RNS Number:8481M
Zi Medical PLC
27 June 2003



                 ZI MEDICAL PLC ("ZI MEDICAL" OR "THE COMPANY")

                              PRELIMINARY RESULTS

                    FOR THE 12 MONTHS ENDED 31 DECEMBER 2002

(Specialist developer of innovative medical device technologies with an emphasis
                           on drug infusion therapy)

                                   KEY POINTS

   *Distribution and collaboration agreements have recently been signed with
    Baxter, the major global healthcare company.

   *The loss for the period was #609,000 - broadly in line with budget.

   *As ZiMed Ltd. was acquired via a reverse takeover in April 2002, the
    results include approximately five months trading of BioLife Ventures plc.

   *Further developments of RedEye - the company's gravity infusion
    monitoring device - include a GSM communications module suitable for the
    home care market and a catheter monitoring system

   *The company is developing a range of syringe drivers using a new patented
    method of detecting back-pressure, a problem commonly suffered by existing
    products. The market for these devices is significant.

   *Zi Medical has developed and patented some key devices for use within the
    consumables used with syringe drivers, volumetric pumps and RedEye which it
    hopes to market within the coming year. The consumables represent a greater
    source of revenue for manufacturers than the associated hardware.

   *The board is seeking further partnering arrangements with large, well
    established medical device businesses to accelerate sales, rather than
    retaining its in-house sales capability.

Executive chairman, Michael Fort comments

"We are very excited about the potential of, not only our current product
pipeline, but also the planned developments over the next two to three years. A
National Audit Office report in 2000 identified that almost a third of all
serious adverse events (SAEs) in hospitals relate to the giving of fluids in one
form or another. ... We will continue to concentrate on exploiting areas in
patient safety in fluid infusions as we believe that this market is one that
will lead to optimum shareholder returns in the medium term. "

Press Enquires:

Michael Fort, Executive Chairman,              Tel: 07976 849470

Zi Medical PLC

Zoe Biddick, Biddicks                          Tel: 020 7448 1000

Chairman's Statement

I am pleased to report the inaugural trading results of the group for the period
ended 31st December 2002. I am also particularly pleased to be able to comment
further on the recent signing of the distribution and collaboration agreements
with Baxter Healthcare S.A., a member of the Baxter Healthcare Inc. Group.

The results include approximately five months trading as Biolife Ventures plc
prior to the reverse takeover of Zimed Limited and the placing and open offer
detailed in the document to shareholders dated 18th April 2002.

The loss for the financial period of #609,000 was broadly in line with our
expectations at the time of the acquisition. Sales of Red-Eye, the group's
patient monitoring system, by the internal sales force, were lower than expected
for reasons detailed below in the Operational Review, but tight management of
costs across all areas of the business kept the profit and loss account in line
with budget.

The group has made great strides in its product pipeline development. Further
enhancements have been made to the Red-Eye portfolio particularly in the
development of the GSM communications module that will be ready for launch later
in 2003 in order to exploit opportunities within the homecare market.

The development of a family of syringe driver products is particularly
encouraging as we believe the size of the global market for such products will
provide the group with strong growth opportunities in the medium term. We
believe that the group's unique and patented mechanism for backpressure
detection presents a strong marketing edge against current product offerings.
This problem increases the risk of using existing syringe drivers and its
resolution is perceived as a very positive development in the field. Great
emphasis will be placed over the next twelve months on ensuring this particular
area of our technology is exploited to the full. Additional further products in
the intravenous (IV) safety portfolio are planned for development this year.

The group's cash position has remained tight throughout the year. Our initial
fund raising of #562,000 just over a year ago was supplemented by a further
#180,000 in March this year. The financial market's appetite for an early stage
technology business such as ours has not been keen to say the least, when
combined with the general stock market malaise, raising funds has proved very
difficult. However, the progress made to date with limited funds has been a
great achievement, especially when this has been underscored with the recent
technology transfer deal with Baxter Healthcare. In order to fully exploit the
exciting opportunities for our products and to put the group on a sound
financial footing for the foreseeable future it will be necessary for the group
to raise additional funds before the end of the current financial year.

