is being marketed by InterVene Limited, a company owned by
Matthew Root, a former Director of IMD.

    Following the receipt of initial orders in the UK, discussions have commenced with a distributor in Canada, for both Canada and the USA.
This distributor would be able to apply for FDA approval for the USA, making access to the US market attainable more quickly.

    We have confidence in the Surety project and look forward to reporting further progress over the next period. 

    Exceptional charge and Business integration
    The Exceptional charge affecting the Profit & Loss account for the period, has arisen from issues relating to the restructuring of the
plc Board, integration and relocation of Response Medical Equipment, and abortive acquisition costs.

    Firstly, Response Medical Equipment which represents the major part of the Devices Division, has been reorganised and integrated onto
our main geographic operational centre at Selby. The Selby location has warehouse facilities accommodating all the Acute Care divisional
logistical and administrative operations for Pro-Care, Minster Medical, and Meddis. Both from an operational and cost savings perspective,
the decision was made to consolidate these operations into one location, thereby maximising operational and management efficiencies, while
minimising duplication of administrative functions.

    In the short term, this has resulted in significant oneoff costs, which are reflected in the Exceptional charge, but by making these
operational changes at this time, it is anticipated that material improvements to the business, and profitability, will follow. I am pleased
to inform you that to date, following this integration in December 2007, trading has increased in both Response Medical Equipment and
Pro-Care, while at the same time Response Medical Equipment has operated with a significantly lower overhead base. 

    IMD therefore now operates from two locations only, being Selby, Yorkshire and Gloucester with the Aged Care Division.

    Another element of the Exceptional charge relates to an acquisition which was aborted due to reasons beyond IMD's control. We spent
significant time, effort, and costs on this acquisition which would have been a major step for IMD, and could have enhanced the share price
significantly. Unfortunately, it was not possible to complete this acquisition, and therefore the costs incurred have been charged to the
Profit & Loss account.

    Conclusion
    IMD has made very positive progress during the last six months. Major changes to the operations of the business have been successfully
completed, to ensure the business foundations are in place to take the Group forward on a stronger, more efficient, and integrated footing.
Revenues for the second half of 2008 have commenced in line with expectations. I am confident of the future and I look forward to reporting
the second half results reflecting the introduction of these developments.

    On behalf of the Board, I would like to thank all staff and the executive team for their hard work over the past six months.

    L. C. S. Sanford
    Chairman
    27 May 2008

      Consolidated Income Statement


    Six months ended 29 February 2008


                                             Unaudited     Unaudited   Audited
                                           6 months to   6 months to   Year to
                                                 29-Feb        28-Feb   31-Aug
                                                   2008          2007     2007
                                                   £000          £000     £000
 Revenue                                          6,184         5,063   11,247
 Cost of sales                                  (3,706)       (3,121)  (6,564)
 Gross profit                                     2,478         1,942    4,683
 Distribution expenses                          (1,014)         (647)  (1,820)
 Administration expenses                          (959)         (879)  (1,961)
 Operating profit before exceptional                505           416      902
 items 
 Exceptional costs                              (1,273)            -         -
 Operating profit/(loss) after                    (768)           416      902
 exceptional items 
 Finance costs                                    (213)         (122)    (384)
 Finance income                                       4             8       20
 Profit/(loss) before tax                         (977)           302      538
 Taxation                                             -             -        -
 Profit/(loss) for the period                     (977)           302      538
 Loss per share
 Basic                                        (£0.0031)       £0.0012  £0.0020
 Diluted                                      (£0.0031)       £0.0011  £0.0017



      
    Statement of Changes in Equity


    Six months ended 29 February 2008

                                   Share     Share   Capital    Retained
                                 Capital   Premium   Reserve   Earnings    Total
                                     £000      £000      £000       £000    £000
 Balance as at 1 September 2006     2,489    12,499     1,350      (677)  15,661
 Changes in equity for the six
 months
 to 28 February 2008:
 Profit for the period                 -         -         -         302     302
 Issue of share capital               199     1,161        -          -    1,360
 Deferred contingent                   -         -      1,240         -    1,240
 consideration 
 Movement in period                   199     1,161     1,240        302   2,902
 Unaudited balance as at
 28-Feb-07                          2,688    13,660     2,590      (375)  18,563
 Changes in equity for the six
 months
 to 31 August 2007:
 Profit for the period                 -         -          -        236     236
 Issue of share capital               272       218         -          -     490
 Issue costs                           -       -170        -          -     -170
 Deferred contingent                   -         -        540          -     540
 consideration 
 Movement in period                   272        48       540        236   1,096
 Balance as at 31 August 2007       2,960    13,708     3,130      (139)  19,659
 Changes in equity for the six
 months
 to 29 February 2008:
 Loss for the period                                               (977)   (977)
 Issue of share capital               380       317         -         -      697
 Deferred contingent                   -         -      (570)          -   (570)
 consideration 
 Movement in period                   380       317     (570)      (977)   (850)
 Unaudited balance as at
 29-Feb-08                          3,340    14,025     2,560    (1,116)  18,809



