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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Intl.Medical | LSE:INT | London | Ordinary Share | GB00B035PZ17 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.83 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:3270G
International Medical Devices PLC
25 October 2007
25 October 2007
International Medical Devices plc
(AIM: INT)
("IMD" or "the Company")
Results for the year ended 31 August 2007
International Medical Devices plc announces its financial results for the year
ended 31 August 2007.
Highlights
* Turnover up 195% to #11.2 million from #3.8 million
* Profit after tax of #538,000 (from a loss of #360,000 in 2006)
* Gross profit margin up to 41% from 36% (2006)
* Acquisitions of two companies adding to a growing portfolio
* Renewal of existing distribution agreements, and new distribution
agreements signed
* Three companies integrated into one operation located in Selby, Yorkshire
Acquisitions
The two acquisitions that IMD made during the 2006 financial year were as
follows: Pro-Care, which was acquired for #4 million and #760,000 for Minster
Medical Ltd, and since the acquisitions both purchases have strengthened the
Acute Care Division, although these results only include 8 months' trading for
both Companies.
These two acquisitions were funded through the provision of a term loan of #3.95
million from Allied Irish Bank Plc and a flexible book debt facility of which
#1.59 million has been utilised, which allowed the Company to refinance all
existing Group debt.
Integration
As part of the Company's focus on organic growth and to be in a position to
acquire new businesses, the Board has appointed Bill McGrath as a Consultant
Chief Operating Officer to oversee the integration of the operating divisions. A
key challenge for IMD over the past six months and during the next year is to
continue to integrate the acquired businesses into one coherent business
operation under the IMD corporate brand albeit organised on a divisional basis.
Bill has a proven track record in successfully integrating diverse operating
companies and is now responsible for putting in place a sustainable integration
and operations plan for the five business.
Lindsay Sanford, Chairman of IMD, commented:
"The Board of IMD is delighted with these results and the acquisitions it has
made during the year. The medical device sector is a fast growing one and we
believe that IMD is well placed to act as a consolidator in this market place."
Copies of the accounts have been sent to shareholders today, and will be
available to download from the Company's website shortly.
The Annual General Meeting will be held on 11 December 2007 at the offices of
JMFinn Capital Markets Limited, 4 Coleman Street, London EC2R 5TA.
Full Directors' reports and financials follow.
For further information, contact:
International Medical Devices JMFinn Capital Markets Parkgreen Communications
Chris Thomas, CEO Geoff Nash Simon Robinson
+44 203 008 4960 +44 20 7600 1658 Erica Nelson
+44 207 851 7480
CHAIRMAN'S STATEMENT
I am pleased to announce your Company has successfully continued its growth
strategy of 'buy and build' over the past 12 months. This strategy has delivered
a 195% increase in Revenue to #11.2million with Operating Profit of #902,000 and
a Profit after Tax of #538,000 compared to the 2006 Loss of #360,000.
In this period your Company added two further acquisitions to a growing
portfolio of medical products, creating a profitable Medical Device trading
house. As I outlined in the interim report, this strategy is proof that IMD
continues to establish itself within the healthcare market in supplying both new
and established brands into the medical devices sector.
Acquisitions
IMD has made two acquisitions during the period. The purchase price was #4
million for Pro-Care Limited and #760,000 for Minster Medical Ltd, and since the
acquisitions both purchases have strengthened The Acute Care Division, although
these results only include 8 months trading.
These two acquisitions were funded through the provision of a term loan of #3.95
million from Allied Irish Bank Plc and a flexible book debt facility of which
#1.59 million has been utilised, which allowed us to refinance all existing
group debt.
Integration
As part of our focus on organic growth and to be in a position to take on new
business from acquisition, the Board appointed Bill McGrath as a Consultant
Chief Operating Officer to oversee the integration of the operating divisions.
A key challenge for IMD over the past six months and during the next year is to
continue to integrate the acquired businesses into one coherent business
operation under the IMD corporate brand albeit organised on a divisional basis.
