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Press release

14 August 2009

Medicsight PLC

('Medicsight' or 'the Group')

Interim Results

for the six months ended 30 June 2009

Medicsight PLC, industry leader in the development of Computer-Aided Detection (CAD) and image analysis software to assist in the early detection and diagnosis of disease, is pleased to announce its interim results for the six months ended 30 June 2009.

Highlights

	Responded to the US Food & Drug Administration's (FDA) Additional Information request letter in March 2009.
	Launched ColonCAD™ 4.0 which is CE Marked and has received approval from the Therapeutic Products Directorate of Health Canada.
	Launched MedicRead™ 3.0 Colon in June, available in Europe as an online CTC solution.
	Global software licence and distribution agreement with Alma IT Systems.
	Streamlined the business to reduce costs and conserve cash.
	Group cash balance at 30 June 2009 of £13,746,000.

Allan Rowley, Chief Executive of Medicsight PLC commented: 'Medicsight has expanded its product portfolio with the launch of ColonCAD 4.0 and MedicRead 3.0 Colon. Both products have significant improvements over previous versions and have been CE marked for use in Europe. ColonCAD 4.0 has also been approved in Canada. The Group completed a cost reduction program to streamline operating costs and conserve its cash position. Medicsight is well positioned for the second half of 2009 and beyond.'

For further information, please contact:

Medicsight PLC
Allan Rowley	+44 (0)20 7605 7950
	www.medicsight.com
Daniel Stewart & Company PLC
Simon Leathers / Charlotte Stranner	+44 (0)20 7776 6550

Media enquiries:

Abchurch
Heather Salmond heather.salmond@abchurch-group.com	Tel: +44 (0) 20 7398 7700 Mob: +44 (0) 7855 018 606
Stephanie Cuthbert stephanie.cuthbert@abchurch-group.com	Tel: +44 (0) 20 7398 7700 Mob: +44 (0) 7843 080947
	www.abchurch-group.com

  Chief Executive's Review

I am pleased to report Medicsight's interim results for the six months ended 30 June 2009.

Commercial Partnerships

In June 2009 Medicsight signed a non-exclusive software license and distribution agreement with Alma IT Systems (Alma), for the integration of Medicsight's ColonCAD API 4.0 software into Alma's 3D visualisation workstation.  Alma is one of Spain's market leaders in medical imaging technology with a large and well-established installed base of radiology customers. We expect sales to commence before the end of the year.

Product Development & Regulatory Approvals

The Company submitted a 510(k) application to the US Food & Drug Administration (FDA) for ColonCAD 3.1 in November 2008. In December 2008, Medicsight received an Additional Information request letter and, after close collaboration with its FDA advisers, sent a comprehensive response in March 2009. We are currently awaiting feedback from the FDA on the status of our application.  

In November 2007 the Company submitted an application for MedicRead 1.0 to the Ministry of Health, Labour and Welfare (MHLW) of Japan. We recently had a meeting with the MHLW authorities, and are in the process of responding to their queries, and await their feedback.

Medicsight's product development program continues on track. In the six months ended 30 June 2009 the Group released ColonCAD 4.0, the most accurate version of the Medicsight ColonCAD to date. The updated software demonstrates a 50% reduction in the number of false positive CAD markings per patient case, whilst maintaining high levels of sensitivity for the detection of colorectal polyps. ColonCAD 4.0 has been granted regulatory approval in Europe (CE marked) and also from the Therapeutic Products Directorate of Health Canada.

The Group also launched MedicRead 3.0 Colon, Medicsight's CAD-enabled CT colonography reviewing tool, which is available online via the Medicsight website (www.medicsight.com).  MedicRead 3.0 Colon has been CE marked, and other regulatory approvals are in progress.

As part of a CTC scan examination, the patient's colon has to be distended with gas or air to enable accurate imaging diagnosis. Following market demand, Medicsight has started development of a CO2 insufflation device, MedicCO2lon, for this purpose. The Group is also exploring new image processing and analysis tools for optical colonoscopy.  Both of these new applications will bolster the existing CTC portfolio. 

Clinical Progress

Doctors Perry Pickhardt and David Kim (from the University of Wisconsin Medical School, in the United States) are undertaking a retrospective comparative analysis of Medicsight's ColonCAD 4.0 performance against the performance of expert radiologists interpreting CTC image data. Early results from this study of more than 3,000 patient datasets show excellent ColonCAD performance and more detailed study results are expected to be presented later in 2009.  

