For Immediate Release 15 March 2004

THE MEDICAL HOUSE PLC

Unaudited interim results
for the six months ended 31st December 2003

The Medical House PLC (the “Company” or “Medical House”) (AIM:MLH), the orthopaedic devices and drug delivery company, announces its interim results for the six months ended 31st December 2003.

Highlights

Group

• Group turnover £2,224,000 (2002: £2,707,000)
• Group operating loss £267,000 (2002: loss of £150,000) reduced from 2nd half of 2002/03
• Balance sheet strengthened post half year end by placing raising £1,517,000
• New manufacturing premises on line since January 2004
• Plant and equipment investment programme largely completed

Orthopaedic Instruments

• Record order book of over £3,000,000
• January & February 2004 sales 24% ahead of previous quarter on pro-rata basis
• Operating profit stable at £293,000 (2002: £287,000)
• Invoiced sales lower at £2,174,000 (2002:£2,603,000) principally due to reorganisation of manufacturing premises

Drug Delivery

• Collaborative agreement with division of Dechra Pharmaceuticals PLC
• Distribution agreements for sales of needle-free insulin delivery systems in Poland, China, Egypt and New Zealand
• Development Award Grant of £176,000 from DTI

Commenting on these results, Medical House Chairman Bryan Bodek said,

“Over the period under review both divisions performed in line with our expectations. We believe however, that there are many opportunities for growth in the second half of the year and beyond.

Our orthopaedic devices business is enjoying a record order book. We intend to exploit this further now that our expanded manufacturing facility is up and running. Similarly, the level of activity is continually improving within the drug delivery division and we are confident of an improving performance in the second half.”

For further information

The Medical House PLC
Ian Townsend, Chief Executive Tel: 0114 261 9011

Buchanan Communications
Tim Anderson/Lisa Baderoon/Rebecca Skye Dietrich Tel: 020 7466 5000

Medical House Internet Website: www.themedicalhouse.com

BUSINESS REVIEW

Overview

1. Manufacturing instruments primarily for the orthopaedic market: Eurocut Limited
2. Drug Delivery Systems: Medical House Products Limited

We are pleased to report that the Group is now well placed to capitalise on the opportunities for growth in both of these trading divisions. Our orthopaedic division is currently enjoying a record order book and our drug delivery division is also making significant progress. With our recently completed new premises, incorporating state of the art equipment, the Company is now very well positioned to increase sales in the coming months and years. To this end, we are pleased to report that in the first two months of the current calendar year Group sales are 24% up on a pro rata basis when compared to the last quarter of 2003.

Group Financials

Group turnover for the first six months to 31st December 2003 was £2,224,000, down on the comparable period for 2002 of £2,707,000, although Group operating losses for the half year were restricted to £267,000 (2002: loss of £150,000). The reduction in turnover slightly is misleading as we actually produced more in the six months to 31st December 2003 than in either of the comparative periods when one adjusts for opening and closing work-in-progress. The basic loss per share was 0.59p (2002 : loss of 0.41p).

Whilst the reduction in invoiced sales in the period was disappointing, the Board believes that this was a creditable result as it was achieved against a backdrop of a major plant reorganisation, a relocation of Medical House Products and the factory extension to Eurocut.

We have recently completed a placing of 3.7m new ordinary shares at 41p per share which raised approximately £1,517,000 (before expenses). These new shares were placed with new and existing institutional shareholders and the net proceeds of the placing will be used to facilitate the expansion of the Company’s trading divisions.

Orthopaedic Division : Eurocut

Our orthopaedic division currently has a record order book of over £3,000,000 and, since the additional manufacturing capacity became fully available in January of this year, productivity levels are also rising. Consequently we are anticipating an improved performance in the second half of the current financial year. The operating profit for the first half of £293,000 (2002: operating profit £287,000) was largely unchanged on the comparable period last year despite lower sales of £2,174,000 (2002 £2,603,000). As mentioned earlier, invoiced sales were held back due to the reorganisation of the existing premises and the installation of new machinery which took place towards the end of 2003.

Levels of ‘work in progress’ were significantly higher at 31st December 2003 than at 30th June 2003. Consequently we are pleased to say that invoicing is now reaching much higher levels in the first quarter of 2004 than achieved in the last quarter of 2003.

Due to the new design of our facilities we have been able to lay out our production equipment in a more efficient way. This has resulted in increased machine utilisation levels, which in due course should improve yields and margin growth.

The official opening of the premises on February 12th 2004 gave us an opportunity to show to the orthopaedic world our enhanced capability and we are confident that this will reap positive benefits going forward.

Drug Delivery Division : Medical House Products

Direct sales of needle-free devices in the UK for the six months ended 31st December 2003 were £48,000 which, although ahead of the equivalent value in the same period last year, leaves tremendous scope for improvement. Nevertheless, we are making significant progress in the key areas of this division with four distribution deals and one collaboration agreement being signed since we announced our final results for 2003.

We now have ten distributors worldwide and initial pre launch quantities of our new SQ-Pen system will shortly be despatched to many of them, enabling them to begin the process of marketing and obtaining regulatory approvals in their respective territories.