Bill has a proven track record in successfully integrating diverse operating
companies and is now responsible for putting in place a sustainable integration
and operations plan for the five businesses acquired to date.
Divisional structure
After careful consideration and to achieve further operational savings, IMD now
intends to focus on three operating divisions rather than as previously
reported.
- Acute Care
- Aged Care
- Devices
IMD will continue to target the NHS and private health sector with its product
portfolio where essential spending is required to provide medical services which
will not be affected by the economic climate.
New Products
IMD has launched a number of new products ranging from wound drains to
respiratory systems such as CPAP. In particular the Aged Care Division worked
closely with Inogen Inc to launch their oxygen concentrator, a lightweight,
portable system with unique features.
Brand Awareness
IMD has developed two new brands to be launched in the next twelve months.
Firstly the "Surety" brand for a range of high quality safety devices. Secondly,
the "Integrity" Brand for value for money consumables.
To successfully grow and secure IMD's place as a major distributor in the health
care market, it is essential we develop a portfolio of products under IMD's own
brand names. This will help deliver sustainable margins and build market share,
thereby adding future asset value to the company.
Safe Needle Progress/Launch of "Surety" brand
In the past 12 months, IMD has made considerable progress in the development of
its safe needle patent. Having obtained a CE marking certificate for the safe
needle, IMD has continued the evaluation process agreed with the NHS.
Currently the Surety Needle is being evaluated by the South West Ambulance
Service NHS Trust and at Papworth Hospital. IMD will formally launch its Surety
Needle at the Dusseldorf Medica exhibition in November, and this will be the
first product under the "Surety" brand. Previously this product was referred to
as "Clip-On", and formed part of the intellectual property acquisition by IMD in
July 2005. It is our intention to launch other complimentary safety intravenous
injection and phlebotomy devices under this brand over the next 18 months.
Buy and Build Strategy
The past six months have seen the company focus on integration, cost reduction
and the refocusing of the Devices Division. The group continues to seek further
growth opportunities, and is working with various financial institutions who are
keen to fund us to achieve our growth ambitions, and currently we have
identified a number of targets for acquisition.
Non-Executive Directors
During the year Doug Sims and Don O'Sullivan, the representatives of Eastland
Medical Systems Limited (EMS) on the IMD Board, stepped down following the
disposal in December 2006 of EMS's entire holding of 40.5 million shares in IMD.
This disposal has paved the way for each company to establish its own identity
in the global health care market. The business relationship will continue and
both companies intend to collaborate on existing projects and explore future
opportunities. We thank Doug and Don for their valuable contribution.
Conclusion
IMD continues to deliver its original strategy of building a healthcare group
with sustainable revenues and profit growth.
The success of our business strategy is reflected in our Annual Report, where
IMD has delivered a significant Operating Profit of #902,000 on Revenue of #11.2
million.
We are confident that, by combining a focused integration plan with an ongoing
buy and build strategy, IMD can continue to grow organic sales and complete new
acquisitions.
On behalf of the board I would like to thank the Executive Team and staff for
their contribution and hard work over the past 12 months which is always
appreciated.
L.C.S. Sanford
Chairman
October 2007
CHIEF EXECUTIVE'S REPORT
In the calendar year 2006, IMD acquired four companies. This momentum is
reflected in IMD's quick progress in achieving profitability in the year to the
31st August 2007. However, the last six months has seen a period where the focus
has been on integration, cost reduction, stock management, sales force
rationalisation and margin management.
Integration
To date IMD has acquired five companies. Following the acquisition of Pro-Care
Ltd and Minster Medical Ltd in December 2006, it was decided to integrate these
two businesses with Meddis Ltd which had been acquired in September 2005. These
three businesses now constitute the Acute Care Division based in Selby, North
Yorkshire. All warehousing, accounting and sales management have been
centralised in Selby, and the Division is now operated under two distinct
business units (Enteral and Surgical) and sales teams managed by the sales
director, John Tharme. As outlined in the Divisional review, the product
portfolio has been rationalised and refocused to meet specific hospital needs.
