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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Healthcare Ent. | LSE:HCEG | London | Ordinary Share | GB00B6030H73 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 20.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:2002U Healthcare Enterprise Group PLC 16 November 2005 Healthcare Enterprise Group PLC Trading Update, Interim results for the six months ended 31 August 2005 and Board Changes Healthcare Enterprise Group PLC ("HCEG", the "Group" or the "Company"), the international healthcare products group, today reports results for the six months ended 31 August 2005 * Turnover up 58% to #8.8 million (2004: #5.6 million) * Operating loss, before exceptional items, #2.1 million (2004: #0.32 million profit) * Loss per share 1.50p (2004: profit per share 0.32p) Post period * Board changes * Disposal of assets to Ridgecrest * Acquisition of ATA and Link 16 November 2005 Enquiries: Healthcare Enterprise Group PLC 020 7351 7500 Mark Tompkins, Chairman Gordon Wood, Chief Executive College Hill 020 7457 2020 Adrian Duffield / Corinna Dorward Trading Update During the period the Crest Medical business, acquired by the Group in November 2004, was integrated into the Healthcare Sales & Service Ltd ("HSS") site in Warrington. The integration of that business has proved more difficult and is taking longer than anticipated, and the Group has recorded losses as a result. Measures have already been implemented which are designed to return the business to profit and cash generation by the early part of next year. Since the end of the period changes have occurred in the senior management of HSS with Gordon Wood, Group CEO, overseeing the business whilst the search for a new Managing Director is undertaken. As announced previously, the Group now expects to get the US Environmental Protection Agency ("EPA") regulatory approval for Ebiox in the first half of the next financial year and separate State approvals later in that year. Significant costs have been involved in obtaining EPA approval, in order to secure a number of distribution agreements in the US which are expected to generate revenue in the second half of the next financial year. The Group continues to progress a number of new product initiatives in this range. The Group's new High Level Disinfectant ("HLD") product has successfully undergone in situ trials and commercial discussions are underway with potential global partners. The Group remains confident in this innovative range of products, as interest is continuing to be expressed by potential distributors in markets worldwide. The Group is in the process of appointing a Managing Director to develop the Ebiox business. Progress on development of Optiscope continues to be good and the Board anticipates having prototype products in spring 2006. As previously announced the product has met the technical milestone of outperforming the optics train in the "gold-standard" market-leading re-useable endoscope. The Board is looking to maximise the value of Optiscope in the near term. Interim Results The Group reported a loss after interest, tax and exceptional items of #2.3 million (2004: profit #0.4 million) on turnover of #8.8 million (2004: #5.6 million) for the six month period ended 31 August 2005. The loss has been caused by difficulties experienced in integrating certain acquisitions, the delays in achieving contracts for the sale of Ebiox (as previously announced) and the cost of obtaining regulatory approvals. The Group's loss per share for the period ended 31 August 2005 was 1.50p (2004: profit 0.32p). The Group's net debt increased in the period by #1.7 million to #3.1 million, cash decreasing by #1.6 million and debt increasing by #0.1 million. Healthcare Sales & Service ("HSS") HSS is the Group's business trading in the occupational health and first aid market, with the main company located at a 60,000 sq ft site in Warrington. It has been formed by the consolidation of four companies over the last 18 months, Safa Limited, IPS Limited, First Aid UK Limited and Crest Medical Limited. In June 2005 the Group acquired CICS (Holdings) Limited and its wholly owned subsidiary, Cross Infection Control Services Limited (together "CICS") for up to #3 million in HCEG shares. CICS sells sterile kits and other disposables to dental practice customers. CICS has been successfully integrated into the Warrington site and is selling the Group's products into its