Clinical research incorporating Medicsight's ColonCAD was published in the peer-reviewed American Journal of Roentgenology in June 2009. The Group, in collaboration with Dr. Stuart Taylor  (of University College Hospital, London) also received notice in July of acceptance of a second peer-reviewed paper for publication in Radiology journal. 

Both these studies demonstrate the positive benefit of Medicsight's ColonCAD to radiologists when interpreting CT colonography datasets.

Financial Review

Revenue for the six months ended 30 June 2009 was £67,000 (2008: £44,000).

In line with management's expectations the Group incurred total operating costs of £4,913,000 in the six months to June 30 2009 (2008: £4,892,000). Research and development costs were higher in the period due to a renegotiation of terms with a development partner.

Following the streamlining of business operations and reduction of headcount earlier in the year, Medicsight remains in a strong financial position with cash and cash equivalents of £13,746,000 and expects future operating costs to be significantly lower as we realise the full benefit of the cost reduction program.

Conclusion

With significant financial resources at the Group's disposal Medicsight continues to make progress on all fronts and is well positioned for the second half of 2009 and beyond.

Allan Rowley

Chief Executive Officer

14 August 2009

  INTERIM FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS

		6 months ended 30 June 2009	6 months ended 30 June 2008	Year ended 31 December 2008
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
Revenue
License and support fees		67	44	103
Cost of sales		-	-	-
		________	________	________
Gross profit		67	44	103
		________	________	________
Sales and marketing expense		(724)	(696)	(2,095)
Administrative expenses		(2,970)	(3,005)	(5,839)
Research and development		(860)	(574)	(1,822)
Share-based expense		(359)	(617)	(1,253)
		________	________	________
Operating loss		(4,846)	(4,848)	(10,906)
		________	________	________
Finance income		37	371	2,664
		________	________	________
Loss before taxation		(4,809)	(4,477)	(8,242)
Taxation		-	-	-
		________	________	________
Loss on ordinary activities after taxation attributable to equity holders of the parent		(4,809)	(4,477)	(8,242)
		________	________	________
Loss per share - basic and diluted		(3p)	(3p)	(5p)
		________	________	________

  INTERIM FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

		30 June 2009	30 June 2008	31 December 2008
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		180	221	273
		________	________	________
		180	221	273
		________	________	________
Current assets
Trade and other receivables		890	1,033	1,298
Marketable securities and treasury deposits		-	1,076	-
Cash and cash equivalents		13,746	20,314	18,387
		________	________	________
		14,636	22,423	19,685
		________	________	________
Total assets		14,816	22,644	19,958
		________	________	________
LIABILITIES
Current liabilities
Trade and other payables		(1,791)	(2,007)	(2,483)
		________	________	________
Total liabilities		(1,791)	(2,007)	(2,483)
		________	________	________
Net assets		13,025	20,637	17,475
		________	________	________
SHAREHOLDERS' EQUITY
Ordinary shares		7,776	7,776	7,776
Share premium		57,306	57,306	57,306
Share-based payment reserve		2,848	1,853	2,489
Currency translation reserve		-	33	-
Retained earnings		(54,905)	(46,331)	(50,096)
		________	________	________
Equity attributable to equity holders of the parent		13,025	20,637	17,475
		________	________	________

  INTERIM FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS

		6 months ended 30 June 2009	6 months ended 30 June 2008	Year ended 31 December 2008
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
Cash flows from operating activities
Cash used in operations		(4,700)	(4,157)	(9,437)
Interest received		-	371	-
		________	________	________
Net cash from operating activities		(4,700)	(3,786)	(9,437)
		________	________	________
Cash flows from investing activities
Purchase of equipment		(7)	(106)	(207)
Interest received		37	-	2,672
Purchase of marketable securities		-	(574)	(890)
Sale of marketable securities		-	-	1,030
Investment in treasury deposits		-	(502)	-
		________	________	________
Net cash used in investing activities		30	(1,182)	2,605
		________	________	________
Effects of exchange rate changes		29	36	(27)
		________	________	________
Net (decrease) in cash and
cash equivalents		(4,641)	(4,932)	(6,859)
Cash and cash equivalents at 1 January		18,387	25,246	25,246
Cash and cash equivalents		________	________	________
at period end		13,746	20,314	18,387
		________	________	________