Certain lines have been culled, like ophthalmic scalpels which on analysis were
making a negative contribution.
The main challenge for the next two years is to refocus the Devices Division.
The Division is in the process of changing its sales mix away from a dependency
on hardware sales to a more regularised order flow of consumable and disposable
medical devices like the Penfine diabetic needle and safe retractable needle, '
Surety'. The Division's sales force had for many years sold GE Healthcare ECG
machines, now replaced by Welch Allyn in the product portfolio. The installed
base of such machines is finite within the NHS PCT and Hospital Trust framework.
IMD has assembled its own proprietary branded portfolio ('Integrity') of ECG '
consumables', and in coming months will be in a position to offer our customer
lower prices.
Brands
IMD has assembled an impressive range of brands that are sold into the NHS and
overseas markets. The IMD business model is based both on acquisitions and
exploitation of our IP. Brands which are represented by IMD through contractual
distribution agreements include: Ypsomed (diabetic needles : "Penfine"), Welch
Allyn (ECG's and defibrillators), SunTech Medical (blood pressure monitors),
Respironics (CPAP), Inogen (oxygen concentrator), Applied Medical Technologies
(mini button enteral feeding device), Serres (disposable suction liners) and
Saterlabs (Oxygen catheters). Typically IMD have two to three years exclusive
agreements with these principals, and to balance these distribution agreements,
IMD also invests in its own brands, obtained either via acquisition or through
exploitation of our own technology. These brands include Tendertip and Caretip
(open and closed suction catheters), Kylie, Kanga and Martex (continence care
products), Breeze (tracheotomy and endotracheal Care), Intex (self
catheterisation), Cherishh (SCP Clamps, eyeshields and bonnets for neo-natal
care) and Tubicare (medical tubing, catheters and naso-gastric bile bags).
Over the next 12 months IMD will launch two new brands into the medical devices
market. "Surety" is the brand under which the retractable safe needle is to be
launched, with all products in the Surety portfolio united by their focus on
safety and smart design. Each has been designed to be intuitive and to reduce
risk to both healthcare professionals and patients.
The Surety needle is scheduled to be launched at Medica, the 19th World Forum
for Medicine in Dusseldorf, Germany on November 14-17, 2007. The intention is to
extend the brand range to include blood collection needles, blood collection
tube holders, hypodermic needles, butterfly needles and cannula. Within the next
18 months, this will allow IMD sales force to offer a range of Surety products,
and will provide a stream of fresh, new products with added features at
competitive prices.
The second new brand to be introduced to market is the "Integrity" range of
cardiology consumables that will include defibrillator pads, cuffs, lead wires,
gels and pulse oximetry probes.
The strategic importance of a medical device distribution business like IMD
possessing a balanced portfolio of 3rd party brands and in-house brands has been
confirmed by the recent privatisation of NHS Logistics and the Purchasing and
Supply Agency (PASA). In October 2006, the government awarded a 10 year
outsourcing contract to DHL under which DHL became responsible for procuring a
range of products - from catering suppliers to medical equipment - and
delivering them to NHS hospitals and GP surgeries. From October 2006, the new
service has been known as NHS Supply Chain and remains managed by the NHS
Business Service Authority.
NHS Supply Chain and IMD
DHL operates NHS Supply Chain as the agent of the NHS BSA with the contract
covering the supply and delivery of 10 product categories. Of relevance to IMD,
these categories include medical supplies, bedding and linen, dressings, patient
appliances and lab equipment. Over the 10 categories, the NHS uses around
500,000 different products with a value of #3.7 billion per year.
NHS Supply Chain lists all product categories open to supplier bids, and
operates a centralised procurement system that offers new opportunities to
suppliers like IMD to grow market share through their ability to leverage
customer purchasing volume.