customer base. The operation had sales of #8.3 million (2004: #5.3 million) in the six month period ended 31 August 2005 and recorded an operating loss of #0.6 million (2004: profit #0.9 million). The integration of the Crest Medical business has proved more difficult and is taking longer than anticipated which has resulted in losses. A number of areas have already been identified where significant and immediate improvements can be made. Since the integration of the Safa-IPS/First Aid UK/Crest Medical businesses into the single Warrington facility, headcount has reduced from 179 to 149, and general operating expenses reduced by #70,000 per month with further overhead reductions anticipated as part of the review process. Ebiox Ebiox is the Group's proprietary range of cleansing and decontamination products for use in healthcare and other industries. The range includes a handrub, handwash, detergents for cleaning hard surfaces and floors, cleaning wipes, an instrument cleaning range and the newly developed High Level Disinfectant for the sterilisation of surgical instruments. Ebiox sales in the period ended 31 August 2005 totalled #0.1 million (2004: #Nil) and operating losses were #0.24 million (2004: #0.01 million). A further #0.25 million (2004: #Nil) was spent on product development. The Ebiox instrument and surface cleaning range of products has been successfully registered in Germany and sales are commencing. Registration activities have continued with the relevant authorities in many other countries worldwide. In the US the Group's regulatory consultants have indicated that the Environmental Protection Agency ("EPA") approvals will be received in the first half of the next financial year - the products have now passed all requested testing to date and the registration process has commenced. US EPA approval will be followed by individual State approvals and the Board would anticipate being able to sell the Ebiox range in the US from late summer 2006. The Group is also progressing the negotiation of distribution agreements with partners worldwide. Optiscope Optiscope is HCEG's fully disposable rigid endoscope. Progress on development of Optiscope continues to be good and the Group anticipates having prototype products in spring 2006. As previously announced the product has met the technical milestone of outperforming the optics train in the "gold-standard" market-leading re-useable endoscope. During the period HCEG has invested a further #0.08 million to increase its stake to 68.1%. Optiscope recorded no revenues in the period (2004: #Nil) and reported an operating loss of #0.03 million (2004: #Nil). Women's Reproductive Health The Group has two investments in this area and has agreed terms to acquire a third. Medilator In May 2005 the Group acquired 2.5% of the share capital of Medilator Limited (" Medilator") with a series of options to acquire up to 65% of the ordinary share capital. Medilator has developed a platform for single-use, disposable cervical dilatation devices. Fertiligent In June 2005 the Group acquired 2.5% of the share capital of Fertiligent Limited ("Fertiligent") with a series of options to acquire up to 100% of the ordinary share capital. A further investment of $125,000 was made in September 2005 bringing the Group's investment to 13.08%. Fertiligent develops innovative reproductive health products capable of significantly enhancing the success rates of existing infertility treatments. Fertiloscopy The Group has agreed terms to acquire Fertiloscopy for up to Euro354,000 in cash. Fertiloscopy is a device to assist in the diagnosis of infertility in women. Disposal of certain non core assets to Ridgecrest In November 2005 the Group completed the sale of certain non-core assets with a book value of $2.5m to Ridgecrest Healthcare Group, Inc. ("Ridgecrest") for $5.0m in Ridgecrest ordinary and convertible preferred shares. Acquisition of ATA and Link In November 2005 the Group completed the acquisition of its distributors in South East Asia for #40,000 in cash and 350,877 HCEG ordinary shares. Board Changes Stuart Bruck is stepping down as Executive Chairman of the Board with immediate effect to relocate to the US and pursue other interests. Mr Bruck was the founder of the Group and the Board acknowledges the valuable contribution he has made to the Group's evolution to date. Mr Bruck remains a significant shareholder and will serve as a non executive director. Mark Tompkins, a non-executive