Neometals Regulatory News (NMT)

26 Apr 2005 07:00

NMT Group PLC26 April 2005 26 April 2005 NMT GROUP PLC Preliminary Results for the year ended 31 December 2004 NMT Group PLC ("NMT") announces its Preliminary Results for the year ended 31December 2004: • Group focusing on developing commercial licensing opportunities. • Negotiations continuing with party in Far East for the 2-G safety syringe, following signature of the letter of intent. • Discussions continuing with pharmaceutical companies on the Safety Needle Unit. • Re-organisation of Company completed. • A loss before interest of £2.2m (2003: £16.9m). • Cash balances of £7.0m (£12.8m) - in line with expectations. Tony Fletcher, Chairman NMT Group PLC said:"Progress has been made over the last twelve months, particularly with thesignature of the letter of intent for the license to manufacture and distribute2-G safety syringes.Clearly, this remains a critical time for the Group. Every effort is being made to conclude the current negotiations but it isessential that the Group wins a significant contract shortly in order to secureits long-term future. Given the Group's strong cash position and the significant nature of thecontracts under negotiation, the Board believes that its present best course ofaction is to pursue these contracts to an ultimate conclusion in the comingmonths".Enquiries:Tony Fletcher, Chairman - NMT Group PLC Tel: 07836 725246Gerard Cassels, Company Secretary - NMT Group PLC Tel: 01506 445000Gordon Beattie - Beattie Communications Tel: 07768588163 Chairman's Statement Following the transition into a licensing and development business at thebeginning of 2004, the Group's main activities have been focussed on developingappropriate commercial opportunities for the 2nd Generation (2-G) retractablesafety syringe and the Safety Needle Unit.As reported in the 2004 Interim Statement, discussions have taken place with anumber of parties in the Far East to secure a licensing agreement for themanufacture and distribution of the 2-G safety syringe. This resulted in theannouncement in January 2005 that the Group had signed a letter of intent withone of these parties. The letter of intent was also co-signed by a number of suppliers of capitalequipment, who have been working closely with the Group to supply theprospective customer with a turn-key package for a new dedicated manufacturingoperation. The customer sought the Group's assistance in the selection ofmanufacturing equipment suppliers for suitable tooling and automated assemblyequipment. The letter of intent provides the Group with an initial licensing fee, phasedover agreed project milestones, and a unit royalty thereafter. The size of thepotential contract is significant. Negotiations are continuing with formal tendering for the supply of capitalequipment currently taking place. The agreement of satisfactory commercial termsby all parties will be required for the project to proceed. A furtherannouncement will be made when contractual negotiations have been concluded. The Group has previously reported that it has been in discussion with threepharmaceutical companies for the license to manufacture and distribute itsSafety Needle Unit in specific pre-fill syringe drug delivery applications. Thecompany with the smallest potential application in volume terms has opted toproceed with an alternative off-the-shelf "active" device. To date, we have beenunable to secure agreement with the other two parties, due to delay in theirdecisions on how to proceed. Although we remain in discussion with bothcompanies, it now appears that commercial availability of the Safety Needle Unitis unlikely to be required before 2007. Results An operating loss before interest of £2.2m (2003: £16.9m) comprised of anoperating loss on continuing activities of £1.4m (2003: £1.6m) and a loss ondiscontinued activities of £0.8m (2003: £15.3m),the loss on discontinuedactivities related principally to the settlement of the law suit withRetractable Technologies Inc. Interest income and taxation resulted in a lossafter tax of £1.7m (2003: £16.5m). Net cash inflow from operating activities was £0.2m (2003: £1.8m outflow), whichcomprised of a net cash outflow from continuing operations of £1.2m (2003:£1.6m), offset by a cash inflow from discontinued operations of £1.4m (2003:£0.2m outflow). Utilisation of re-organisation provisions amounted to a cashoutflow of £6.2m, which matched the outstanding provision at 31 December 2003 of£6.3m. Cash balances at the year end of £7.0m (2003: £12.8m) were in line withexpectations. Re-organisation The re-organisation was completed in October 2004 when the manufacturingfacility at Oakbank Park was vacated, following disposal of the manufacturingequipment and the completion of re-instatement work to the premises. There-organisation provision, which was made in the 2003 accounts, has beensubstantially utilised and the balance of £0.1m released. Board and Management Roy Smith, Chief Executive and Gerard Cassels, Group Finance Director left theGroup in April and July 2004 respectively, although Gerard is continuing to actas Company Secretary on a part-time basis. I thank both of them for theircontribution to the Group. With the slimmer management team and in order to allow Graham Crowther, ChiefExecutive, to