The deal with Baxter Healthcare, signed on 20th June 2003 was the culmination of
months of discussion and should be seen as high-level validation of the group's
technology and its ability to develop products for the worldhealthcare markets.
Baxter's position as a global leader in the medical devices business, with
representation in all major countries of the world, will ensure that Red-Eye
will be exploited to its full potential. Further, the technology collaboration
deal will allow our group to access Baxter resources during product development
and will further enhance our group's ability to develop first class products in
the areas of IV safety and ensure that they are commercialised on a very broad
geographical front. Whilst the details of the contracts must remain confidential
for commercial reasons, I can report that the royalty structure and contract
minimum quantities will provide the business with an income stream for the
foreseeable future.

That George Gallagher and his team have been able, in such a relatively short
period of time, not only to develop these new technologies but also to close
deals with multi national businesses is a testament to their abilities, both
technical and commercial. The group remains in discussions with a number of
other major healthcare businesses and we hope to be able to announce further
developments later in the year.

Subject to our ability to raise the necessary funds in the short term, I remain
very confident in the group's prospects for the medium to long term. We are very
excited about the potential of, not only our current product pipeline, but also
the planned developments over the next two to three years. We will continue to
concentrate on exploiting areas in patient safety in fluid infusions, as we
believe that this market is one that will lead to optimum shareholder returns in
the medium term.

Michael J Fort
Executive Chairman

Operational Review

Following the acquisition of Zimed Limited and the subsequent fund raising, it
had been the group's intention to complete the vertical integration of the
business as a medical devices solutions provider with the Red-Eye patient
monitoring system as the group's initial product offering.

To this end, the group recruited a small sales force in October 2002 to promote
the product direct to end-users, principally NHS hospitals. While the feedback
from what was effectively the first exhaustive field trial of RedEye proved
extremely useful, it also confirmed the difficulties facing a small company
trying to break into a mature market. It quickly became apparent that the cash
resources at the group's disposal were less than adequate to make the required
impact in the UK hospital market. It was therefore decided that the sales force
would be dismantled and that all efforts would be directed to the core
competencies of product development. At the same time, business development
activity was increased at a corporate level in order to seek out partnering
arrangements with large, well-established medical device businesses, with the
profile to exploit markets much more effectively.

The group's strengths lie in its abilities to develop innovative medical device
technologies based on current delivery methods, particularly in the areas of
patient safety in drug infusion therapy. A National Audit Office Report from
2000 identified that almost a third of all serious adverse events (SAEs) in
hospitals related to the giving of fluids in one form or another. The group,
having identified a need in this device area, set out to build a portfolio of
products, specialising in exploiting the need that clearly existed, namely:

Red-Eye

Further work has been undertaken on developing the Red-Eye family of products
that now include a catheter monitoring system, a GSM network model that is
particularly applicable to markets where homecare is a specific requirement,
together with various peripheral adaptations. It is believed, from market
intelligence gathered from the direct sales experience mentioned above together
with research undertaken at the time of the acquisition that the potential
market for Red-Eye in the UK alone is in the region of #15m per annum for the
basic product at market values. Your Board believes that the recent announcement
of the Baxter Healthcare contract to distribute Red-Eye is the optimum way to
exploit this market and other markets in Western Europe and the rest of the
world. The fact that one of the world's leading medical devices businesses has
chosen to exploit our product is proof of concept of the market niche for the
product.

Syringe Driver Family

The syringe driver market globally is very large - market estimates vary from
$500m to almost $1bn. However, product development is, at best, sporadic with
the main players relying on existing products, which have dominated the market
for a least a decade. The group has developed a family of syringe drivers with a
new patented method of detecting back-pressure in such devices - a problem with
existing syringes that is a cause of a high number of serious adverse events
(SAEs) each year. Zi-Medical's unique, modern product design puts the end-user
first. This is particularly important with ambulatory drivers where the patient
wears the product for days at a time. In therapeutic areas such as thalassemia,
where there is a high concentration of younger users, it is critical for the
product to appeal to the patient in order that they continue to use it.

The group's development pipeline includes an ambulatory driver with a very small
footprint - ideal for the thalassemia market; a standard sized ambulatory driver
for the general infusion of products where there is a need for patient mobility;
a low cost bedside driver to exploit the emerging countries markets, and a
standard bedside driver. It is believed that exploitation of this area of
product development offers the group the shortest route to profitability.