director of HCEG since formation, is to take over as Chairman. Mr Tompkins has extensive experience at board level in listed healthcare companies in both the US and Europe. This is supplemented by his working experience in senior executive management, management consulting and investment. John Bradshaw has decided to step down as Group Finance Director and will be assisting the Group with the recruitment of his replacement. He will also be continuing to assist the Group in the commercialisation of Optiscope. As previously announced, in November 2005, Michael Low, Group Development Director, and Kenneth Denos, non-executive Director, left the Board, as part of the disposal to Ridgecrest. Summary In spite of the difficulties and disappointing figures, the Board remains of the view that HSS, which is the market leader in its sub-sector, is a strong business capable of producing significant revenues and profits in the future. It is pleased with the progress and growing market acceptance of Ebiox and is encouraged by the product development trials of Optiscope. Nevertheless, the exact timing of the commercialisation of both Ebiox and Optiscope remains difficult to predict. Consequently, without licensing income from either or both of these product ranges in the second half, the Board would not expect the Group to be profitable in the current full financial year. The Board is continuing to review all of the Group's assets to maximise shareholder value and cash generation. Unaudited consolidated profit and loss account For the six months ended 31 August 2005 Six months ended 31 August 2005 2004 Continuing Exceptional Total Continuing Exceptional Total operations items operations items #'000 #'000 #'000 #'000 #'000 #'000 Turnover Continuing operations 8,666 - 8,666 5,264 - 5,264 Acquisitions 136 - 136 303 - 303 8,802 - 8,802 5,567 - 5,567 Cost of sales (5,140) - (5,140) (2,916) - (2,916) Gross profit 3,662 - 3,662 2,651 - 2,651 Net operating (5,737) (105) (5,842) (2,332) 116 (2,216) expenses Group operating profit (loss) Acquisitions 25 - 25 16 - 16 Continuing activities (2,100) (105) (2,205) 303 116 419 Group operating (2,075) (105) (2,180) 319 116 435 profit (loss) Share of operating - - - (8) - (8) results of associates Total operating (2,075) (105) (2,180) 311 116 427 profit (loss) Exceptional costs - - - - 1 1 Profit (loss) on (2,075) (105) (2,180) 311 117 428 ordinary activities before interest Net interest payable (98) - (98) (66) - (66) and similar charges Profit (loss) on (2,173) (105) (2,278) 245 117 362 ordinary activities before taxation Taxation on profit - - - - - - (loss) on ordinary activities Profit (loss) on (2,173) (105) (2,278) 245 117 362 ordinary activities after taxation Minority interests 9 - 9 8 - 8 Profit (loss) for the (2,164) (105) (2,269) 253 117 370 six month period Basic earnings per (1.50p) 0.32p share Audited consolidated profit and loss account For the year ended 28 February 2005 Year ended 28 February 2005 Continuing Exceptional Total operations items #'000 #'000 #'000 Turnover Continuing operations 3,687 - 3,687 Acquisitions 11,280 - 11,280 14,967 - 14,967 Cost of sales (7,275) - (7,275) Gross profit 7,692 - 7,692 Net operating expenses (6,686) (125) (6,811) Group operating profit (loss) Acquisitions 364 - 364 Continuing activities 642 (125) 517 Group operating profit (loss) 1,006 (125) 881 Share of operating results of associates 6 - 6 Total operating profit (loss) 1,012 (125) 1,012 Exceptional costs - (1,135) (1,135) Profit (loss) on ordinary activities before 1,012 (1,260) (248) interest Net interest payable and similar charges (74) - (74) Profit (loss) on ordinary activities before 938 (1,260) (322) taxation Taxation on profit (loss) on ordinary (30) - (30) activities Profit (loss) on ordinary activities after 908 (1,260) (352) taxation Minority interests 18 - 18 Profit (loss) for the year 926 (1,260) (334) Basic and diluted loss per share (0.27p) Unaudited consolidated balance sheet As at 31 August 2005 31 August 28 February 2005 2004 2005 #'000 #'000 #'000 Fixed assets Intangible assets 34,911 16,539 33,759 Tangible assets 618 322 514 Investments in associated - 23 - undertakings Other investments 145 120 116 35,674 17,004 34,389 Current assets Stocks 3,141 1,292 3,048 Debtors 6,107 3,073 6,008 Current asset investments - - 4 Cash at bank and in hand 710 1,112 2,341 9,958 5,478 11,401 Creditors: Amounts falling due (5,050) (3,501) (4,542) within one year Invoice discounting