  INTERIM FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 

		Share Capital	Share  Premium	Share-based payment reserve	Currency translation reserve	Retained earnings	Total   Equity
		£000	£000	£000	£000	£000	£000
At 1 January 2008		7,776	57,306	1,236	(6)	(41,854)	24,458
Loss for the period		-	-	-	-	(4,477)	(4,477)
Net exchange adjustments		-	-	-	39	-	39
		________	________	________	________	________	________
Total recognised income and expense		-	-	-	39	(4,477)	(4,438)
Share-based payments		-	-	617	-	-	617
		________	________	________	________	________	________
At 30 June 2008		7,776	57,306	1,853	33	(46,331)	20,637
Loss for the period		-	-	-	-	(3,765)	(3,765)
Net exchange adjustments		-	-	-	(33)	-	(33)
		________	________	________	________	________	________
Total recognised income and expense		-	-	-	(33)	(3,765)	(3,798)
Share-based payments		-	-	636	-	-	636
		________	________	________	________	________	________
At 31 December 2008		7,776	57,306	2,489	-	(50,096)	17,475
Loss for the period		-	-	-	-	(4,809)	(4,809)
Net exchange adjustments		-	-	-	-	-	-
		________	________	________	________	________	________
Total recognised income and expense		-	-	-	-	(4,809)	(4,809)
Share-based payments		-	-	359	-	-	359
		________	________	________	________	________	________
At 30 June 2009		7,776	57,306	2,848	-	(54,905)	13,025
		________	________	________	________	________	________

  NOTES TO INTERIM FINANCIAL STATEMENTS

1. Basis of preparation of interim financial information

These interim consolidated financial statements are for the six months ended 30 June 2009. The interim financial report, which is unaudited, has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union (IFRS). The accounting policies and methods of computation used are consistent with those used in the Group annual report for the year ended 31 December 2008 and are expected to be used in the Group Annual Report for the year ended 31 December 2009. The six month period figures have not been audited.

The financial information for the year ended 31 December 2008 does not constitute statutory information. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on these accounts was not qualified and did not contain statements under section 237(2) and (3) of the Companies Act 1985.

The interim consolidated financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates. All values are rounded to the nearest thousand pounds (£000) except when otherwise stated.

  NOTES TO INTERIM FINANCIAL STATEMENTS

2. Segmental geographical reporting 

The Group operates in one business area which is the development and commercialisation of medical imaging software.

Operating results are reported to the Group's chief operating decision maker on a geographical basis. The following reports financial information on a geographical basis and reconciles it to the Group's results.

		UK & Europe £000	Japan £000	USA £000	All other segments £000	Total £000
		________	________	________	________	________
6 months ended 30 June 2009
Revenue		67	-	-	-	67
Interest receivable		37	-	-	-	37
Depreciation		34	37	-	-	71
Share-based expense		312	15	32	-	359
Loss before tax		(3,886)	(687)	(10)	(226)	(4,809)
Non-current assets		47	133	-	-	180
Total assets		14,388	369	-	59	14,816
Total liabilities		(1,627)	(25)	(59)	(80)	(1,791)
		________	________	________	________	________
		UK & Europe £000	Japan £000	USA £000	All other segments £000	Total £000
		________	________	________	________	________
6 months ended 30 June 2008
Revenue		44	-	-	-	44
Interest receivable		371	-	-	-	371
Depreciation		41	23	-	-	64
Share-based expense		552	20	45	-	617
Loss before tax		(3,226)	(496)	(334)	(421)	(4,477)
Non-current assets		70	151	-	-	221
Total assets		22,287	337	-	20	22,644
Total liabilities		(1,683)	(39)	(49)	(236)	(2,007)
		________	________	________	________	________
		UK & Europe £000	Japan £000	USA £000	All other segments £000	Total £000
		________	________	________	________	________
12 months ended 31 December 2008
Revenue		103	-	-	-	103
Interest receivable		2,664	-	-	-	2,664
Depreciation		82	61	-	-	143
Share-based expense		1,122	35	96	-	1,253
Loss before tax		(5,527)	(1,002)	(1,291)	(422)	(8,242)
Non-current assets		78	195	-	-	273
Total assets		19,394	510	-	54	19,958
Total liabilities		(1,974)	(56)	(148)	(305)	(2,483)
		________	________	________	________	________

  NOTES TO INTERIM FINANCIAL STATEMENTS

3. Earnings per share 

		6 months ended 30 June 2009	6 months ended 30 June 2008	Year ended 31 December 2008
		(unaudited)	(unaudited)	(audited)
		______________	______________	______________
Loss for the period (£000)		(4,809)	(4,477)	(8,242)
Weighted average number
of ordinary shares (000)		155,525	155,525	155,525
Loss per ordinary share
- basic and diluted		(3p)	(3p)	(5p)
		______________	______________	______________

The loss per share is based on the weighted average number of ordinary shares in issue during the year.  The Group has recorded a loss in all periods.  No adjustment has been made to the basic loss per share, as the exercise of the share options would have the effect of reducing the loss per ordinary share and is anti-dilutive. 