The opportunity for IMD to sell its brands to the NHS is in a consultative
approach to supplying NHS Trusts via the NHS Supply Chain who themselves
generate margins and operate a sales force of 64 representatives nationally,
plus 20 account managers. Through our 'buy and build' approach, IMD has acted as
a mini-consolidator in the market, and has the ability to sell into the NHS on a
national as opposed to a fragmented regional scale.
IMD enjoys a strong relationship with NHS Supply Chain with over 50% of the
Acute Care Division sales via this distribution channel. The Age Care Division
was successful in securing a 3 year national NHS contract for direct patient
delivery with the three continence care brands, Kylie, Kanga and Martex. IMD has
ongoing tenders and supply agreements in place, and has recently received
plaudits for high levels of service.
Summary
The challenge for IMD is to consolidate the businesses acquired to date into a
coherent sustainable business that will deliver increasing revenue and profit
via efficient integration practices and cost management, and by continuing to
launch innovative new products to provide sales growth.
This, combined with our 'buy and build' strategy should provide the growth
strategy to generate more sales and shareholder value. This is the focus for IMD
over the next 12 months.
Christopher Thomas
Chief Executive Officer
19 October 2007
FINANCIAL REVIEW
I am pleased to report the financial performance of IMD during the period.
Revenues increased to #11,247,000 from #3,817,000 in 2006, Operating Profit of
#902,000 compares with a Loss of #(222,000) in 2006, and Profit after Tax
amounted to #538,000 compared with a Loss of #(360,000) to 31 August 2006.
Two further companies were acquired in December 2006, both contributing towards
the consolidated results from that date. Following these acquisitions, the day
to day operations and administration of these businesses were merged, together
with our subsidiary Meddis Limited. All are now based in Selby, Yorkshire.
This integration was very successfully and speedily implemented, operationally,
logistically, and from the IT perspective.
Fund Raising and Acquisitions
Fund raising undertaken in July 2007 amounted to #515,300 before costs. These
funds were raised to allow IMD to continue with its organic growth.
IMD acquired two further companies in December 2006, being Pro-Care Limited and
Minster Medical Limited. The acquisition of these companies was financed
through bank debt. Consideration was structured in the form of cash, IMD
shares, and deferred consideration. The deferred consideration is performance
related, and could amount to additional payments in the form of shares of
#1,240,000 over a period of three years to 31 August 2010, based on the share
price when payment falls due.
Capital reserves include expected future deferred consideration payable in the
form of shares, amounting to #3,130,000, in accordance with International
Financial Reporting Standard 3.
Revenue and Gross Margin
IMD achieved Revenues of #11.2 million during the year to 31 August 2007. This
compared with Revenues of #3.8 million to 31 August 2006. Revenues incorporate
post acquisition trading results, and therefore include the 3 previous
acquisitions for the full year, together with Pro-Care Limited and Minster
Medical Limited for the period from 21 December 2006.
A full review of all product lines was undertaken during the period, resulting
in rationalisation of those lines where profit generated from the sales effort
was not commensurate with the rewards achieved. This has resulted in lower
Revenue in the short term, but has allowed margin improvement, and will in turn
improve profitability in future periods. Revenue has also been affected by
lower capital equipment sales during the period, but these have been compensated
by excellent performances elsewhere in the group. All subsidiaries made
contributions to profit in the period, and there are many more organic and
acquisition opportunities available in each division.
Gross margin on Revenues averaged 41% for the year, up from 36% in 2006. This
increase is a reflection of product mix between the different operating
divisions, and in part the cutting of certain product lines noted above. Where
product lines were rationalised, it is for the long term benefit of the Group's
profitability. As a result, while all potential cost savings will not have been
reflected in the 2007 Profit & Loss account, benefits have already been seen in
margin improvement.
Operating Cash flows
IMD produced positive Operating Cash flows before movements in working capital
of #1,014,000 in the period to 31 August 2007 (2006: Outflow #262,000).