concentrate on establishing the new development and licensingbusiness, I retained certain executive responsibilities during the year,principally relating to the re-organisation, investor relations and corporateaffairs. To further strengthen Corporate Governance, the Directors plan to appoint anadditional non-executive director to the Board, once the medium-term future ofthe Group can be assured through the attainment of a significant licensingcontract. Share Capital Consolidation A special resolution was approved at the Extraordinary General Meeting, held on3rd November 2004, to consolidate the Group's ordinary share capital to 1 newordinary share of £4 for every 100 shares of 4 pence in issue. The total numberof ordinary shares in issue now amounts to 8,711,000 shares. Outlook Clearly this is a critical time for the Group. Whilst every effort is being made to conclude the current negotiations, I wouldemphasize to shareholders that it is essential that the Group wins a significantcontract shortly in order to secure its long-term future. Due to the long lead times of the contractual processes in the markets targetedby the Group's safety needle products, the Board presently sees littlelikelihood of obtaining additional business which will contribute significantlyto profitability in the next two years, other than from contracts currentlyunder active negotiation. Failure to achieve success in securing a major contract will result in the Boardconsidering alternative strategies to maximise the value of the Group'sfinancial assets. However, given the Group's strong cash position and the significant nature ofthe contracts under negotiation, the Board believes that its present best courseof action is to pursue these contracts to an ultimate conclusion in the comingmonths. Tony FletcherChairman. Operating and Financial Review Operating Review Restructuring into a development and licensing business was completed during theyear. Whilst minimising cash burn, the Group focused on commercialising itsrange of safety needle devices, based on its patented automatic needleretraction and passive needle re-sheathing technology. Following the cessation of manufacturing at Oakbank Park, the new organisationof 10 people relocated to a much smaller office and laboratory facility at DeerPark, Livingston in June 2004. Design and Development In spite of the disruption caused by the relocation, our design and developmentteam continued to make excellent progress on the Safety Needle Unit to ensurethat 'proof of principle' status was achieved on schedule. In-house testingtogether with independent marketing trials, have proven that the latest devicesdeliver precisely what our market research indicates clients require.Applications have been made for further patents relating to improved designfeatures. No additional development resources were committed to the 2nd Generation (2-G)retractable safety syringe until a licensing partner had been identified,although sales and marketing efforts continued unabated. Industry recognitionfor the plastics technology built into the 2-G safety syringe was recognisedwith a UK Plastics Industry Award for Technical Innovation. Safety Needle Unit Our commercial strategy for the Safety Needle Unit remained focused on securinglicensing contracts, with fixed volumes and pricing being agreed, prior tocommitting capital investment. Discussions have taken place with over 40 prospective customers in thepharmaceutical sector regarding the sale and licensing of the Safety Needle Unitfor pre-fill syringe drug delivery. The importance of safety devices is widelyseen by pharmaceutical companies as offering a competitive advantage. Howeverthe dynamics of change are slow and whilst feedback has been positive, long leadtimes appear to be prevalent. Advanced discussions for the commercial supply of Safety Needle Units took placewith three pharmaceutical companies in the latter part of 2004. Detaileddesigns, customised to relevant customer requirements, were completed andprototype products supplied. Whilst one of these potential customers opted foran off-the-shelf "active" safety needle device, the two others remain in activediscussions with us. Product was assembled for one of these pharmaceutical companies to carry out amarketing trial in the US and several European countries. The trial, whichinvolved one other competitor, was completed in mid-February 2005. Whilstfeedback on the NMT product has been good, a decision on which product to adoptis still awaited from the pharmaceutical company. They have however indicatedthat they would now be unlikely to require commercial deliveries before 2007 anda decision on how to proceed would be delayed accordingly. The Group exhibited in January 2005 at PharmaPack in Paris, its firstpharmaceutical industry exhibition. Its products were well received, withenquiries taken from new potential pharmaceutical customers. Initial meetingswith a number of these pharmaceutical companies have already taken place. 