Other Product Developments

Whilst developing the two key product areas described above, other opportunities
have presented themselves to the group. The consumables, used both in syringe
drivers, volumetric pumps and Red-Eye are a bigger source of revenue for the
manufacturers than the hardware itself. To this end the group has developed and
patented some key devices contained within the consumables that it hopes to
market within the coming year.

Similarly, with the emphasis on patient safety, further early stage
opportunities are being investigated. In all cases, it is planned that each new
area for product development should be able to be commercially exploited within
eighteen months of work commencing on its development.

Financing

All the plans mentioned above are clearly dependent upon the group's ability to
continue to fund them. Whilst the cash position has been tight since inception,
the termination of the internal sales force will save the business almost
#250,000 per annum - money that is better invested in exploitation of the
group's intellectual property portfolio.

Each new product that is launched costs approximately #250,000 to develop to a
stage that is presentable to potential partners and customers. From that point
onwards a specific product development plan can be formed whereby the customer
co-funds the development of the product to launch. It is critical however, that
at this early stage of the group's development it is not starved of the funds
that it needs to take it's existing product offerings to customer presentation
stage. To this end a further round of fund raising later in this financial year
is necessary. It is fundamental that the cash invested thus far can evolve into
a serious product portfolio that will take the group into profit in the medium
term.

Board Composition

Immediately following the year-end, Rhys Owen, the group's part-time managing
director resigned to pursue other business interests. Steve Stocks, appointed to
supervise the sales force resigned in May following the board's decision to end
internal sales and concentrate instead on partnering agreements. We wish them
both well and thank them for their contributions during their relatively short
tenures. The current executive board comprises Michael Fort, Chairman and George
Gallagher, Managing Director. We recognise the need to strengthen this area
further and to add to the non-executive capacity with the appointment of at
least one further member to the board in the short term.

Consolidated profit and loss account
for the year ended 31 December 2002

                  Year ended      Year ended      Year ended    9 month period
                                                                       ended
                 31 December     31 December     31 December     31 December
                        2002            2002            2002            2001

                      Existing  Acquisitions        Continuing      Continuing
                    operations                      operations      operations

                        #000            #000            #000            #000

Turnover                   -              43              43               -

Cost of                    -             (19)            (19)              -
sales

               =============== =============== =============== ===============

Gross profit               -              24              24               -

Administrative          (116)           (519)           (635)            (63)
expenses

               --------------- --------------- --------------- ---------------



Group                   (116)           (495)           (611)            (63)
operating
loss

Interest                                                  13               7
receivable and
similar
income

Interest                                                 (11)              -
payable and
similar
charges

                                               --------------- ---------------

Loss on                                                 (609)            (56)
ordinary
activities
before
taxation

Tax on loss on                                             -               -
ordinary
activities

                                               --------------- ---------------

Retained loss                                           (609)            (56)
for the
financial
period

                                               =============== ===============

Loss per
ordinary                                                   
share

Basic and                                               2.02p           0.48p
diluted

                                               =============== ===============

The Group has no recognised gains or losses for the year (2001:period) other
than those stated above and therefore no separate statement of total recognised
gains and losses has been presented. The results above also represent the
historical cost loss.

Consolidated balance sheet
at 31 December 2002

                                       2002                            2001
                       #000            #000            #000            #000

Fixed
assets

Intangible            1,871                               -
assets

Tangible                 32                               -
assets

               --------------                  --------------             ---

                                      1,903                               -

Current
assets

Stocks                   40                               -

Debtors                  51                               4

Cash at bank            104                             502
and in hand

               --------------                  --------------

                        195                             506

Creditors:
amounts
falling due
within

one year               (222)                            (13)

               --------------                  --------------

Net current                             (27)                            493
(liabilities)
/assets

                               --------------                 --------------

Total assets                          1,876                             493
less current
liabilities

Creditors:
amounts
falling due
after

more than one                           (34)                              -
year

                               --------------                  --------------

Net assets                            1,842                             493

                               ==============                  ==============

Capital and
reserves

Called up                               792                             270
share
capital

Share premium                           705                             279
account

Merger                                1,010                               -
reserve

Profit and                             (665)                            (56)
loss
account

                               --------------                  --------------

Equity                                1,842                             493
shareholders'
funds