4. Share options 

The Group has granted share options to eligible employees since 2003.  

A summary of the movement on the Group's share option plans is:

	30 June 2009			31 December 2008
	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
	__________	__________		__________	__________
Start of period	13,312,500	£0.69		11,782,500	£0.76
Granted	8,148,750	£0.09		2,555,000	£0.37
Forfeited	(10,950,000)	£0.69		(1,025,000)	£0.81
Exercised	-	-		-	-
	__________	__________		__________	__________
At period end	10,511,250	£0.22		13,312,500	£0.69
	__________	__________		__________	__________
Exercisable at period end	1,942,500	£0.70		4,504,166	£0.81
	__________	__________		__________	__________

  

NOTES TO INTERIM FINANCIAL STATEMENTS

The following data are a summary of the status of the share options outstanding at 30 June 2009:

		Remaining contractual life
Share Option Plan	Number	(years)
________________	_______________	_______________
A	119,000	4.0
B	196,000	5.3
C	218,333	6.0
D	150,000	7.0
E	1,252,500	7.7
F	50,000	7.9
G	241,667	8.4
H	-	8.9
I	135,000	9.5
J	7,848,750	9.9
K	300,000	9.9
________________	_______________	_______________
	10,511,250
	____________

On 14 May 2009 the Group offered employees the opportunity to forfeit their existing share option plans and, in their place, received 50% of the number of forfeited options in a new share option plan J. The options in the new plan have an exercise price of 8.5p and one sixth of the options vest every six months for three years. Under IFRS 2, the cancellation of existing options and the issue of replacement options are accounted for as modifications of the original options.  4,816,250 options were issued in plan J as replacements for cancelled options and a further 3,032,500 new options were issued.

The grant date fair value of plan J was £875,000, of which £35,000 related to the modification charge. The expense relating to the modification will be expensed over three years; the expense relating to the cancelled options will be expensed over the period of the original plans.

On 20 May 2009 the Group created a new share option plan K. 300,000 options were issued at an exercise price of 10p.  Options under this plan, vest in equal one thirds on 30 June, 30 September, and 31 December 2009.

The grant date fair value of plan K was £20,000, which will be recognised in the period from 20 May 2009 to 31 December 2009.

Options are fair valued using the Black-Scholes option pricing model.  No performance conditions were included in the fair value calculations.  The following weighted average assumptions were used to estimate the fair value of stock options granted in the period:

Dividend yield		Nil
Expected volatility		105%
Risk free rates		3.89 %
Expected term		6.75 years

Expected volatility is based on historical volatility over the last three years of MGT Capital Investments, Inc (the parent company).  The expected life is the average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life.  

NOTES TO INTERIM FINANCIAL STATEMENTS

In the period ending 30 June 2009 the Group recorded a share option charge of £359,000 (30 June 2008: £617,000).

5. Related Parties 

The Group has related party relationships with its subsidiaries, its parent company (MGT Capital Investments, Inc.), directors, employees and subsidiary companies of its parent Group.

Other subsidiary companies of the parent also operate from 66 Hammersmith Road, London and some establishment, finance, IT and administration costs are charged to, and from, these companies. In the six months to 30 June 2009 Beijing Medicexchange China Co. Limited and MGT Capital Investments (UK) Limited charged the Group £152,000 and £384,000 respectively.  In this period the Group charged MGT Capital Investments (UK) Limited £13,000.

6. Reconciliation of net cash flows from operating activities

		6 months ended 30 June 2009	6 months ended 30 June 2008	Year ended 31 December 2008
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
		__________	__________	__________
Loss for the period		(4,809)	(4,477)	(8,242)
Adjustments for:
Depreciation		71	64	143
Loss on sale of investments		-	-	8
Interest income		(37)	(371)	(2,672)
Interest expense		-	-	-
Foreign currency finance cost		-	-	(148)
Share options		359	617	1,253
Changes in working capital
Trade and other receivables		408	(326)	(591)
Trade and other payables		(692)	336	812
		__________	__________	__________
Cash used in operations		(4,700)	(4,157)	(9,437)
		__________	__________	__________

- Ends -

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