facility (1,850) (984) (1,331) Debt due within one year (970) (450) (1,369) Net current assets 2,088 543 4,159 Total assets less current 37,762 17,547 38,548 liabilities Creditors: Amounts falling due (4,211) (1,250) (4,326) after more than one year Provisions for liabilities and (289) - (289) charges Net assets 33,262 16,297 34,023 Capital and reserves Called up share capital 4,566 3,684 4,492 Shares to be allotted 1,997 629 2,348 Warrants issued 364 358 364 Share premium account 34,191 16,130 32,042 Profit and loss account (5,939) (2,981) (3,670) Merger reserve (2,293) (2,293) (2,293) Other reserves 728 771 728 Shareholders' funds (including 33,250 16,299 34,011 non-equity interests) Minority interests 12 (2) 12 Capital employed 33,262 16,297 34,023 Unaudited consolidated cash flow statement For the six months ended 31 August 2005 Six months ended Year ended 31 August 28 February 2005 2004 2005 #'000 #'000 #'000 Net cash outflow from operating (1,585) (695) (2,634) activities Return on investments and servicing of finance Interest received 16 - 48 Interest paid (115) (66) (202) Net cash outflow for returns on (99) (66) (154) investments and servicing of finance UK corporation tax paid (36) - (320) Capital expenditure and financial investment Purchase of tangible fixed assets (179) (129) (293) Development costs capitalised (199) - (211) Proceeds of sale of tangible fixed - 1,030 1,288 assets Purchase of fixed asset investments (50) (72) (107) Net cash inflow (outflow) from (428) 829 677 capital expenditure and financial investment Acquisitions Purchase of subsidiary undertakings (78) (1,084) (2,032) Acquisition expenses (169) - (719) Net cash acquired with subsidiaries 250 87 195 Net cash outflow from acquisitions 3 (997) (2,556) Net cash outflow before financing (2,145) (928) (4,987) Financing Issue of share capital 182 73 5,766 Share issue costs - - (456) (Decrease)increase of long term - (372) (476) borrowings Repayment of short term borrowings (430) - (1,148) Increase in short term borrowings 519 - - Repayment of principal under hire (7) - (28) purchase contracts Net cash inflow from financing 264 (299) 3,658 (Decrease) increase in cash in the (1,881) (1,227) (1,329) period Unaudited consolidated cash flow statement For the six months ended 31 August 2005 Reconciliation of operating loss to net cash outflow from operating activities Six months ended Year ended 31 August 28 February #'000 #'000 Operating profit (loss) (2,075) 881 Amortisation of intangible fixed 39 22 assets Depreciation of tangible fixed assets 80 125 Decrease (increase) in stocks (40) (373) Decrease (increase) in debtors 2 (2,137) Increase (decrease) in creditors 484 304 Movement in provision for share - 125 options Exceptional costs (105) (1,333) Profit on sale of fixed assets - (248) Investment write off 30 - Net cash outflow from operating (1,585) (2,634) activities Analysis of net debt 31 August 2005 28 February 2005 #'000 #'000 Cash at bank and in hand 710 2,341 Invoice discounting facility (1,850) (1,331) Debt due within one year (970) (1,351) Debt due after one year (1,025) (1,025) HP contracts (49) (56) Net debt (3,184) (1,422) Notes to the interim financial statements 1. Form of statements These financial statements do not constitute statutory accounts within the meaning of the Companies Act 1985 and are unaudited. The figures for the year ended 28 February 2005 have been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and contain an unqualified audit report. 2. Accounting policies The interim report is prepared on the basis of the accounting policies set out in the financial statements for the year ended 28 February 2005. 3. Earnings per share Earnings per share are calculated by dividing the profit on ordinary activities attributable to shareholders by the weighted average number of shares in issue during the period. The weighted average number of shares used is 151,145,902 (Half year ended 31 August 2004: 115,600,000, Year ended 28 February 2005: 123,908,141). 4. Acquisitions On 16 June 2005 the Group acquired 100% of the equity share capital of CICS (Holdings) Limited for a consideration of #1,337,000, including costs. Goodwill of #1,005,000 arose on the transaction. 5. Interim dividend The directors do not recommend the payment of an interim dividend. This information is provided by RNS The company news service from the London Stock Exchange END IR DQLBFEFBZFBZ
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