2nd Generation Safety Syringe During 2002 and 2003, the Group pursued several sales and marketingopportunities in the US and Europe for its 2-G safety syringe, but found thatlittle interest was shown by large medical device companies. The reality was,and still is, that the market penetration for retractable safety syringe devicesremains low in Western healthcare organisations. Without legislation in place, and without it being rigorously enforced, it ishighly unlikely that this situation is likely to change in the foreseeablefuture. Therefore NMT decided to explore other markets and in particular the FarEast, where discussions have been taking place with potential partners. The Group's objective is to license the manufacture and distribution of syringesto third parties, either on a global basis or by individual territory, with alicense fee and a royalty structure negotiated to suit each individualrequirement. This strategy has the advantage of minimal capital investment forNMT, whilst providing a revenue stream going forward on future sales. Discussions with a number of potential partners reached an advanced stage during2004 and negotiations with two organisations continued into 2005, resulting in aletter of intent to manufacture and market the 2-G safety syringe being signedwith one of the organisations in January. The subsequent contractual process of the overall project is proving to belengthy and complex, due to its size and the involvement of other companies inthe supply of capital equipment. Every effort is being directed to securing alegally-binding licensing agreement as soon as practicable. Reorganisation The reorganisation of the Group's activities is complete. The manufacturingfacility at Oakbank Park has been vacated, with part of the facility beingassigned to a new tenant and agreement secured with the landlord to terminatethe portion of the outstanding lease in respect of the remainder of thebuilding. Remedial and re-instatement work to the premises was completed inOctober 2004. Graham CrowtherChief Executive FINANCIAL REVIEW Operating Results Following the announcement in 2003 of the closure of the Group's manufacturingoperations the Group focused on two main activities: finalisation of the closureof the discontinued business and developing the continuing business, whichcomprises the core design and development business.The operating loss for the year before interest and tax was £2.2m (2003:£16.9m), split between the loss on continuing business of £1.4m (2003:£1.6m),and discontinued operations of £0.8m (2003: £15.3m). Continuing operations The loss on the continuing business was £1.4m (2003: £1.6m), representinglargely the personnel and administration costs of the restructured company. Discontinued operations The loss on discontinued operations relating to the manufacturing activities was£0.8m and compares to a corresponding £15.3m loss after exceptionals in theprevious year. The Group incurred £0.6m of exceptional charges in the yearlargely relating to the lawsuit filed by Retractable Technologies Inc (RTI) in2002, which was resolved in April 2004 by out of court settlement. Thesettlement comprised the payment of £0.6m and admission of non-willfulinfringement of RTI patents.After net interest receivable of £0.4m (2003: £0.4m) the loss for the financialyear was £1.7m(2003: £16.5m). Financial Position and Cashflow The Group's net cash at the end of the financial year was £7m, a decrease of£5.8m for the period. The majority of the cash outflow related to settlement ofthe December 2003 re-organisation liabilities, which are now completed and theRTI litigation exceptional charge. Cash outflow from continuing operations was£1.2m (2003: £1.6m). Taxation The tax credit of £0.1m was related to Research and Development allowances inthe year and compares with the credit of £0.1m in the previous year which wasrelated to similar allowances for 2003.No charge arose for the current year due to trading losses incurred. The Grouphas significant unutilised tax trading losses available to carry forward againstfuture profits. Treasury Policies Treasury policies and significant treasury transactions are reviewed andapproved by the Board. The Group's aim is to secure returns in line withprevailing market rates while minimising the risk of capital loss. Financial Instruments It is and has been the Group's policy that no speculation or trading infinancial instruments shall be undertaken.The Group's financial instruments, which are defined as any contract that givesrise to both a financial asset of one entity and a financial liability or equityinstrument of another entity, other than derivatives comprise: • Cash including deposits and foreign currency holdings • Debtors, creditors and accruals that arise directly from its trading operations The Group uses these financial instruments to fund its operations and to providefor commitments to future expenditure. The Group also enters into derivativetransactions, principally forward foreign currency contracts, the purpose ofwhich is to manage material transactional currency exposures.The policies used by the Group to manage the risks arising from the Group'sfinancial instruments are outlined below. These policies are regularly reviewedby the Board and have been applied consistently year on year. The numericaldisclosures detailed within the Financial Statements are representative of thesepolicies. Regular reports are provided to management and treasury operations aresubject to periodic review.The main risks arising from financial instruments