The SQ-Pen is a re-useable spring-powered needle-free system (formerly referred to as the GH1) which we can market worldwide for any indication. The SQ-Pen is a greatly improved system over the current mhi-500 device and incorporates an automatic delivery mechanism, which is a feature of many innovations emanating from Medical House Products. We believe that for a product to be successful as a self-injection system, the required injection technique needs to be simple enabling any user, young or old to be able to inject themselves safely and effectively. The SQ-Pen has all these characteristics.

Our strategy for growth within the drug delivery division remains focussed on concluding partnerships with pharmaceutical companies on a global basis. We are very pleased to have added a pharmaceutical collaboration agreement with Arnolds Veterinary Products, a division of Dechra Pharmaceuticals PLC. Along with the BioPartners agreement which licensed the new needle-free system for delivery of human growth hormone, we are extending the use and range of our systems which should provide long-term sales growth for devices and consumables. We are currently in negotiations with other pharmaceutical companies for the use of the SQ-Pen, the SU1 (single use gas-powered needle-free system) and the ASI (needle-based Auto Safety Injector). Negotiations can take a considerable amount of time and timescales are impossible to predict; however, we remain confident that we will succeed in our endeavours and should be able to report further progress in due course.

Importantly we are receiving a great deal of interest in the ASI which has far wider application potential than our needle-free systems, as the ASI can be used with almost any pre-filled liquid drug.

In February of this year we were also delighted to receive a development award in respect of the ASI and the SU1 through the DTI. This award is for grant assistance up to a maximum value of £176,172 under the development award scheme for research and development. This funding is not only of great assistance but also provides independent confirmation of the prospects for these devices.

The biggest obstacle encountered in gaining market share for our needle-free system within the UK diabetic market has been a lack of personnel making face-to-face presentations. Where we get the opportunity to present the advantages of our systems, we have a good record of success. However, with only two nurses in our team, progress has been slow. Consequently we are changing our approach in order to get significantly more people presenting on our behalf. We are achieving this by appointing distributors and demonstrators recruited from our database of satisfied users. Together with stepping-up the marketing activity overall, we believe these measures will help grow our direct sales at a much higher rate than has been achieved to date.

Other Business : Hyperlyser

As reported in November 2003 we are now actively seeking partners for this device and are in discussions which we hope will lead to a successful outcome for this diagnostic breath test.

Outlook for the full year

Over the period under review both divisions performed in line with our expectations. We believe however, that there are many opportunities for growth in the second half of the year and beyond.

Taking each division in turn, our orthopaedic devices business is enjoying a record order book. We intend to exploit this further now that our expanded manufacturing facility is up and running. Similarly, the level of activity is continually improving within the drug delivery division and we are confident of an improving performance in the second half.

Lastly, may we thank all our shareholders for their continued support and look forward to updating you further at the year end.

Ian Townsend – Chief Executive
Bryan Bodek - Chairman

15 March 2004

Unaudited Consolidated Profit and Loss Account
for the six months ended 31 December 2003

Notes

1. The financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The information for the year ended 30 June 2003 has been extracted from the statutory accounts of The Medical House PLC which carried an unqualified audit report and have been delivered to the Registrar of Companies.
2. Taxation has been provided at the estimated effective rate for the period. Full provision has been made for Deferred Taxation in accordance with FRS 19 “Deferred Taxation”.
3. The calculation of loss per share is based on the loss after taxation and the weighted average number of ordinary shares in issue during the period (six months ended 31 December 2003: 55,222,071 shares, six months ended 30 June 2003: 53,222,747 shares and the six months ended 31 December 2002: 53,219,472 shares)
4. Copies of this report are available to the public at the Company’s registered office, 201 Newhall Road, Attercliffe, Sheffield S9 2QJ and have been sent to shareholders.
   

Unaudited Consolidated Balance Sheet
as at 31 December 2003

	31 December 2003	30 June 2003	31 December 2002
	£000	£000	£000
Fixed Assets
Intangible Assets	2,821	2,671	2,424
Tangible Assets	4,130	3,240	2,983
	6,951	5,911	5,407
Current Assets
Stock & Work in Progress	1,194	806	878
Debtors	1,169	956	843
Cash	-	-	-
	2,363	1,762	1,721
Creditors falling due within one year	(3,184)	(2,415)	(2,310)
Net Current (Liabilities)/Assets	(821)	(653)	(589)
Total Assets Less Current Liabilities	6,130	5,258	4,818
Creditors falling due after one year	(1,394)	(838)	(525)
Deferred Tax	(200)	(216)	(456)
Net Assets	4,536	4,204	3,837
Capital & Reserves
Called up share capital	559	544	532
Share Premium Account	4,979	4,334	3,846
Other Reserves	487	487	487
Retained Profits	(1,489)	(1,161)	(1,028)
Equity Shareholders' Funds	4,536	4,204	3,837

Unaudited Consolidated Cash Flow Statement
for the six months ended 31 December 2003

Reconciliation of Operating Loss to Net Cash Inflow/(Outflow) from Operating Activities