                               ==============                  ==============

Consolidated cash flow statement
for the year ended 31 December 2002

                                         Year ended        Period ended
                                         31 December         31 December
                                              2002                2001

                                              #000                #000



Net cash outflow from operating               (623)                (54)
activities

Return on investments and                        2                   7
servicing of finance

Capital expenditure and                        (28)                  -
financial investment

Acquisitions and disposals                    (320)                  -

                                -------------------- -------------------

Cash outflow before financing                 (969)                (47)

Financing                                      532                 549

                                -------------------- -------------------

Decrease/(increase) in cash in                (437)                502
the period

                                ==================== ===================

Reconciliation of net cash flow to movement in net funds
for the year ended 31 December 2002

                                         Year ended        Period ended
                                         31 December         31 December
                                              2002                2001

                                              #000                #000



(Decrease)/increase in cash in                (437)                502
the period

                                -------------------- -------------------

Movement in net funds in the                  (437)                502
period

Net funds at the start of the                  502                   -
period

                                -------------------- -------------------

Net funds at the end of the                     65                 502
period

                                ==================== ===================

Notes

(forming part of the financial statements)

 1. *Basis of preparation

    The Group suffered a loss on ordinary activities for the year of #609,000
    (2001: loss of #56,000) although at the current level of investment in
    development activities, the directors are confident that the Group will turn
    to profitability in the medium term. The directors estimate that the Group's
    funding requirements, in order to continue to exploit the current commercial
    opportunities over the next 12 months are in the region of #0.5m to #0.75m,
    against which a current bank overdraft facility of #30,000 exists.

    The directors are of the opinion that the recent signing of the distribution
    and collaboration agreements with Baxter Healthcare S.A. leave the Group
    well placed to approach new private investors in the short term for
    additional funding later in 2003 which they believe will generate sufficient
    working capital facilities to satisfy the forecast funding requirements.

    Until such time, the directors have identified a number of options to
    continue within its facilities.

    Although there can be no certainty that sufficient equity funding will be
    available, the directors believe it to be appropriate to prepare the
    financial statements on a going concern basis since they are confident that
    the Group will be able to secure additional funding for the next 12 months
    to enable it to continue to meet its debts as they fall due.

    The financial statements do not include any adjustments that would result
    from the going concern basis of preparation being inappropriate.

 2. Loss per share

        The calculation of loss per share is based on basic and diluted losses
        of #609,000 (9 months ended 31 December 2001: #56,000 loss) and basic
        and diluted ordinary shares of 30,113,376 (2001: 11,642,827) being the
        weighted average number of shares in issue during the year (2001:
        period).

3.  Acquisitions and disposals

        On 14 May 2002 the Company acquired the entire share capital of Zimed
        Limited comprising net liabilities of #291,000 for a total cost of
        #1,600,000. The issued share capital of Zimed Limited is #1,000 which is
        fully paid up.

        The net liabilities acquired are set out below:



                                                           Book and fair
                                                         value at 14 May
                                                                  2002

                                                                  #000



Fixed assets                                                        66

Current assets                                                      62

                                                         ---------------

Total assets                                                       128

Creditors                                                         (419)

                                                         ---------------

Net liabilities                                                   (291)

Goodwill                                                         1,891

                                                         ---------------

Total cost of acquisition (including fees of #250,000)           1,600

                                                         ===============

        Satisfied by:



        Issue of 18,000,000 initial consideration ordinary               1,350
        shares at 7.5p per share

        Issue of 353,336 ordinary shares at 7.5p per share in               27
        lieu of fees

        Cash                                                               223

                                                             === ---------------

                                                                         1,600

                                                             === ===============

        In addition to the initial consideration, a maximum deferred
        consideration of #420,000 is payable via the issue of a further
        5,600,000 2p ordinary shares at 7.5 per share.