are liquidity risk, interestrate risk and foreign currency risk. Liquidity Risk The Group's policy is to ensure continuity of funding. Funding is achievedthrough a combination of equity and lease financing. It is policy to maintainhigh flexibility on the liquidity of its funds, which are placed on deposit withmaturity periods not exceeding three months. Interest Rate Risk The Group finances its operations through a mix of equity and lease financing,all in sterling. The Group's policy on financial liabilities is to obtainfinance at the best available market rate, fixed or floating, depending onfunding requirements.The Group's policy on financial assets is to place surplus cash on deposit toearn interest at optimum market rates, fixed for periods up to a maximum of 90days. Foreign Currency Risk The Group also has potential transactional currency exposures that arise fromoverseas sales, purchases and expenses. Group policy is to use forward foreigncurrency contracts to eliminate the currency exposure arising on materialforeign currency purchase commitments that are known with reasonable certainty.The duration of the contracts varies according to the timing of the underlyingtransactions. CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2004+--------------+----+-------+-+-------+---------+-+-------+----------+-+--------+| | | | | | 2004| | | | | 2003|| | | Con-| |Discon-| Total| | Con| Discon-| | Total|| | |tinuing| | tinued| £'000| |tinuing| tinued| | £'000|| | | £'000| | £'000| | | £'000| £'000| | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| |Note| | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Turnover | 2 | -| | -| | -| | -| | 12,285| | 12,285|+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Cost of sales | | -| | -| | -| | -| |(10,320)| |(10,320)|+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Gross profit | | -| | -| | -| | -| | 1,965| | 1,965|+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Distribution | | (252)| | -| | (252)| | (216)| | (94) | | (310)||costs | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Administration| |(1,177)| | (148)| |(1,325)| |(1,383)| |(2,744) | | (4,127)||expenses | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Exceptional | 3 |- | | (696)| | (696)| | -| | -| | -||administration| | | | | | | | | | | | ||expenses | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Group | |(1,429)| | (844)| |(2,273)| |(1,599)| | (873)| | (2,472)||Operating Loss| | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Exceptional | 3 | -| | 73| | 73| | -| |(14,476)| |(14,476)||items | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Loss before | |(1,429)| | (771)| |(2,200)| |(1,599)| |(15,349)| |(16,948)||interest | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Interest | | 391| | -| | 391| | 301| | 170| | 471||receivable and| | | | | | | | | | | | ||similar income| | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Interest | | -| | -| | -| | -| | (72)| | (72)||payable and | | | | | | | | | | | | ||similar | | | | | | | | | | | | ||charges | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Loss on | |(1,038)| | (771)| |(1,809)| |(1,298)| |(15,251)| |(16,549)||ordinary | | | | | | | | | | | | ||activities | | | | | | | | | | | | ||before | | | | | | | | | | | | ||taxation | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Taxation on | | 71| | -| | 71| | 87| | -| | 87||loss on | | | | | | | | | | | | ||ordinary | | | | | | | | | | | | ||activities | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Loss for the | | (967)| | (771)| |(1,738)| |(1,211)| |(15,251)| |(16,462)||financial year| | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Loss per | | | | | | | | | | | | ||ordinary share| | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Basic and | 4 |(11.1)p| | (8.9)p| |(20.0)p| |(13.9)p| |(175.1)p| |(189.0)p||diluted | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+|Loss per | 4 |(11.1)p| |(2.0)p | |(13.1)p| |(13.9)p| | (9.3)p | |(23.2)p ||ordinary share| | | | | | | | | | | | ||before | | | | | | | | | | | | ||Exceptional | | | | | | | | | | | | ||items | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+| | | | | | | | | | | | | |+--------------+----+-------+-+-------+-+-------+-+-------+-+--------+-+--------+ There is no difference between the loss on ordinary activities before taxationand the loss for the year stated above and their historical cost equivalents. BALANCE SHEETSAt 31 December 2004 Group Company 2004 2003 2004 2003 £'000 £'000 £'000 £'000Fixed assetsTangible assets 301 386 301 386 Current assetsDebtors 232 3,157 232 3,043Cash at bank and in 7,005 12,842 6,985 12,663hand 7,237 15,999 7,217 15,706 Creditors: amountsfalling duewithin one year (279) (1,018) (259) (999) Net current assets 6,958 14,981 6,958 14,707 Total assets less current liabilities 7,259 15,367 7,259 15,093 Creditors: amountsfalling dueafter more than one - (60) - (60)year Provisions for - (6,310) - (6,310)liabilities andchargesNet assets 7,259 8,997 7,259 8,723 Capital and reservesCalled up share capital 37,187 37,187 37,187 37,187Share premium account 38,639 38,639 38,639 38,639Profit and loss (68,567) (66,829) (68,567) (67,103)account Total shareholders' 7,259 8,997 7,259 8,723equity funds The Financial Statements on pages 8 to 13 were approved by the board ofdirectors on 25 April 2005 and were signed on its behalf by:A.T. FletcherDirector STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 December 2004 Group 2004 2003 £'000 £'000 Loss for the financial year (1,738) (16,462)Exchange adjustment on translation of net assets of subsidiary - 688 Total recognised losses for the financial year (1,738) (15,774) RECONCILIATION OF SHAREHOLDERS' FUNDS For the year ended 31 December 2004 Group Company 2004 .. 