      Consolidated Balance Sheet

    Six months ended 29 February 2008
                                             Unaudited     Unaudited   Audited
                                           6 months to   6 months to   Year to
                                                 29-Feb        28-Feb   31-Aug
                                                   2008          2007     2007
                                                   £000          £000     £000
 Assets
 Non-current assets
 Goodwill                                        14,165        13,683   14,165
 Other intangible assets                          9,189         8,694    9,078
 Property, plant and equipment                      407           257      311
                                                 23,761        22,634   23,554
 Current assets
 Inventories                                      1,810         2,249    2,471
 Trade receivables                                2,556         2,433    2,055
 Other receivables                                  262           316      364
 Cash and cash equivalents                           26           629      463
                                                  4,654         5,627    5,353
 Total assets                                    28,415        28,261   28,907

 Equity and liabilities
 Equity attributable to equity holders of
 the parent
 Share capital                                    3,340         2,688    2,960
 Share premium                                   14,025        13,660   13,708
 Capital reserves                                 2,560         2,590    3,130
 Retained earnings                              (1,116)         (375)    (139)
                                                 18,809        18,563   19,659
 Non-current liabilities
 Bank loans                                       2,455         2,955    3,155
 Convertible loan notes                             300           250        -
 Other non-current liabilities                      240           388      148
                                                  2,995         3,593    3,303
 Current liabilities
 Trade and other payables                         5,586         4,855    5,145
 Convertible loan notes                             225           250        -
 Bank loans                                         800         1,000      800
                                                  6,611         6,105    5,945
 Total liabilities                                9,606         9,698    9,248
 Total equity and liabilities                    28,415        28,261   28,907
      Consolidated Cash Flow Statement

    Six months ended 29 February 2008
                                             Unaudited     Unaudited   Audited
                                           6 months to   6 months to   Year to
                                                 29-Feb        28-Feb   31-Aug
                                                   2008          2007     2007
                                                   £000          £000     £000
 Cash flows from operating activities
 Profit/(loss) from operations                    (768)           416      902
 Adjustments for:
 Depreciation of property, plant and                 60            47      104
 equipment 
 Charge in relation to share options                                9        8
 Operating cash flows before movement in          (700)           472    1,014
 working capital 
 (Increase)/decrease in inventories                 661          (59)     (16)
 (Increase)/decrease in receivables               (399)         (409)    (588)
 Increase/(decrease) in payables                    592         (275)      460
 Tax paid                                            -          (132)    (394)
 Cash generated from operations                     154         (403)      476
 Interest paid                                    (213)          (56)    (384)
 Net cash from/(used in) operating                 (59)         (459)       92
 activities 
 Cash flows from investing activities
 Interest received                                    4             8       20
 Acquisition of non-current assets                (207)         (308)    (552)
 Acquisition of subsidiary net of cash               -        (2,493)  (2,585)
 acquired 
 Proceeds from disposal of non-current               -             -        10
 assets 
 Net cash (used in) investment activities         (203)       (2,793)  (3,107)
 Cash flows from financing activities
 Net proceeds on issues of shares                    -             -       467
 Net borrowings                                   (175)         3,175    2,305
 Net cash from financing activities               (175)         3,175    2,772
 Net decrease in cash and cash                    (437)          (77)    (243)
 equivalents 
 Cash and cash equivalents at beginning             463           706      706
 of period 
 Cash and cash equivalents at end of                 26           629      463
 period 
 Bank balances and cash                              26           629      463


      Notes to the Consolidated Financial Statements

    1. Presentation of Financial Statements
    The financial information contained in this Interim Statement for the 6 months ended 29 February 2008 is unaudited and does not comprise
accounts within the meaning of s240 of the Companies Act 1985. The financial information for the full preceding period is based on the
statutory Report and Accounts for the financial year ended 31 August 2007 which were reported on by the auditors, without qualification or
statement under Section 237 (2) or (3) of the Companies Act 1985 and have been delivered to the Registrar of Companies.

    The financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

    The interim financial information has been prepared on the basis of accounting policies set out in the Group's statutory accounts for
the year ended 31 August 2007. The interim accounts should be read in conjunction with the Group's audited accounts for the year ended 31
August 2007.

    The Consolidated financial statements include the financial statements of the Company and its subsidiaries to 29 February 2008. Assets
and liabilities that exist at the date of acquisition are recorded at their fair values reflecting their condition at that date. Purchased
goodwill arising on consolidation represents the excess of the fair value of the consideration given, plus associated costs, for a business
over the fair value of the assets acquired. Goodwill arising on acquisition is capitalised as an intangible fixed asset.

    2. Taxation
    No tax charge has been incorporated into the consolidated accounts for the period ended 28 February 2008, due to availability of tax
losses within the Group to offset taxable profits.

    3. Loss per Share
    The Earnings per Ordinary Share in this interim period is calculated by reference to the Loss after Tax of £(977,000) and the weighted
average number of 312,270,764 shares in during this period. In the period ended 28 February 2007 the Company made a profit of £302,000 and
the weighted average number of shares was 256,505,629. For the year to 31 August 2007, a profit was made of £538,000 and the weighted
average number of shares amounted to 265,314,440.

    4. Share Placing
    On 13 December 2007, the Company issued 36,125,047 Ordinary Shares under the deferred payment terms of the acquisition agreements for
its subsidiaries, RME Holdings Ltd, EMS Medical Ltd, Pro-Care Ltd, and Minster Medical Ltd.

    5. Copies of Accounts
    A copy of the half-year report will be distributed to all shareholders and will also be available to members of the public from the
Company's registered office address at 10 Orange Street, London, WC2H 7DQ. A copy of the interim report will also be available on the
Company's website www.imd-plc.com.


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