Operating Profit, Interest, and Taxation
IMD achieved an Operating Profit for the year, amounting to #902,000 (2005: Loss
#222,000). As noted with Revenues, this reflects contribution from Pro-Care
Limited and Minster Medical Limited for a period of eight months, post
acquisition.
With interest rates having increased significantly over the last twelve months,
together with increased borrowings, this has resulted in higher interest charges
for the period. IMD entered into an interest cap agreement, which caps the
interest base rate at 6%, before borrowing margin, for borrowings of #3 million
for a period of 2 years from March 2007.
There is no charge to Corporation Tax, as Group tax losses available have been
offset against current year profits, subject to HM Revenue and Customs
agreement.
Earnings Per Share
Basic Earnings Per Share (EPS) are 0.20 pence per share (2006: Loss per share
0.21 pence). Fully diluted, EPS is 0.17 pence (2006: Loss per share 0.21
pence).
Cash and Net Debt
The Board determined to finance the two acquisitions made in December 2006 by
increasing IMD's borrowings. As a result, a cashflow term loan of #3,955,000
was entered into, together with an invoice discounting facility. These funds
were used to make the acquisitions, together with repayment of existing debt
inherited with the acquisition of RME Holdings Limited, its subsidiary Response
Medical Equipment Limited, and EMS Medical Limited.
The Group had cash of #463,000 at the year end (2005: #706,000). This is before
bank debt of #800,000 repayable within one year, and bank debt of #3,155,000
repayable after more than one year. In addition, IMD operates an invoice
discounting facility which was utilised to a level of #1,594,000 at 31 August
2007 (2006: #212,000). Therefore net debt amounted to #5,021,000 (2006:
#1,023,000). Gearing, net of cash balances, is 17.4% of Total Equity and
Liabilities (2006: 4.8%). Net finance cost for the period amounted to #364,000
(2006: #53,000).
Working Capital
The business relies on having inventory available immediately, due to the
requirements of its customers. Inventories at 31 August 2007 amounted to
#2,471,000 (2006: #1,791,000), the increase reflecting the two acquisitions made
during the period.
Goodwill
IMD has Goodwill on the Balance Sheet amounting to #14,165,000 (2006
#8,674,000), representing purchased Goodwill. This Goodwill arises directly
from the difference between the consideration paid for the acquisition of the
subsidiaries, and the net assets of those subsidiaries at the time of
acquisition. Goodwill includes expected future deferred consideration payable
in the form of shares, in accordance with International Financial Reporting
Standard 3.
International Financial Reporting Standards
IMD has adopted International Financial Reporting Standards for its Annual
Report and Accounts to 31 August 2007, as it did for the Annual Report and
Accounts to 31 August 2006. The information is therefore comparable, with no
adjustments being necessary.
Dividends
IMD is not declaring a dividend for the year. In the Interim Report to 28
February 2007, the Chairman indicated a desire to commence paying dividends with
respect to the financial year ending 31 August 2008, and this will be considered
by the Board of Directors at the appropriate time.
Taxation
There is no corporation tax charge for the year. Tax losses available in the
group, are being used to offset taxable profits in the period, subject to HM
Revenue & Customs agreement (2006: #Nil).
M P Acheson
Finance Director
19 October 2007
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED 31 AUGUST 2007
Group
Notes Year ended Year ended
31-Aug-07 31-Aug-06
#'000 #'000
Revenue 2 11,247 3,817
Cost of sales (6,564) (2,443)
Gross profit 4,683 1,374
Distribution expenses (1,820) (460)
Administration expenses (1,961) (1,136)
Operating Profit / (Loss) before exceptional 902 (222)
items
Restructure costs - (85)
Operating Profit / (Loss) 3 902 (307)
Finance costs (384) (70)
Finance income 20 17
Profit / (Loss) before tax 538 (360)
Taxation 4 - -
Profit for the year 538 (360)
Profit / (Loss) per share
Basic 5 #0.0020 #(0.0021)
Diluted 5 #0.0017 #(0.0021)
There were no other gains or losses other than those recognised in the income
statement. All activities relate to contributing activities.