2003 2004 2003 £'000 £'000 £'000 £'000Loss for the financial year (1,738) (16,462) (1,464) (24,468) Other recognised foreign - 688 - -exchange gains for the yearTotal recognised losses for (1,738) (15,774) (1,464) (24,468)the financial yearShare options - notional - 37 - 37cost of sharesTotal movements during the (1,738) (15,737) (1,464) (24,431)yearShareholders' funds at 1 8,997 24,734 8,723 33,154JanuaryShareholders' funds at 31 7,259 8,997 7,259 8,723December CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2004 2004 2003 Note £'000 £'000 Net cash inflow/(outflow) from operating activities 249 (1,785)Net cash outflow - discontinued business (6,237) (313) Net cash outflow from operating activities (5,988) (2,098) Returns on investments and servicingof financeInterest received 418 539Interest paid - (72) Net cash inflow from returns oninvestments andservicing of finance 418 467 Taxation 195 114 Capital expenditure and financialinvestmentPurchase of tangible fixed assets (5) (439) Cash outflow before management ofliquidresources and financing (5,380) (1,956) Management of liquid resourcesCash returned from term deposit 5,003 2,714 Cash(outflow)/before financing (377) 758 FinancingFinance lease - repayment of principal (457) (608) Net cash outflow from financing (457) (608) (Decrease)/increase in cash in the year (834) 150 NOTES TO THE FINANCIAL STATEMENTS Basis of preparation The financial information included within this Preliminary Statement has beenprepared on the basis of accounting policies consistent with those set out inthe Director's Report and Accounts for the year ended 31 December 2004. Thefinancial information on pages 8 to 13 was approved by the Board on 25 April2005. The information shown for the years ended 31 December 2004 and 31 December 2003does not constitute statutory accounts within the meaning of Section 240 of theCompanies Act 1985 and has been extracted from the full accounts for the yearsended 31 December 2004 and 31 December 2003 respectively. The reports of theauditors on those Accounts were unqualified and did not contain a Statementunder either Section 237 (2) or Section 237 (3) of the Companies Act 1985. TheAccounts for the year ended 31 December 2003 have been filed with the Registrarof Companies. The Accounts for the year ended 31 December 2004 will be deliveredto the Registrar of Companies in due course. 2. Segmental analysis Turnover Operating Loss Net assets 2004 2003 2004 2003 2004 2003 £'000 £'000 £'000 £'000 £'000 £'000By originEurope - - (1,429) (1,599) 7,259 8,997Total continuing - - (1,429) (1,599) 7,259 8,997operations Europe - 6,961 (844) (2,163) - -United States - 5,324 - 1,290 - -Total discontinued - 12,285 (844) (873) - -operation - 12,285 7,259 8,997 Operating loss before exceptional items (2,273) (2,472)Exceptional items (note 3) 73 -Group operating loss (2,200) (2,472)Loss on closure of discontinued - (14,476)businessLoss before interest (2,200) (16,948)Net interest 391 399 Loss before tax (1,809) (16,549) Turnover 2004 2003 £'000 £'000By customer locationEurope - 6,961United States - 5,324Discontinued operation - 12,285 3. Exceptional items The following exceptional items have been reflected in the accounts for the yearended 31 December 2004. Exceptional administration expenses of £0.7m (2003:nil) relate to the resolutionof the lawsuit filed by Retractable Technologies Inc in April 2004 by out ofcourt settlement. The settlement comprised the payment of £0.6m and admission ofnon-wilful infringement of RTI patents. In addition, a further £0.1m ofuninsured legal costs were incurred. The exceptional item for the current year relates to the £0.1m release from theDecember 2003 organisation provision. The charge in the prior year of £14.5m wasin relation to the closure of the 1st Generation syringe facility in Livingston. 4 Loss per ordinary share Loss per ordinary share is calculated by dividing the loss attributable toordinary shareholders by the weighted average number of shares in issue. 2004 2003 £'000 £'000 Loss attributable to members of NMT Group 1,738 16,462PLC Exceptional items (note 3) (623) (14,476)Loss before exceptional item 1,115 1,986 2004 2003 Weighted average number of ordinary shares 8,711,317 8,711,317in issue On 3 November 2004 shareholders approved a 100 for 1 share consolidation to NewOrdinary shares. The comparative weighted average number of shares has beenadjusted to reflect the consolidation. The loss before exceptional items provides a more meaningful comparison ofbusiness performance year on year.As a result of losses incurred in 2004, the exercise of share options would nothave been dilutive and accordingly, the basic and diluted loss per share are thesame. This information is provided by RNS The company news service from the London Stock Exchange