        The conditions attached to the deferred consideration are in two
        elements as follows:

                (i) If the turnover for the Group for the 12 month period ended
                30 April 2003 exceeded #175,000 then a maximum of 2,800,000 2p
                ordinary shares would have been issued at 7.5 per share
                (#210,000). Since the actual turnover for the 12 month period
                ended 30 April 2003 did not exceed #175,000 this element of the
                deferred consideration has expired.

                ii. If the turnover for the Group for the 12 month period ending 
                30 April 2004 reaches #2,000,000, then a maximum additional 
                consideration of 2,800,000 2p ordinary shares will be issued at 
                7.5p per share (#210,000). The payment of this element of the 
                deferred consideration is dependent on the turnover for the 12 
                month period ending 30 April 2004 exceeding #1,000,0000 with
                consideration being payable on a pro rata basis for turnover 
                between #1,000,000 and #2,000,000.

        The profit and loss account of Zimed Limited for the period 1 January
        2002 to 14 May 2002 included turnover of #9,000 and a loss after
        taxation of #92,000. The loss on ordinary activities for the 9 month
        period ended 31 December 2001 was #118,000.

        4. Reconciliation of movements in shareholders' funds



                                                                 Group

                                                           Year ended 31
                                                              December

                                                                  2002

                                                                  #000



Loss for the year                                                 (609)

New share capital subscribed                                     1,958

                                                      ------------------

                                                                 1,349

Opening shareholders' funds                                        493

                                                      ------------------

Closing shareholders' funds                                      1,842

                                                      ==================


 5. Reconciliation of operating loss to operating cash flows

                                              Year ended 31  Period ended 31
                                            December 2002    December 2001
                                                     #000             #000



        Operating loss                               (611)             (63)

        Depreciation                                   20                -

        Amortisation                                   62                -

        Decrease in stock                               6                -

        Increase in debtors                           (31)              (4)

        (Decrease)/increase in                        (69)              13
        creditors

                                         ------------------ ----------------

        Net cash outflow from operating              (623)             (54)
        activities

                                         ================== ================

 6. *Analysis of cash flows for headings netted in the cash flow statement



                                                    Year ended     Period ended
                                                    31 December      31 December
                                                         2002             2001

                                                         #000             #000

        Returns on investments and servicing of
        finance

        Interest received                                  13                7

        Interest paid                                     (11)               -

                                                --------------- ----------------

        Net cash inflow from returns on
        investment and servicing of finance

                                                            2                7

                                                =============== ================



        Capital expenditure and financial
        investment

        Payments to acquire tangible fixed                (28)               -
        assets

                                                --------------- ----------------



        Net cash outflow from capital
        expenditure and financial investment

                                                          (28)               -

                                                =============== ================

        Acquisitions and disposals

        Payments to acquire subsidiary                   (223)               -
        undertaking

        Net overdraft acquired with                       (97)               -
        subsidiary

                                                --------------- ----------------

        Net cash outflow from acquisitions and           (320)               -
        disposals

                                                =============== ================

        Financing

        Issue of share capital                            581              549

        Capital element of finance leases                  (2)               -

        Repayment of bank loans                           (47)               -

                                                --------------- ----------------

        Net cash inflow from financing                    532              549

                                                =============== ================

 
       7. Reconciliation of net cash flow to movement in net funds



                                                                  #000



Decrease in cash during the year                                  (437)

Cash outflow in respect of repayment of loans and                   49
finance leases

                                                        ----------------

Change in net funds resulting from cashflows                      (388)

Loans and finance leases acquired with subsidiary                  (92)

                                                        ----------------

Change in net funds                                               (480)

Net funds at 1 January 2002                                        502

                                                        ----------------

Net funds at 31 December 2002                                       22

                                                        ================

        8. Analysis of changes in net funds



                        At 1          Cash      Acquisitions  At 31 December
                                             (excluding cash          2002
                                             and overdrafts)

                     January         flows

                        2002

                        #000          #000            #000            #000



   Cash at               502          (398)              -             104
   bank and in
   hand

   Overdraft               -           (39)              -             (39)

               --------------- ------------- --------------- ---------------

                         502          (437)              -              65

   Debt due                -            17             (28)            (11)
   within 1
   year

   Debt due                -            30             (60)            (30)
   greater
   than 1
   year

   Finance                 -             2              (4)             (2)
   leases

               --------------- ------------- --------------- ---------------

                         502          (388)            (92)             22

               =============== ============= =============== ===============

 9. This report is being sent out to shareholders and copies will be made
    available at the Company's registered office, Unit 4, St Asaph Business
    Park, St Asaph, Denbighshire LL17 0LJ.

ENDS




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