The notes following these tables form part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2007
Group Share Share Capital Retained Total
Capital Premium Reserve Earnings
#'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 year
to 31 August 2007:
Profit for the year - - - 538 538
Total recognised income and - - - 538 538
expense for the year
Issue of share capital 471 1,379 - - 1,850
Issue costs - (170) - - (170)
Deferred contingent - - 1,780 - 1,780
consideration
Movement in year 471 1,209 1,780 538 3,998
Balance as at 31 August 2007 2,960 13,708 3,130 (139) 19,659
Company Share Share Capital Retained Total
Capital Premium Reserve Earnings
#'000 #'000 #'000 #'000 #'000
Balance as at 1 September 2006 2,489 12,499 1,350 (862) 15,476
Changes in equity for the year
to 31 August 2007:
Profit for the year - - - 435 435
Total recognised income and - - - 435 435
expense for the year
Issue of share capital 471 1,379 - - 1,850
Issue costs - (170) - - (170)
Deferred contingent - - 1,780 - 1,780
consideration
Movement in year 471 1,209 1,780 435 3,895
Balance as at 31 August 2007 2,960 13,708 3,130 (427) 19,371
BALANCE SHEET
AS AT 31 AUGUST 2007
Group Company
2007 2006 2007 2006
#'000 #'000 #'000 #'000
Assets
Non-current assets
Goodwill 14,165 8,674 - -
Other Intangible Assets 9,078 8,479 8,636 8,001
Property, plant and equipment 311 233 30 -
Investments in subsidiaries - - 14,107 8,494
23,554 17,386 22,773 16,495
Current Assets
Inventories 2,471 1,719 - -
Trade receivables 2,055 1,276 - -
Other receivables 364 290 152 -
Intercompany loan - - 442 188
Cash and cash equivalents 463 706 468 175
5,353 3,991 1,062 363
Total assets 28,907 21,377 23,835 16,858
Equity and liabilities
Equity attributable to equity
holders of the parent
Share capital 2,960 2,489 2,960 2,489
Share premium 13,708 12,499 13,708 12,499
Capital reserves 3,130 1,350 3,130 1,350
Retained earnings (139) (677) (427) (862)
19,659 15,661 19,371 15,476
Non-current liabilities
Bank loans 3,155 1,300 3,155 -
Convertible loan notes - 250 - 250
Other non-current liabilities 148 444 - -
3,303 1,994 3,155 250
Current liabilities
Trade and other payables 5,145 3,122 509 349
Intercompany loan - - - 533
Convertible loan notes - 250 - 250
Bank loans 800 350 800 -
5,945 3,722 1,309 1,132
Total liabilities 9,248 5,716 4,464 1,382
Total equity and liabilities 28,907 21,377 23,835 16,858
L.C.S. Sanford, Chairman 19 October 2007
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2007
Year Ending Year Ending
Group Company
31-Aug-07 31-Aug-06 31-Aug-07 31-Aug-06
#'000 #'000 #'000 #'000
Cash flows from operating activities
Profit /(Loss) from operations 902 (307) 661 (554)
Adjustments for:
Depreciation of property, plant and equipment 104 45 2 -
Share Options Expense 8 - 8 -
Operating cash flows before movement in working capital 1,014 (262) 671 (554)
(Increase) in inventories (16) (316) - -
(Increase) / Decrease in receivables (588) 892 (1,041) (105)
Increase / (Decrease) in payables 460 (320) (578) 325
Tax paid (394) (80) - -
Cash generated from operations 476 (86) (948) (334)
Interest paid (384) (70) (288) -
Net cash from/(used in) operating activities 92 (156) (1,236) (334)
Cash flows from investing activities
Interest received 20 17 6 8
Acquisition of Trading Subsidiary net of cash acquired (2,585) (2,434) - -
Investment in Trading Subsidiary - - (2,867) (2,633)
Acquisition of Non Current Assets (552) (44) (32) (44)
Proceeds From Disposal of Non Current Assets 10 - - -
Net cash (used in) investment activities (3,107) (2,461) (2,893) (2,669)
Cash flows from financing activities
Net proceeds on issues of shares 467 2,815 467 2,815
Net borrowings 2,305 145 3,955 -
Net cash from financing activities 2,772 2,960 4,422 2,815
Net increase in cash and cash equivalents (243) 343 293 (188)
Cash and cash equivalents at beginning of period 706 363 175 363
Cash and cash equivalents at end of year 463 706 468 175
Bank balances and cash 463 706 468 175
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2007
1. Presentation of Financial Statements
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and with those parts of the Companies Act
1985, applicable to companies reporting under IFRS. The financial reports have
been prepared under the historical cost convention.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates. A summary of the more important accounting policies, which
have been applied consistently, is set out below:-
1.1 Basis of Accounting
The financial statements are prepared in accordance with the historical
cost convention.
1.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and enterprises controlled by the Company (and its subsidiaries) and
are made up to 31 August each year. Control is achieved where the Company has
the power to govern the financial and operating policies of an investee
enterprise so as to obtain benefits from its activities.
The financial statements of International Medical Devices Plc have been prepared
in accordance with the International Financial Reporting Standards ("IFRS").
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the Group.
All significant intercompany transactions and balances between Group enterprises
are eliminated on consolidation.
The principal subsidiary undertakings at 31 August 2007 are as follows:
Company Activity % Ownership
Meddis Ltd Medical Distribution 100
Response Medical Equipment Ltd Medical Distribution 100
RME Holdings Ltd Dormant Company 100
EMS Medical Ltd Medical Distribution 100
Procare Ltd Medical Distribution 100
Minster Medical Ltd Medical Distribution 100
Global Medical Devices Ltd Dormant Company 100
All companies are incorporated and registered in England.
1.3 Revenue recognition
Revenue represents the total invoice value, excluding value added tax, of sales
made in the year. Interest income is accrued on a time basis, by reference to
the principal outstanding and at the interest rate applicable. Dividend income
from investments is recognised when the shareholders' rights to receive payment
have been established.
1.4 Foreign currencies
Transactions in foreign currency are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
sterling at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of the historical
cost in a foreign currency are translated using the exchange rate at the date of
the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to sterling at the
foreign exchange rates ruling at the dates that fair value was determined.
1.5 Inventory
Inventory is valued to the lower of cost and net realisable value.
1.6 Intangible assets
Goodwill
All business combinations are accounted for by applying the purchase
method. Goodwill represents the amount arising on acquisition of subsidiaries.
In respect of business acquisitions, goodwill represents the difference between
the cost of the acquisition and the fair value of the net identifiable assets
acquired.
Goodwill is stated at cost less any accumulated impairment losses.
Goodwill is allocated to cash-generating units and is no longer amortised but is
tested annually for impairment (see accounting policy 1.8).
Negative goodwill arising on acquisition is recognised directly in the
income statement.
1.7 Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation.
Depreciation is charged so as to write off the cost or valuation or assets over
their estimated useful lives, using the straight-line method, on the following
bases.
Fixtures, Fittings and equipment 20%
Motor Vehicles 25%
Plant and Machinery 10%
Leasehold Property Improvements straight line over life of lease
The asset's residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
great than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the disposal proceeds
with the carrying amount and are included in the income statement.
1.8 Impairment
The carrying amounts of the Group's assets, other than deferred tax assets (see
accounting policy 7), are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists,
the asset's recoverable amount is estimated.
For goodwill, assets have an indefinite useful life and intangible assets that
are not yet available for use, the recoverable amount is estimated at each
balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-generating
units (group of units) and then, to reduce the carrying amount of other assets
in the unit (group of units) on a pro rata basis.
The recoverable amount of the Group's receivables carried at amortised cost is
calculated as the present value of the estimated future cash flows, discounted
at the original effective interest rate. Receivables with a short duration are
not discounted.
The recoverable amount of other assets is the greater of their net selling price
and the value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
An impairment loss in respect of a receivable carried at amortised cost is
reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is only reversed to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss as been recognised.
1.9 Trade receivables
Trade receivables are recognised initially at fair value less provision for
impairment. A provision for impairment of trade receivables is established when
there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of receivables. The amount of the
provision is the difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted at the effective interest rate.
The amount of the provision is recognised in the income statement.
1.10 Trade payables
Trade payables are stated at their nominal value.
1.12 Financial Risk Management
The Group uses a limited number of financial instruments, comprising cash,
short-term deposits, bank loans and overdrafts and various items such as trade
receivables and payables, which arise directly from operations. The Group does
not trade in financial instruments.
Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and interest rate risk), credit risk, liquidity risk
and cash flow interest rate risk. The Group's overall risk management
programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group's financial performance.
Market risk
a) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the UK pound
and Euro. Foreign exchange risk arises from future commercial transactions.
b) Credit risk
The Group has no significant concentrations of credit risk and has policies in
place to ensure that sales are made to customers with an appropriate credit
history.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
available funding through an adequate amount of committed credit facilities. The
Group ensures it has adequate cover through the availability of bank overdraft
and loan facilities.
d) Cash flow and interest rate risk
The Group finances its operations through a mix of cash flow from current
operations together with cash on deposit and bank and other borrowings.
Borrowings are generally at floating rates of interest and no use of interest
rate swaps has been made.
e) Fair value estimation
The nominal value less impairment provision of trade receivables and payables
are assumed to approximate their fair values. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to
the Group for similar financial instruments.
1.13 Deferred Tax
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements.
2. Revenue Analysis
Revenue Analysis
2007 2006
Geographical analysis of revenue: #'000 #'000
United Kingdom 10,678 3,777
Europe 537 40
Rest of World 32 -
11,247 3,817
2007 2006
Analysis by revenue stream: #'000 #'000
Acute Care 4,841 1,708
Aged Care 1,763 398
Devices 4,643 1,711
11,247 3,817
The Group has one main business segment. The above analysis by revenue stream is
provided for information purposes only.
3. Profit from operations
Operating profit is after charging:
Group
2007 2006
#'000 #'000
Depreciation
- owned asets 104 45
Auditor's remuneration
Audit services
- Group 30 39
- Company 10 15
Non-audit services 75 51
Foreign exchange (gain) 0 (24)
4. Taxation
The tax is assessed on the profit on ordinary activities for the year, is lower
than at the standard rate of UK corporation tax of 30% (2006: 30%), as explained
below:
2007 2006
#'000 #'000
Profit of ordinary activities before taxation 538 (360)
Profit of ordinary activities multiplied by 161 (108)
30%
Expenses not deductible for tax purposes 14 9
Depreciation in excess of capital allowances - -
Utilisation of B/Fwd Loss Relief (175) -
Carried forward - 99
Total Current Tax - -
There is no tax charge for the year, due to availability of losses for off-set
by group relief against other group company profits. As at 31 August 2007, the
group had approximately #50,000 tax losses available, subject to agreement with
HM Revenue & Customs.
There are no material deferred tax balances as at 31 August 2007 and at 31
August 2006.
5. Profit per share
Group
Earnings 2007 2006
#'000 #'000
Profit for the purpose of calculating basic profit per share 538 (360)
Number of shares 2007 2006
Weighted average number of ordinary shares for the purposes of basic 265,314,440 171,314,367
earnings per share
Weighted average number of ordinary shares for the purposes of diluted 315,172,911 -
earnings per share
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFELALLXFAE
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